Consumer Behavior Exam 1

Biases (sunk cost- left-to-right - percent of purchase

etc.) , A bias is a cognitive evaluation that systematically leads people to favor one alternative in a way that seems a bit irrational. Even though humans are "cognitively advanced" compared to other species, we still have our limits, and biases sometimes lead us astray. Psychologists have identified quite a few biases. Marketers should understand these biases because they impact how people interpret information and subsequently make purchases. Below are three example biases. If you work in marketing professionally, you might search online for other biases and look into them a bit. The first example bias is "left to right" and occurs when people read numbers. We read left-to-right, and digits we see first (on the left) typically appear more prominent than digits we see later (on the right). So when people compare $2.00 to $1.99, they see a 1 cent difference. And when people compare $1.99 to $1.98, they also see a 1 cent difference. But when making a quick judgment, people typically say the $2.00 to $1.99 difference "seems bigger" than the $1.99 to $1.98 difference. So when pricing, marketers sometime show "on sale" prices where it seems the sale is big, because the left-most digit has changed, and marketers sometimes show price increases where only right-most digits change, which makes the increase seem less severe. A second example bias is a "percent of purchase" bias. For this bias, a specific dollar amount "seems" higher or lower when it's a higher-or-lower percent of a total purchase. For example, suppose a consumer purchases a new car and is asked whether to also purchase $1000 of added audio equipment. This $1000 often "seems" somewhat low-cost, because it's a small percent of the total purchase of the car. Studies show that when consumers buy cars without the audio equipment, and later consider the same $1000 audio equipment, they view the $1000 as somewhat higher-cost, because now the $1000 is seen by itself; not as a small portion of a total cost. Marketers leverage the percent-of-purchase bias in several ways, for example by increasing prices to people on vacations (restaurant prices, souvenir prices, etc.), because they know vacationers sometimes view these purchases as a "percent" of the total vacation cost, so they view the prices as "low enough" to move forward with the purchase. A third example bias is called the "sunk cost" bias. The sunk-cost bias means that people make a future decision to "support" a prior decision that involved some investment (sometimes this bias is called the sunk-investment bias). Thus, suppose a consumer has already spent $10 purchasing materials to make a craft project. Now suppose the consumer sees some additional materials that cost $20. The consumer might normally think, "No, this is not worth $20." But now the consumer thinks, "Well, I've already spent $10, and it would seem foolish to waste that $10 by not following through with the other $20." The sunk cost bias occurs like this, when consumers link two separate purchase decisions that should be evaluated separately. In fact managers fall into the same trap when they spend money on software or employee training programs based on a "justification" that they already spent some up-front money. More logically, the up-front money is already gone; it's been sunk. So the more logical question is simply, "should I spend the extra money, regardless of what I already sunk into this." Another way you can see this sunk-cost effect is when you think of a person who is standing next to an elevator and a staircase. Suppose the person is initially unsure whether it would be quicker to take the elevator or the stairs. Also suppose the person mentally flips a coin and pushes the elevator button. After 15 seconds or so, the person does not hear any sounds coming from the elevator shaft and is now thinking, "I should have taken the stairs." Sometimes you'll see people continue to wait by an elevator when they think, "I should just take the stairs now, but I would feel foolish for having already spent 20 seconds waiting for the elevator, and then wasting it." Ok, those are just three biases and many others exist. For the purpose of our class, just understand what a bias is, know these three, and realize they have many applications. If/when you work in marketing, I strongly encourage you to look up "consumer biases" or even "psychological biases" and read up on some others. Understanding these biases can make you a better decision maker in all sorts of areas in your life! (NOTE: I don't think this bias term is in our text, but it's an important part of decision making.)

Heavy users; 80/20 rule

A "heavy user" is someone who consumes a lot in a product category. For example, once in a while I do a wood-working product and buy some lumber and make a table or other piece of furniture. But a "heavy user" does this a lot, and purchases lots of lumber and related products (screws, wood glue, clamps and other tools, etc.). Marketers love to know "who are my heavy users" and "how can I attract more heavy users?" The reason is simple; a small number of heavy users can bring in just us much profit as a very large number of normal users. Heavy users are thus more profitable to serve. Most product categories have heavy users, and in some product categories people are heavy users only sometimes. For example, when people become new parents they are suddenly "heavy users" of all things related to babies (.e.g., baby furniture, diapers, baby food, etc.). And then the parents may stop purchasing those products, and then restart if they have another baby. The 80/20 rule applies to heavy users and in many other non-marketing areas. This rule essentially says, "A small amount of people account for a large amount of what happens." For example, a large portion of crimes are committed by a small number of people, and a large amount of car-maintenance costs are caused by a relatively small number of problems. The 80/20 rule does not mean that literally 80% and 20% are "the numbers." The 80/20 rule is just a phrasing to reflect that often, a large portion of results are caused by a small portion of people or other things. Now let's go back for a moment to the statement above that heavy-users are often more profitable to serve, compared to non-heavy users. Why just "often"; why aren't heavy users always more profitable to serve? Sometimes heavy users know all the deals and discounts, and sometimes they need a lot of extra service. So when your company identifies "heavy users" it's often a good practice to assess the true profitability of these heavy users. Once in a while a company finds out that heavy users are not always the more profitable to pursue. An example might be people who visit a zoo or museum a lot, and they purchase an annual family pass. With the pass they end up getting a rather cheap admission price, and some of these consumers don't buy souvenirs and they ask for a lot of explanations from the zoo or museum staff, which takes up the staff time. The zoo or museum might still like having these customers, but these 'heavy user' customers may be less profitable than occasional visitors who spend more money. People who go to bars only for 'happy hour' specials might be another example of consumers who shop with high frequency, but who are not correspondingly more profitable. Just remember heavy users will generally be very profitable, but not always.

