Permissions Department, Thomson Business and Economics Roger D. Blackwell Paul W. Miniard James F. Engel Consumer Behavior Requests for permission to make copies of any part of the work should be mailed to the following address: Permissions Department, Thomson Business and Economics 5109 Natorp Boulevard Mason, OH 45040 800–423–0563

Consumer Behavior and Consumer Research CHAPTER 1 Consumer Behavior and Consumer Research

What Is Consumer Behavior? Activities people undertake when obtaining, consuming, and disposing of products and services

Consumer Influences Organizational Influences Obtaining Consuming Disposing Consumer Behavior

Organizational Influences Consumer Influences Organizational Influences

Organizational Influences Consumer Influences Organizational Influences Culture Ethnicity Personality Family Life-stage Values Income Available Resources Attitudes Opinions Feelings Motivations Past Experiences Peer Groups Knowledge Brand Product Features Advertising Word of Mouth Promotions Retail Displays Price Quality Service Store Ambiance Convenience Loyalty Programs Packaging Product Availability

Consumer Influences Organizational Influences Obtaining Consuming Disposing Consumer Behavior

Obtaining Consuming Disposing

Obtaining Consuming Disposing How you decide you want to buy Other products you consider buying Where you buy How you pay for product How you transport product home How you use the product How you store the product in your home Who uses the product How much you consume How product compares with expectations How you get rid of remaining product How much you throw away after use If you resell items yourself or through a consignment store How you recycle some products

ORGANIZATIONAL INFLUENCES CONSUMER INFLUENCES Culture Ethnicity Personality Family Life-stage Values Income Available Resources Attitudes Opinions Motivations Past Experiences Feelings Peer Groups Knowledge ORGANIZATIONAL INFLUENCES Brand Product Features Advertising Word of Mouth Promotions Retail Displays Price Quality Service Store Ambiance Convenience Loyalty Programs Packaging Product Availability OBTAINING How you decide you want to buy Other products you consider buying Where you buy How you pay for product How you transport product home CONSUMING How you use the product How you store the product in your home Who uses the product How much you consume How product compares with expectations DISPOSING How you get rid of remaining product How much you throw away after use If you resell items yourself or through a consignment store How you recycle some products Consumer Behavior

What Is Consumer Behavior? Activities people undertake when obtaining, consuming, and disposing of products and services A field of study that focuses on consumer activities

What Is Consumer Behavior? Activities people undertake when obtaining, consuming, and disposing of products and services A field of study that focuses on consumer activities Scope goes beyond just why and how people buy to include consumption analysis

Consumption Analysis Why and how people use products in addition to why and how they buy

The Marketing Concept The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives

The Marketing Concept The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives Satisfaction with an exchange depends on satisfaction with consumption of product and the exchange of money

Why Study Consumer Behavior?

Why Study Consumer Behavior? Consumer Behavior Determines the Economic Health of a Nation

Why Study Consumer Behavior? Consumer Behavior Determines the Economic Health of a Nation Consumer Behavior Determines the Success of Marketing Programs

Why Study Consumer Behavior? Consumer Behavior Determines the Success of Marketing Programs Marketing can be used to influence brand choice and purchase, while Demarketing can influence people to stop harmful consumption “The Customer is King” Organization influenced by consumer needs and wants

Why Study Consumer Behavior? Consumer Behavior Determines the Success of Marketing Programs Organizations that are Customer-centric use a total marketing approach to focus their resources on satisfying customers Marketing Process of transforming or changing an organization to have what people will buy

Why Study Consumer Behavior? Consumer Behavior Determines the Economic Health of a Nation Consumer Behavior Determines the Success of Marketing Programs Consumer Behavior Determines the Economic Health of Everyone

Why Study Consumer Behavior? Consumer Behavior Determines the Economic Health of Everyone The individual’s decisions as a consumer determine their economic health by making more effective consumption decisions while avoiding deceptive practices harmful to them

Why Study Consumer Behavior? Consumer Behavior Determines the Economic Health of Everyone Public policy leaders and social commentators study consumer behavior to alleviate overconsumption and underconsumption by educating consumers about problems and providing assistance

Educating Consumers About Crises

Educating Consumers About Health Understanding consumers’ issues or problems and developing methods to reach and educate consumers

Educating Consumers About Health Understanding consumers’ issues or problems and developing methods to reach and educate consumers

Why Study Consumer Behavior? Consumer Behavior Determines the Economic Health of a Nation Consumer Behavior Determines the Success of Marketing Programs Consumer Behavior Determines the Economic Health of Everyone Consumer Behavior Helps Formulate Public Policy