Consumer - Customer - Consumer Behavior

A consumer is someone who purchases something for personal use, or who strongly influences something purchased for individual use. For example, when a parent purchases ice cream for a toddler, we would reasonably consider both the parent and toddler to be consumers, even though the toddler did not "make a purchase." Almost everyone is a consumer, and thus the notion of "consumer" really is about identifying contexts related to purchasing goods and services for personal use. Ok, what is "personal use?" Personal use means the purpose of the purchase, and the subsequent use of the product/service, was to satisfy a personal need, as opposed to an organizational need. We thus classify purchases as either "consumer" or "business." Thus, if a person purchases a hotel night, but the reason for the hotel night is a business trip, then the hotel-night-purchase is considered a business purchase, not a consumer purchase. Of course sometimes it's hard to completely classify a purchase as "consumer" or "business," for example when a person purchases a hotel night for a trip that includes both business and personal itineraries. For this course we will mainly study "consumers" but to a small extent we will examine purchases made in business contexts. When companies sell to consumers, we call this B2C, which stands for Business to Consumer sales. When a company sells to other businesses, then we call this B2B, which stands for Business to Business. In terms of dollar sales, both B2B and B2C are huge, and most cites I've seen say B2B is bigger than B2C in terms of total sales dollars, especially if you include government purchases as part of B2B. Many companies sell to both B2B and B2C. Among companies that mainly sell B2C, the "marketing" area is generally more important than the "sales" area. On the flip side, among companies that mainly sell B2B, the "sales" area is generally viewed as being more important than the "marketing" area, and in these companies the role of marketing is largely to support the sales team. Another difference between B2C and B2B is that in B2C, "consumers" are often called "customers," but in B2B, purchasers are often called "customers" only; rather than also being called "consumers." In B2B, the word "consumer" is typically applied to instances where an end-user exists who purchases or consumes for personal use. For example, consider a company that makes commercial beverage dispensers that you use in a fast food restaurant. A restaurant purchases the dispenser and puts it near the seating area, so consumers get an empty cup and fill it themselves using the dispenser. For the company that makes the dispenser, the restaurant is a "customer" and the end-user is the "consumer." In fact, the company that makes the dispenser might consider Coke or Pepsi to be a main customer, because the major beverage companies (e.g., Coke or Pepsi) win contracts with restaurants, which then serve either Coke products or Pepsi products. When Coke or Pepsi win a contract, they may tell the restaurant to now use a certain beverage dispenser. So the company that makes the dispenser sells it to the restaurant, but where the purchase decision is really made by Coke or Pepsi. So some important nuances exist with respect to who is a "customer." Moving on to "consumer behavior," this term broadly means all activities related to purchasing, using and disposing of products/services. So let's consider a consumer who makes a list of possible items to purchase for a friend's next birthday. Then two months later our consumer actually purchases one of the items on the potential-gift-list. And then the friend's birthday occurs after another month passes, and the purchase is given to the friend along with a birthday card. These actions span pre-purchase, purchase and post-purchase, and are all relevant to the study of consumer behavior.

Journey map

A journey map is a visual tool that helps you see what customers experience when they buy from your company, and when they contact your company with questions or to get help with service. Why are journey maps used in marketing? Because marketers care about the customer experience, and without a journey map sometimes we don't really understand the experience. Here's an example: a customer attends a play, held at a local theatre. The marketer thinks, "I hope the customer liked attending, and comes again." So how does the marketer know whether the customer liked attending? The marketer could ask, "So; did you like the play?" But whatever response the customer gives may not really tell the whole story. Maybe the customer is thinking, "Yes the play was good, but I would not come again because ....." where the reason for not coming again could be some other aspect of the experience, which could be parking, the long time waiting in the food/concession line or a lack of food/beverage options, the bathroom cleanliness, etc. A journey map is basically a picture that helps you visualize, "Here's what happens as the customer buys from us and uses our product." The visualization helps you think about all the touchpoints that impact the customer experience, and helps you think about how to improve different touchpoints. Good journey maps are a blend of art and science; based on objective documentation of what customers do, but also based on subjective interpretations of what you hear from customers who talk about interactions with your company. As a final note, a national organization exists that focuses on customer experience issues, and they have local chapters with members that are largely in marketing, but sometimes are in other areas. This is CXPA (see www.cxpa.org); for Customer Experience Professionals Association. We don't have a chapter in NE Wisconsin, but chapters exist in Milwaukee and Madison. And if you look at information about customer journey maps, you may see acronyms CX and UX. CX stands for Customer Experience and UX stands for User Experience. The more you can understand things from the customer experience perspective, the more insights you'll develop that can help you improve your marketing. (NOTE: I don't think this term is in our text.)

Mental accounting - mental budget

A mental budget is when consumers have some thoughts about what they expect to spend on something, or what they believe would be reasonable to spend on something. Then 'mental accounting' occurs when people subsequently compare what was actually spent to what they expected to spend, or when people subsequently make some type of update to the expected costs, so they are 'revising their mental budget.' Why is this important for marketers? Well, when people spend less than they anticipated spending, they often act as though they have something 'left over' and they are often a bit care-free with this extra or left-over money. And conversely, if people spend more than they anticipated, they sometimes feel as though they got squeezed, or that they lost something, and they subsequently become risk averse and look for other areas to cut in their purchasing. So in marketing, sometimes it's helpful to know, "What do consumers expect to spend on this purchase" so you can keep your price close to that amount. NOTE: the "mental budget" term also appears in chapter 9 of our text.

Position

A position is what people think of a brand, relative to other brands that are available. For example, people might think of a brand as being "high quality" or "stylish." Or they might think of a brand as being "practical." And positions can be thought of in terms of how brands perform on specific features, where performance perceptions may differ across people. For example, consider Fruit Loops cereal. An adult might look at the fruit flavoring in Fruit Loops and think, "that's not fruity; that's just sugary" but a young child might view the flavoring as being very fruity. As a marketer, when you work on "positioning" you are trying to get people to think of your brand in a certain way. Hopefully your positon achieves three things. First, consumers think, "This brand offers things I want; it's close to my sense of the 'ideal' brand." Second, consumers think, "This brand is different in some positive way, compared to other brands." This 'different than other brands' is important because if your brand is viewed as being essentially the same as other brands, then consumers will shop more based on price. And third, lots of consumers are in the market that is attracted to your brand. In other words, consider a position that is highly desired and seems different than competing brands. This is still not a good position if it only attracts a few consumers; too few to be profitable. The actual position is ultimately what consumers think of the brand, not what the marketer is trying to achieve. So a hotel owner may say, "My hotel is quaint" but if consumers think, "Your hotel is plain" then the position is "plain" instead of "quaint." NOTE: chapter 5 of our text includes "positioning strategy" and mentions "position" but does not clearly discuss position. I think the "position" concept is helpful to consider when thinking about how consumers make decisions, so "position" as a concept is listed here, and then in chapter 5 you'll see "positioning strategy again."

Culture

Culture is a "way of life" and applies to a group of people. The group may be geographically based (i.e., the culture of a country or region), or the group may have some shared activity, such as the culture among sports fans or artists. And sometimes people refer to a 'company culture' which reflects the way people think and act within a business. Our text refers to culture as "a society's personality," but in everyday language I think culture often refers to behaviors as well as personality. For example, Wisconsin's 'culture' includes hunting and drinking (hopefully in limited amounts when mixed together), and those are not just personality issues. Culture can apply to lots of things including the way people spend free time, their values, how they make group decisions (e.g., in a more autocratic or democratic way, or deferring to elders or other people). Marketers care about culture because products that 'fit' one culture or way-of-life might not fit a different culture. Further, when people think about how products are used, they often fail to realize, "this is not how products are used in a different culture," and so they lose opportunities when marketing to people in that other culture. An example is cars; European car makers spend a lot of time thinking about how cars are used in the U.S., so they can design cars for our way of life. In Europe, destinations are relatively close to each other, and people don't "get in the car for a cross-country trip" the same way we do in the U.S. In the U.S people take cars off-roading, and use cars as extended campers, and we generally like more space in our cars than people need in Europe. So to make a product that is appropriate for a different group of people, sometimes you need to understand their culture a bit.

Decisiveness

Decisiveness is a person's tendency to make decisions quickly, and to be fairly confident in the ability to make good decisions in a fairly quick manner. As an example of how decisiveness comes into play in marketing, I recall talking to Rick who works at the Bergstrom Nissan dealership in Oshkosh. Rick was telling me about the need to deal with very decisive consumers in a way that differs from how he must deal with indecisive consumers. (By the way, my impression of Rick is that he's the type of person who genuinely likes to help consumers. So Rick will adapt to customers as he thinks it will help them, but perhaps other salespeople would not adapt so much). As an example of more decisive consumers, Rick sometimes deals with customers that come to the car lot, very ready to make a purchase. They've often looked online and they just want to be in-and-out with a new car, without spending much time. Then Rick deals with other consumers that are much less decisive, and they often want to hear about lots of options, and they need more time to "feel comfortable" making a purchase. In marketing, it's nice to have decisive consumers; it's efficient to deal with them. But you must realize many people are a bit indecisive, and for these people you should typically: 1) give them at least a few more options to consider; hopefully not putting them on overload, but getting them to feel some reassurance that they did not decide too quickly and miss a major option, 2) make recommendations because often these consumers are looking for some 'reason' to make a final decision, and if you have expertise it's often good to guide these consumers a bit, and 3) push them a bit to make a decision, and you must use judgment here so you are constructively-pushy and not pushy in a bad way. On this third item of being pushy, I know people often have a negative stereotype image of a pushy salesperson, and you want to avoid "bad pushy" tactics. But imagine you have a friend in college who should really get started on an assignment for a class, and your friend keeps stalling because she says, "I just don't know where to start." At some point you tell your friend, "Just get started and then see where it goes, because if you don't get started, you'll just fail the assignment, so any reasonable start is better than no start." When you talk to your friend this way, you are being "constructively pushy" and that is what you should aim for in marketing and in sales. If you are pushy in the right way, consumers will sometimes say, "Thanks for making me decide; I really needed that nudge." And if you apply for a job in sales, look out for an interview question where you get asked, "If you were a customer, how much time would you need to make a decision?" Be careful; the interviewer is looking to see if you are decisive and could decide quickly, or if you would need a lot of time to decide. The interviewer wants to hire a salesperson that is fairly decisive, and avoid hiring a salesperson who would need a lot of time to decide. Why? Because indecisive salespeople often view indecision as being reasonable, and they will be less likely to constructively push customers to make decisions, which sometimes must be done. (NOTE: I don't think Decisiveness is in our text, but I've heard marketers talk about decisiveness as being important in both B2B and B2C contexts.)

Demographics

Demographics are general traits of people; ways to describe people. When people list demographics, they often list items such as age, gender, ethnicity, religion, marital status, number of children, occupation, income and education. Marketers sometimes collect demographic information so they know, "what type of person buys my product" so the product can be more effectively targeted to buyers. For example, suppose you start your own online business and you sell hand-crafted greeting cards. If you find out a lot of retired people visit your site, then you might think, "Aha! I should start to showcase cards for grandchildren." Other main traits exist too, aside from demographics, such as geographics (where your customer lives, or what type of area your customer lives in) and psychographics (factors more directly about why your consumer buys). The "demographic" factors mainly describe "who" your consumer is, which can then be related to why they buy, but is mainly just descriptive of who buys.

Evaluative criteria

Evaluative criteria are the features or benefits a consumer mainly thinks about when selecting one brand compared to another brand. Let's say a consumer is in the grocery store buying milk. His criteria might be the fat content (i.e., skim, 1%, 2% or whole milk), the expiration date, the flavor (regular, chocolate), and container size (gallon, half-gallon, quart or 16 oz.), the price, and perhaps the familiarity with the brand name. Some criteria might be important for one consumer, and a bit less important for other consumers. But across consumers, you want to know, "Which criteria do people use to make a selection, and how well does my brand perform on these criteria?" Sometimes companies develop new features because they see consumers struggle to pick one brand over another, so presenting a new feature gives consumers some other reason to say, "here's a reason to select this brand." An example would be "accident forgiveness" that is promoted by some car insurance companies. And our textbook gives an example of 'freshness dates' on soda cans. Most evaluative criteria are not 'newly invented' by the companies that make the brands, so these are interesting illustrations, but the most important thing for marketers is simply to understand the criteria that drive selection, and then to make sure their brands are reasonably competitive on the most important criteria.

Feature creep

Feature creep is a term used in marketing to reflect a company's continual expansion of new features. Thus, feature creep does not describe a "consumer" characteristic; it describes a process that often occurs in product management. Feature creep is not inherently "good or bad;" it's good when new features are added to a product that offer good value, and it's bad when new features simply drive up the cost and complexity of a product, without offering improved value. Feature creep happens a lot, and simply reflects normal human thinking and creativity. When marketers evaluate products, they list things the products do. Over time, they have additional thoughts about, "Hey, we could add a feature so the product also does this or that." It's perfectly normal to have additional thoughts, and so feature creep is sort of common. The question is whether balance is maintained between adding new features and benefits that are valuable, versus losing sight of your position and why consumers buy your brand in the first place. When people think of feature creep, they often think of software enhancements. But feature creep can happen almost anywhere (not just with software). Consider a college course; over time the professor keeps finding more concepts and assignments to add, and the professor's intent is good, but the course becomes too complex with all the added bells and whistles. Or think of a student club and each semester the officers think, "Let's add this speaker or activity or trip" and over time the club's schedule becomes unmanageable. If you work in marketing at an ad-agency, you'll find the same thing happens with projects for clients, but we call it "scope creep." Scope creep is the term used in projects, when you agree to work on a project, and someone keeps finding things to add to the project that go beyond the initial project intent. The person suggesting added things is not trying to be mean; the person simply thinks, "Oh, here's another thought; what if we did this too." Suppose you work at an ad agency and you are the person managing a client project. You will learn to start by defining the "scope" of the project with your client. Then, when the client asks for additional things, you'll be in a better position to say, "Yes, we can do that, but it's beyond the scope we agreed to, so extra time and cost would be involved, and your price will increase." As another example, universities have been viewed as having scope-creep over decades, and the scope-creep is partly responsible for why students' costs of attending universities has increased higher than the rate of inflation. If you compare services offered by universities today, to services offered by universities some decades ago, you'll see that many services have been added, while very few have been dropped. The added services range from counseling services, to tutoring to more options for dorms and meal plans, more access to advisors and computer labs, the ability to enroll online, etc. These services are perhaps "good" feature/scope creep, but a cost and price is involved, and sometimes people don't think about the total benefit versus total cost of continued scope creep.

Gift-giving

Gift giving is presented in the text as an example of a ritual. And yes, many gifts are given for birthdays or holidays, where gifts are expected because of the ritual nature of how we experience the birthday or holiday. But gifts are given at other times too. For marketers that work in products categories where brands are purchased as gifts, understanding the gift part of the purchase is important; it's a main aspect of "The why behind the buy." People give gifts to convey thoughts and emotions, such as "thank you" or "congratulations" or "you are special to me." When people buy a product as a gift for someone else, they often select the product a bit differently than if they buy for themselves. For example, a person might seek a higher (or lower) quality in a product when purchasing as a gift, or might want to the gift wrapped, or might want to know more about return policies in case the recipient does not like the gift. Another aspect of gift giving that marketers should know about occurs on the sales side of marketing. When doing business with people in a different country, different expectations exist with respect to gift giving. Thus, before traveling, you should get some ideas about what gifts are viewed as appropriate and even legal in different areas. For example, in Japan it's common (or expected) to exchange gift during introductory meetings, for example if you meet with suppliers or other channel partners. As another example, giving a bottle of wine as a gift would be appropriate in some regions, but not in Muslim countries where alcohol is prohibited. Some good online sites exist with helpful "doing business" tips if you travel to other countries, and those sites often include some commentary about gift giving.

Habitual decision making- brand loyalty

Habitual decisions are decisions we make repeatedly without much thinking. We have made a decision in the past and now we simply 'execute' the decision again. Perhaps you've heard the saying, "Let's not reinvent the wheel." That saying is good counsel; if you've already thought through something, then there's limited value in thinking it through every single time, and sometimes you'll be better off just going with whatever you decided before. The 'inertia' term refers to habit decisions where consumers are especially uninvolved; they are almost not even thinking of their purchases as "decisions." Now let's consider habit decisions where consumers did not think through a decision clearly the first time, and they bought your competitor's brand instead of your brand, and now they don't want to 'rethink' the decision. What do you do? Consumers often don't like to "change their mind." So when you face consumers making habit-decisions that favor your competitor's brand, don't try to get them to "change their minds" but rather tell them, "We have new information for you to consider, so you would not be changing your mind; you would be making a new decision." To some extent that is just semantics, but people are more willing to make new decisions based on new information, than to just change their mind. So when you present product information, it's helpful to add something new, and to stress how the new information warrants a 'new decision.' This same principle applies to the sales part of marketing; typically it's better to present new information and ask a customer to make a new decision, rather than asking a customer to change their mind. Now let's look at the reverse, where consumers make habit-decisions that favor your brand. In this situation, you want to reinforce the habit, and try to make the repurchase as simple as possible, so consumers don't even pay attention to efforts by your competitors to get consumers thinking about something new. Finally, when consumers purchase brands in a habit manner, are they exhibiting brand loyalty? Yes, brand loyalty is typically thought of as a tendency to purchase the same brand repeatedly, so habit purchases fit this concept of brand loyalty. But a habit driven loyalty could exist simply because a brand is convenient to purchase, even when the consumer does not view the brand as 'better' than other brands. And habit driven loyalty could exist because no other brands are available, which is sometimes called 'forced' loyalty; you might believe a consumer is loyal because they keep purchasing a brand, but really they are just waiting for another option to be available, and psychologically they are not loyal. Loyalty is stronger when a consumer has compared different brands and views a brand as a favorite, with tendency to repurchase the favorite brand. Brand loyalty is then even more enduring, because it's psychological and behavioral. Consumers loyal to a favorite brand may not even look at advertising or promotions offered by other brands.

Heuristics

Heuristics are mental-shortcuts people take when making decisions. In a consumer context, a heuristic is a simple way for people to select brands, without thinking about all the different criteria that differentiate brands from each other. This is related to satisficing because to satisfice means to make a decision that is "good enough" but may not be "best." Let's take an example. Suppose a consumers is selecting a kitchen toaster and is considering three brands. The consumer might tell you they have a bunch of criteria, such as the thickness of the opening (can I toast something wide, like a bagel), and the length of the cord, and whether the toaster is internet enabled, and whether it's easy to clean via a pull-out tray on the bottom, etc. The consumer may consider all criteria carefully. But if the consumer is just trying to make a good-enough decision (satisficing), then the consumer may take a short-cut. For example, the consumer may think, "I'll just buy the first toaster I see that performs well on my top two criteria." The tendency to select just based on one criteria (or on a very small subset of criteria) is called the lexicographic heuristic. Another heuristic that consumers use is an 'elimination' heuristic, where they don't look at all brands at the same time, which can take a lot of effort. When using an elimination heuristic, consumers compare two brands, they eliminate one, then they take the 'winner' and compare it to another brand and again eliminate one, and so forth until they are done looking at all main-considered brands. A main thing to know about using heuristics is that sometimes they lead to intransitive decisions, which means the brand they select might change over and over. For example, let's reconsider the elimination heuristic and suppose we have three brands, A, B and C. Given the specific brand attribute and decision criteria, we might find that a consumers views brand-A more favorably than Brand-B, and views brand-B more favorably than Brand-C, but views brand-C more favorably than Brand-A. This could occur because brand-B is a bit higher priced than brand-A, but not by much, and it performs a bit better than brand-A (so consumers 'prefer' brand-B over brand-A). And the same is true when progressing to brand-C; it's a bit higher priced than brand-B, but not by much, and it performs a bit better than brand-B (so consumers 'prefer' brand-C over brand-B). But now consumers compare brands A and C, and the price difference is 'high' when jumping directly from A to C, and so consumers prefer brand-A over brand-C. So where is the intransitivity? Let's say a consumer starts by comparing brands A and B, takes the winner (B) and compares this brand-C. At the end, the consumer selects brand-C. Ok, let's say the consumer starts by comparing brands A and C, takes the winner (A) and compares this brand-B. At the end, the consumer selects brand-B. And finally, let's say a consumer starts by comparing brands B and C, takes the winner (C) and compares this brand-A. At the end, the consumer selects brand-A. So the brand selected changes over and over, depending on the order in which brands were considered. That's intransitivity and can happen when shortcuts are used. As a comparison, think about grade-school math where you learned about "greater than" signs. You were taught that if A > B, and if B > C, then A will always be greater than C, so A > C. In math, it would not make sense to see A > B, B > C but C > A. But when decisions are made using short-cuts, this seemingly illogical pattern of results can occur. Finally, it's helpful to realize that consumers are more likely to engage in short cuts when they are asked to "make a choice" compared to when they are asked to "make an evaluation." When people are asked to make evaluations, they tend to be somewhat thorough. But when choosing brands, they become more likely to use shortcuts, because an evaluation could take a long time and result in some difficulty in choosing. So there's a saying in the land of consumer behavior, which is that, "Choice is more lexicographic than evaluation." A practical implication is that when you study consumers, be thoughtful about whether you ask them to "evaluate" brands versus asking them, "Imagine you were choosing a brand; what would you choose and why?" If you only ask about evaluations, you may develop an understanding about how consumes buy, that is not realistic in terms of how they actually buy, and your marketing efforts could be misguided.

Information search

Information search is just what it sounds like; consumers looking for information about products. This could be information about features, or warranty or where to buy the product. This could be information from the manufacturer or from other consumers. This could be information gathered as the consumers is actively trying to figure out what to buy, or could occur when a consumers is not 'in the market' and the information is simply 'interesting to know.' Mostly we think of 'information search' as a step in a decision process, which often includes four stages. The first stage involves need-recognition where the consumer thinks, "Ok, I probably need to purchase ...." Second, the consumer gathers some information. Third, the consumer uses the information to evaluate different options, and fourth the consumer then makes a purchase. One of the important issues for marketers is to identify, "When consumers are in the market, what information do they look for, and where are they looking for it?" and identify, "When consumers are NOT in the market, what information will they reasonably attend to?" The point is that once a consumer progresses through the need-recognition stage of buying and is now "in the market" for your product, you want to already have your brand established in the consideration set. So before consumers are in the market, you typically want to present very simple information that makes your brand 'top of mind' and then when consumers are actively looking to buy, then you make it easy for consumers to get more detailed information that helps them evaluate and choose a brand. As an example, consider stores that sell flooring materials such as vinyl, carpeting/rugs, tile and hardwood. Consumers shop for new flooring infrequently. So most messaging will be simple and the store's job in marketing is to build some basic positive views of the store. Then, when people are "in the market" for flooring, the store will provide a lot more detailed information, which consumers are then ready to think about.

Involvement (product - message - situation)

Involvement is 'taking part in something.' Suppose you are a full participant in an activity, and you tell people you love the activity; this could be virtually anything from rock climbing to dancing to cooking to knitting to reading to playing poker, etc. The more actively you are engaged in the activity, physically and mentally, the more involved you are. In marketing, we think about how involved consumers are with our products, how involved consumers are with our advertising or other online communications, and how involved consumers get with the actual decision of whether to purchase our brand. Involvement tends to increase as consumers are more interested in these areas, and when consumers believe "there is more at stake with the purchase," which is why higher-price products tend to be more involving than lower-priced product. People might be more involved with an advertisement because the ad shows a consumer using the product in a way that resonates strongly with the consumer, or because the ad features a celebrity spokesperson the consumer admires. In any case, as consumers are more involved with some aspect of your brand, they tend to remember your brand better, which is a good thing (the increased memory of your brand improves the likelihood that you will be considered and selected). Of course the involvement may be tangent to your brand or core benefits, and that type of involvement may not help you so much. We see this tangential involvement when consumers get 'involved' with a commercial because the commercial is very funny, or because the spokesperson is famous, but then later the consumer remembers the humor or spokesperson, but not your brand. So for involvement to 'help' the marketer, it should be legitimately tied to your brand.

Laddering

Laddering is a technique of asking questions to see how a brand is associated with high level values that drive people to purchase the brand. How does laddering work? When you first ask consumers why they buy a product, they might describe product attributes. These attributes may include quality, price, brand name, or the inclusion of particular features. For example: Q: "Why did you select those wedding invitations?" A: "I really liked the traditional design and the heavy card stock." This answer above sounds honest and accurate. However, it's related to features, and we want to take a next step and reach a level of benefits. So you ask: Q: "Why is the heavy card stock important to you?" A: "The heavy card stock makes the event seem more formal and substantial." So with your "Why?" question, you got the consumer to elaborate on the initial answer. And compared to lists of product attributes, responses at this level are much more thoughtful and come closer to the real reasons an individual cares about the purchase. From a marketing perspective, understanding why someone cares about the product is powerful; this can help you design better products, can help determine messages to use, and can even suggest how you might tackle distribution channel and pricing decisions. Next, we move from benefits to values. So let's see that: Q: "Why is it important that the wedding be more formal and substantial?" A: "My friends had fabulous weddings, and I really want to do something on par with them." This questioning would need to continue a bit. The answer above is getting toward the value, but is still a bit unclear. Based on the answer above, the high level value(s) that motivate the purchase might be status (status relative to the friends) or a sense of achievement, or a sense of belonging to the group of friends (seeking mutual respect). Or perhaps the consumer is thinking that the friends' 'fabulous weddings' created memorable experiences for the brides and grooms, and perhaps the value is to have a long-lasting love-filled marriage. A few more questions are needed, and with these added questions, perhaps the underlying value(s) can be identified.

Collecting

Many people collect things. The main thing to know as a marketer is that you might face 'collection' customers, and they will often continue to purchase because their motive is less about using the product, and more about 'having a collection.' Because of this different motive, they often respond to marketing efforts differently than how non-collectors respond. Even if your product is fairly inexpensive, you might have good profit opportunities if a large number of people collect your brand. For instance, 'extra items' can sometimes be sold to collectors; a specific example would be companies that sell display cases that show their company logo, because collectors often like to display their collections of the company's product in a display case that has the company's name or logo. Another opportunity is to sell 'collector edition' items with limited quantity runs, and those items can create some cachet/prestige for your brand, and can sometimes be priced at a premium. American Girl is a good example of leveraging the collection-orientation that motivates many of their buyers. American Girl sells dolls that were originally associated with women from history. They now offer all sorts of accessories and have a strong following. And many sports teams leverage the 'collection market,' for example by offering special edition items to commemorate championships and other special games or events. If your product is more expensive, then it might make sense to work with collectors in a more individual sales-oriented manner. For example, some artists sell to consumers who collect the work of particular artists. If you sell something that is more expensive (art or other), and you identify people who collect your work, then find out more about what made them interested in your work, and what they are looking for, because they might be very interested in buying more from you.

Segmentation

Market segmentation refers to grouping consumers, so we have consumers that are similar to each other in terms of how they respond to some type of marketing action (e.g., a price increase, or a new delivery option, etc.), or how they respond to an overall marketing product and position. Behavior is a key aspect of this definition; segments are about how consumers 'react' which is behavioral. Now we also have some non-behavioral ideas related to segmentation. For example, in order to group consumers into segments, a marketer might rely on demographics, or purchase motivations or where consumers live (geographic factors) or issues such as lifestyle and psychographics (see these final concepts among the chapter 11 terms in this concept guide). Ok, so why should you think of segmentation as behavioral? Because in marketing, you'll want segments to be 'actionable.' The various ways to segment (demographics, etc.) can be helpful so you can predict segment membership. For example, using the 'gender' demographic factor, for some products we see that men and women shop differently from each other. But don't confuse the 'ways to predict segments' from the behavioral core of segments. If two groups of people act the same (no difference between groups), then in marketing we would treat them the same. The key to segments being actionable is that consumers across segments respond to marketing efforts differently in some way, so we treat the segments differently. Also, once we have identified a segment, it might be important to develop sub-segments. For example, suppose you sell air conditioning units for homes. You might first segment the market into: a) people that don't want air conditioning, b) people that want to buy window-units, and c) people who want to buy central air units. Ok, then suppose you sell to people who buy window-units, which are air conditioners that people put into a window frame during the hot months only, so these units are temporary and only cool one room. Even within this 'window unit segment,' you might sub-segment, because perhaps some people in this segment want a more powerful unit, and some don't. Back to a broad level, why do marketers care about segmenting? Because generally you cannot please everyone. To build customers, you must provide benefits targeted to them. Well, different people like different things. So if you try to please everyone, probably nobody will think you did a great job pleasing them, and they will look for a different supplier.

Needs and categories of needs

Needs are things people want, and in marketing we think about needs as being an end-state of "how people want to feel." Don't confuse this concept of needs with the concept of "needs versus wants." For example, we might say people "need" food and other 'basic life necessities' versus people wanting things that are more optional. Please realize this particular "needs" concept is different than that issue of needs versus wants. So what are some examples of things people want, associated with how they feel? Ok, here's an example; a "need for achievement" refers to a desire people have to gain mastery over things, and to be recognized for this mastery (e.g., a person who plays a musical instrument or sport might wish to achieve and be recognized for obtaining high skills). A need for affiliation reflects a need to be feel tied to other people and accepted by other people in an informal way. Need for power varies across people, and some people have a strong desire to be "in charge" or "in control." Other needs exist too, such as a need to feel unique. Once we start to recognize a variety of needs, we then get into classifying them; we put them into categories/bundles. For example we might have "needs related to family" or "needs related to having a home/apartment environment that you like" or "needs related to a hobby." This classification can be important to marketers because if consumers have a bundle of needs, then understanding the bundle helps marketers develop a marketing mix (4Ps) that addresses the entire bundle. Another classification is whether needs are utilitarian versus hedonic. Utilitarian needs are "Things we need in order to functionally get things done." Hedonic needs are "things that give us pleasure." This utilitarian-vs-hedonic categorization can help if marketers have customers that tend to tend to be more on the utility side or the hedonic side. And then we have Maslow's hierarchy of needs, which is designed to help understand priorities across needs. The Maslow hierarchy views needs as being "more basic" versus "higher up." Figure 1.2 in our text shows the hierarchy. The most basic needs are physiological, and these needs are ever-present. Then each step "up" the hierarchy progresses a bit until we reach a top level of self-fulfillment or "enriching" experiences. All of these needs can exist at the same time; I've heard people interpret Maslow's hierarchy as meaning a person must satisfy lower level needs before moving to higher level needs, but that's not true. For example, consider a person at the end of the day; going to bed. This person is tired and is looking forward to the next day, where she will attend a cooking workshop with her best friend. As she is about to fall asleep she is thinking about the workshop, and how great it will be to learn a new cooking skill and spend time with her friend. She is simultaneously experiencing a need at the bottom of the Maslow hierarchy (physiological need for sleep), a need at the top of the hierarchy (self-actualization; improving her cooking skills), and a need at the middle of the hierarchy (belongingness with her friend). Once you identify a need, you might be able to identify where it fits in the Maslow's hierarchy. For example, the "need to feel important" is sometimes considered to be among the highest of human psychological needs, and this is part of the 'ego' needs in the Maslow hierarchy.

Norms/customs/conventions/rituals (example ritual is rite-of-passage)

Norms are "normal" ways of behaving, or you might say behaving in a way that is considered standard and accepted for a particular group. When we say a situation is "the norm," we mean the situation is typical or expected. Conformity occurs when a person "follows the norm," and we often think of conformity as behaving in the standard way in order to feel comfortable and not "stick out." Many norms are particular to a region or culture, so "the norm" in one place might not be "the norm" in a different place. Customs and conventions are types of norms; so they are labels that help us distinguish between some norms versus others. A custom is typically a behavior, so in our culture it's customary to greet people by shaking their hands, but only in some settings (e.g., when people visit relatives for holidays, they often hug instead of a hand shake, due to their closer relationship). Other customs involve things such as tipping for service at restaurants or hotels, using nicknames (e.g., Bob instead of Robert), leaving about two feet between people when talking (the customary distance is closer in some cultures), eating some foods with our hands such as corn on the cob, etc. A convention is also a norm, and is a way of doing something; a 'conventional way' of doing something that means following a standard way, and this can include behaviors. For some things it's fine to use "custom" and "convention" as about the same thing. For example in most of the U.S. we observe daylight savings time and Valentine's day, and we follow some shared practices for these, and they could be described as our custom or you could say, "we do this by convention." On the other hand, if somebody does something in an unusual way, we might say, "that's unconventional" but I don't hear people saying, "that uncustomary." Thus, if someone plays basketball and shoots a basket underhanded, then we would view that as being unconventional, but not a violation of customs. Ok, on to rituals. A ritual is a special type of routine. A routine is a set of activities we intentionally perform repeatedly, often performed in the same way each time. When a person's routine has a special meaning, and when the person is emotionally attached to conducting the set of activities, then we view the routine as a ritual. So a person might have a "going to bed routine" that involves brushing teeth, setting out clothes for the next day, etc. Suppose the person's "going to bed routine" has a special meaning to the person, and the person would be very uncomfortable changing the sequence of activities in the routine. In that case, we would say this person's "going to be routine" is a ritual. Some fairly common rituals include activities conducted during funerals, the playing of national anthems at the start of sporting events, the perfunctory way we sometimes start meetings with introductions, prayers spoken before meals, and even things as mundane as "how someone likes to watch their favorite movies" if the movie-watching is preceded by arranging snacks and furniture in a certain way. Occasionally we see rituals within 'rites of passage' events, which are events or ceremonies that mark progression into a next stage of life, or into a new social/societal position. Examples are getting married, getting a driver's license, progressing through a religious confirmation or bar mitzvah, and even a ceremony associated with joining a group such as a fraternity, sorority, or service organization.

Delayed gratification

Our text discusses delayed gratification only a little, and with an example about a person who is hungry but forgoes a snack, because the person plans to have a lavish dinner and does not want the snack to take away from the dinner (see page 19 of the paperback version of our text for that example). Delayed gratification is actually a huge issue, and is related to our ability to be self-disciplined versus our tendency to procrastinate. Perhaps the most famous study on delayed gratification is the "marshmallow study," conducted in the 1960s. Researchers tested a large group of five year old children. These children were given a marshmallow by an adult who said, "I'm going to leave the room for some time. If you do not eat the marshmallow while I'm away, then you'll get a second marshmallow and you can eat them both. But if you eat the marshmallow before I come back, then you won't get a second one." The choice was simple: one treat right now or two treats later. The adult left the room and came back 15 minutes later. The children were filmed and you could see some kids eat the marshmallow as soon as the adult left the room, and you could see other kids make faces and wriggle and move their chairs to try to restrain themselves. The most important part of the marshmallow study happened years later. The children who participated in the study were tracked over time. The children who waited to eat the marshmallow did better in life; they performed better in school, they were less likely to have drug and social problems, etc. The findings make sense. In general, as you delay gratification (i.e., in playing online games, going out to bars, etc.), and instead work on things that should be done, then you'll do better. On the flip side, as you procrastinate about doing things that should be done, and "give in" to the desire for immediate gratification by spending time on fun stuff, then you'll perform worse. Why is all of this important to marketers? A couple reasons. First, you might create messages that resonate with consumers because your messages talk about "doing what you should do," for example with respect to purchasing insurance or household-cleaning products, or retirement planning services. And sometimes marketers sell products that have benefits that are mainly "delayed" and these marketers add some immediate benefits because they recognize some consumers will want something "now." An example of this is tourism groups that sell vacation packages months in advance, and when you sign up you start to get emails with information about "your upcoming trip" so your immediate need for gratification is addressed.

Product placement

Product placement is when a company's brand appears in a movie or other setting where consumers are watching (or reading) something, and the brand is simply part of the scene. A product placement is a form of advertising. Some examples: some scenes from the Power Rangers movie were set in Krispy Kreme locations, and a scene from Man of Steel took place in an IHOP restaurant. Nokia phones were used in The Matrix, and James Bond in the Skyfall movie drank a Heineken instead of a 'Martini - shaken, not stirred.' A few decades ago, Marty McFly in the movie 'Back to the Future' wore Nike shoes that were self-lacing, so the concept of self-lacing shoes was around long before the technology became real. Shows like 'This Old House' feature products that are showcased as part of the home remodel, and those products are placements that are a form of advertising. Product placements are sometimes a good way to build awareness and recognition for brands. For large and well-known brands, I'm not sure whether any research exists that indicates placements are a better investment than other types of advertising. But product placements can give consumers a different type of exposure to a brand, and some less-well-known brands have been able to increase awareness through placements. An example would be the showing of a terrarium made by the Neenah-based CagesByDesign, which was featured on the MTV 'Pimp My Ride' show, and effectively exposed their brand to their target market.

Perceived risk

Risk is the combination of uncertainty plus negative consequences. When we perceive some risk, we see a potential to lose something, and the chances of experiencing the loss are at least somewhat unknown. When the perception of risk gets high, people often shy away from making decisions, or they re-prioritize the criteria they use to make a decision, to lessen the chance of experiencing a big loss. As examples, perceived risk could occur when a consumer makes a purchase and thinks, "I wonder if I'll really be able to figure out how to make this work" or perhaps, "I wonder if I'll really enjoy this trip." And risk goes up when price increases, because a bad purchase means, "I lost a lot of money; not just a little money." And risk often increases for products that are used in public or are shared with others because the buyer thinks, "People will see I use this product and perhaps they will think I made a bad decision, and I'll feel stupid." In general, just understand that when buyers perceive risk, they will sometimes delay a purchase decision and will sometimes look for a "safe" option to purchase. Some products win consumers over by being a "safe" purchase item, for example a reasonably well known bottle of wine a consumer could serve guests and expect nobody would be thinking, "That's an odd choice of wine; what was he thinking when he selected that?"

Role theory

Role theory refers to the fact that consumers act in different ways depending on the situation they are in, including who they are with. So when we think of "our target consumer" we should also think about the situation they face when they are in a buying instance. Here's an example of roles. Think back to when you were in middle school or high school. Were you a bit of a slob a your parent's home, and did your mom or dad get annoyed at seeing things you left around the home and did not pick up? Now contrast this "sloppy behavior" to instances when you were at a neighbor's house. Were you also a slob there, or were you more careful, and did you even help clean the table while you were a guest at another person's house? Maybe your mom heard from your neighbor how nice you were at their home, and how you helped clean up. And your mom was thinking, "Wait.... are you sure you are talking about my child?" Why does this happen? Because you are playing the role of "guest" when you were at your neighbor's house, and that role comes with a different style of behavior. Similarly, as a college student you still might behave as though you are playing different roles. If you go out with friends on a weekend, you might behave differently than if you were attending a family gathering. And let's roll the clock forward and suppose you have children someday. You might behave differently when you play "the parent role" versus when you are "just yourself." These roles are important to marketers because if consumers are in a particular role when buying or using a product, then successfully targeting the consumer should involve some catering to that role.

Consumer satisfaction/dissatisfaction and Kano model

See materials in our application assignment/exercise for a more thorough discussion of concepts related to satisfaction and dissatisfaction. As an abbreviated version, satisfaction is a sense of contentedness, or "The degree to which people believe their consumer experiences were good and worth the cost and effort." As consumers become more satisfied with your brand, they are more likely to repurchase it, recommend it to others, etc. But some nuances exist. One nuance is that satisfaction often is based on expectations. Thus, two consumers could have the same experience with your brand, but consumer-1's expectations were exceeded, while consumer-2's expectations were missed. As a result, consumer-1 is satisfied, yet consumer-2 is not. As a second nuance, consumers might be very satisfied with a purchase from you, but their satisfaction leads them to purchase more in the product category, but not from you. And as a third nuance, things that cause people to be "satisfied" are sometimes different from things that cause people to be "dissatisfied" (from the Kano model). Thus, if you only address things that seem to make consumers dissatisfied, you may fail to address things that could make consumers highly satisfied (this gets into 'basic' versus 'delight' attributes). (NOTE: I don't think our text really covers these satisfaction models, but they are sometimes very important in practice.)

Consideration set

The "consideration set" is the brands a consumer initially thinks about as positive options, when considering a purchase in a specific product category. A synonym is "evoked set". Marketers want their brands to be in this "initially considered" set because brands in this set have an early advantage for being selected. A few other "sets" exist. The "awareness set" refers to all brands that a consumer is aware of, regardless of whether the consumers has a positive view of the brand. What about brands the consumer is aware of, but does not view positively? We have the "inert set" which includes brands where the consumer does not have a positive or negative initial view, and we have the "inept set" which includes brands where the consumer has an initial negative view. When marketers wonder, "How can I get more consumers to purchase my brand?" they often start with some evaluation of whether consumers are aware of their brand, and if so, whether the brand is in the evoked, inert or inept set. Depending on which "set" the brand is in, the corrective action pursued often changes.

Motivation

The motive is the reason people act toward filling a need, and a motive can also be low or high. In everyday language, people sometimes use the words "needs" and "motives" interchangeably. For example, consider Joe and Kara; they are dating. It's mid-afternoon and Joe and Kara plan to have dinner together in a couple hours at a nearby restaurant. Right now they are both at Joe's apartment. It turns out Joe skipped lunch today and is getting really hungry. Joe says to himself, "I can't wait for dinner. I need at least some food now." Joe goes to his kitchen and grabs a sandwich. Kara sees this, is a bit offended and says, "What are you doing? We are supposed to go to dinner in a couple hours. Why are you eating now?" Kara's question of "why are you eating now" is essentially asking Joe to explain his motive for getting a sandwich. In response, Joe tells Kara, "Sorry, but I'm really hungry. Think of this as an appetizer." Then Joe realizes his snacking could be offensive in view of their dinner date. Feeling he's a bit "on the spot," he then smiles with all the charm he can muster and says, "I want to enjoy your company during dinner. If I don't eat something now, then we'll get to the restaurant and I'll be starving, and I'll eat everything in sight right away. If I eat a bit now, then I'll be able to pay more attention to you when we're out for dinner." Ok, Kara knows Joe's comment is bull-shitting a bit, but Joe did a good job with his comment and made an effort to address her concern, so she lets it slide. She says to herself, "Food often motivates Joe." Now let's step back just a bit from this scenario. Is food a need, or is food a motivator? In everyday language, I think you could say, "Food motivates Joe" and you could also say, "Joe clearly needs some food," and nobody would complain about your choice of words for either 'motivate' or 'need.' But the scenario involves both elements. We could say "Joe needs food," where the 'need' is an item, or we could say, "Joe needs to NOT feel hunger," where the need is a physical state (being not-hungry). The reason Joe grabbed a sandwich is because he felt his present state of hunger differed from his desired stated of not being hungry, so the need was "hunger" and was large enough that he did not want to wait for dinner. Think of the motive as the difference between where the consumer wants to be, and where the consumer is now. The "need" is where the consumer wants to be, or the items that get the consumer there. The motive is the "drive" that leads the consumer to think or feel, "I must do something." As a marketer, if you truly understand motives (in addition to needs), you can do a better job designing great products and pricing them reasonably. One other issue with motives is that they can be internal (sometimes called intrinsic) and can be external (sometimes called extrinsic). When someone is 'internally motivated,' they act without needing to be rewarded by others. For example, if you like to play the piano, then you will play just because you find it internally rewarding. When someone is less internally motivated, then if we want them to act, then we can give them an external motivation, for example some reward or some penalty. Internal and external motivations can co-exist. For example as a student in a class, you might be internally motivated to study because you find the material interesting or you want to improve your knowledge. On the other hand, you might also study because you realize that as you study, you will be more likely to get a better grade, and the grade is the external motivator. So motives can be connected to internal and external drivers, whereas we think of needs as being internal.

Self-regulation

This is the consumer's ability to control their desires and 'moderate' consumption over time. For example, a person might enjoy eating out, but exerts some self-control and only eats out a certain number of times per month, or only on certain occasions, thus decreasing overall consumption. In some product categories, such as the sale of fitness equipment of gym memberships, self-regulation comes into play where partly the consumer asks herself, "Do I have the ability to stick with a fitness regimen?" and self-regulation involves increasing consumption. Another example would be when selling investment services; the value associated with purchasing these services is higher among people who self-regulate and maintain fairly continuous deposits into the investment vehicle. What should you do if you sell a product where the full consumer benefits exist if buyers self-regulate, but you believe buyers in your target market are not good at self-regulating? In this situation, you might design a purchase option that enables consumers to "force themselves" to self-regulate. To see how this might work, let's go back to the fitness example. Some gyms offer only annual memberships (instead of monthly), which appeal to consumers who think, "It's good for me to lock myself in for a year, because if I pay month-to-month, it's too easy for me to stop going to the gym." Some of these gyms will actually give a consumer a refund for unused membership months if the consumer quits the gym, but the idea of the 'annual membership' helps sell the benefit to consumers, who pay the annual fee and feel 'locked in' to the commitment of working out at the gym.

Value -value proposition

Value is the consumer's perception of what a product is worth versus the possible alternatives, which could be not buying, or could be buying a different brand. Very simply, value = benefits less costs. Costs include price plus time and effort required to make the purchase or use the product. Benefits include anything that makes the consumer better off, which could be tied to using product features (e.g., how well the product works), but can also be image or other things. For example, I've heard students say they bought a certain brand because it was popular and they wanted to be viewed as having the popular brand. A Value Proposition is your statement to a customer that helps them know, "Why would I buy this?" Your value proposition should be stated in customer-friendly language; avoiding overly-technical terms. The value proposition often has three parts: 1) "who" the product/service is aimed at; the overall target market, 2) what need is filled, and 3) how the need is filled. An example for McDonalds might be, "We served hungry people on-the-go who want quick simple meals, and we do this by providing a limited menu of burgers and similar items that are continuously being made to be ready when a customer arrives." Or perhaps when McDonalds offer an opportunity for someone to purchase a McDonalds franchise location, their Value Proposition might be, "We help people who want to own a small business, who seek income and potential growth, and we do this by providing a standardized operation they can manage, with agreements that cover products, advertising and other business needs." Those McDonalds statements are just examples and you might improve on them. Also, McDonalds serves people besides people who are on-the-go; for example they serve retired people who want to go somewhere inexpensive with other retired people to socialize. And McDonalds serves parents who want to have a play-ground area for small children. So you will sometimes find that a brand should be communicated with multiple Value Propositions that focus on slightly different aspects that align with benefits desired by different segments.

Values - Core values

Values are fairly enduring views about things that are inherently worthy. Example values are achievement, adventure, autonomy, compassion, creativity, determination, fairness, friendship, honesty, loyalty, optimism, respect, safety, spirituality, status and wisdom. You can go online and find lists of values, such as https://scottjeffrey.com/core-values-list/, which lists 200 values. When people do things, they sometimes semi-consciously think about 'Does this fit my values?' Marketers should be very aware of any main values shared by people in their target market, because people are much more likely to buy brands that align with their values. The 'align with values' notion sometimes is about people specifically looking for brands that seem to match their values, and perhaps more often is about people ruling brands out because for some reason they view the brand is running counter to their values. For example, suppose a marketer sees that many people in her target value sustainability. Ok, this marketer should look for ways to adjust the marketing mix (at least product and communications) to indicate how the product aligns with sustainable practices, or at least to make sure the product does not appear to strongly violate sustain able practices. Another example would be when people boycott a brand because they company that makes the brand has done something offensive (e.g., if a company is in the news for mistreating employees or for taking a certain political or religious stance, such as bakeries that have refused to make cakes for same-sex marriages). Core values are simply the 'main' values a person has, or values that are strongly adhered to among lots of people within a culture. So you might values lots of things, but you also might pick out a small number of these values and say, "here are things I value the most."

Variety seeking

Variety seeking is, "The desire to seek new alternatives more than familiar ones," and this definition is from our text. For functional products, people often "stick to what they know" and what is familiar, as reflected in the saying, "If it ain't broke; don't fix it." But for hedonic products where consumers seek pleasurable experiences, people often variety seek. Examples would be for things such as food and entertainment. People may have a favorite restaurant, yet still like to try different places. And people may have a favorite movie, but they want to watch new movies. If your company makes a sensation-oriented product, you might try to offer a fair amount of variation, and you might construct messages that convey how people can have different experiences with your product. But if your company markets something that is purchased because it satisfies a functional need, then you are probably better off talking about "reliability" and "no surprises" or perhaps offering some upgrade features but not variety of the type of that leads people to think, "I don't know what to expect."