Helps Formulate Public Policy Government Protection and Education Understanding consumers’ needs to formulate public policy and predicting behavioral changes that follow Interest rates Economics Social Welfare Family Planning Warning labels Government Regulations Protection from Competitive Markets

Why Study Consumer Behavior? Consumer Behavior Affects Personal Policy

Why Study Consumer Behavior? Consumer Behavior Affects Personal Policy Personal policy includes how you behave towards others and in buying situations, your values and beliefs, and how you live your life A person’s economic quality of life is determined by personal policy

Evolution of Consumer Behavior

Evolution of Consumer Behavior Supply Chain: all the organizations involved in taking a product from inception to final consumption - Manufacturers - Wholesalers - Retailers - Facilitating Organizations

Evolution of Consumer Behavior Supply Chain: all the organizations involved in taking a product from inception to final consumption - Manufacturers - Wholesalers - Retailers - Facilitating Organizations Consumers’ Increased Influence on Business

Evolution of Consumer Behavior Wholesaler Manufacturer Retailer Consumer Manufacturing Orientation Selling Orientation Marketing Orientation Consumer Orientation U.S. 1750-1850 1850-WWII 1970-2000 2000+ Europe 1750-1850 1760-WWII 1970-2000 2000+

Consumers’ Increasing Influence Evolution of Consumer Behavior Consumers’ Increasing Influence Wholesaler Manufacturer Retailer Consumer Manufacturing Orientation Selling Orientation Marketing Orientation Consumer Orientation U.S. 1750-1850 1850-WWII 1970-2000 2000+ Europe 1750-1850 1760-WWII 1970-2000 2000+

Evolution of Consumer Behavior Manufacturing Orientation

Evolution of Consumer Behavior Manufacturing Orientation Selling Orientation

Evolution of Consumer Behavior Manufacturing Orientation Selling Orientation Marketing Orientation

Evolution of Consumer Behavior Manufacturing Orientation Selling Orientation Marketing Orientation - Motivation research - Positivism - Postmodernism

Evolution of Consumer Behavior Manufacturing Orientation Selling Orientation Marketing Orientation Consumer Orientation

Consumer Orientation Beyond a marketing focus How all organizations in a demand chain adapt to changing consumer lifestyles and behaviors bringing product design, logistics, manufacturing, and retailing together Role of consumers in shaping many aspects of life—society, government, social programs, health cares, and other areas

Consumer Research: Methods of Studying Consumer Behavior

Consumer Research Methods Observation

Consumer Research Methods Observation Observing consumer behaviors in different situations such as natural or artificial settings

Consumer Research Methods Observation In-home observation: examining how and when consumers use and consume products in their households Shadowing: following and observing consumers in the shopping and consumption processes. Researchers may ask questions about reasons for behaviors Physiological methods: Techniques borrowed from medicine, psychology and other sciences including cameras to measure eye movement, galvanic skin response, and MRI

Consumer Research Methods Interviews and Surveys

Consumer Research Methods Interviews and Surveys Surveys: efficient method for gathering information from a large sample of consumers by asking questions and recording responses (telephone and Internet surveys, mall intercepts, and mail questionnaires)

Consumer Research Methods Interviews and Surveys Surveys: efficient method for gathering information from a large sample of consumers by asking questions and recording responses (telephone and Internet surveys, mall intercepts, and mail questionnaires) Focus Groups: a group discussion led by a moderator skilled in persuading consumers to thoroughly discuss a topic of interest

Consumer Research Methods Interviews and Surveys Surveys: efficient method for gathering information from a large sample of consumers by asking questions and recording responses (telephone and Internet surveys, mall intercepts, and mail questionnaires) Focus Groups: a group discussion led by a moderator skilled in persuading consumers to thoroughly discuss a topic of interest Longitudinal Studies: repeated measures of activities over time to determine changes in opinions, buying, and consumption behaviors

Consumer Research Methods Experimentation Measuring cause-and-effect relation-ships by manipulating independent variables to determine the effects of changes on dependent variables - Laboratory experiment - Field experiment

Consumer Research Methods Experimentation

Consumer Research Methods Experimentation Attempts to understand cause-and-effect relationships by carefully manipulating independent variables to determine how these changes affect dependent variables - Laboratory experiment - Field experiment Independent variables might include number of advertisements and package design Dependent variables might include purchase intent or behavior

Consumer Research Methods Consumption Research

Consumer Research Methods Consumption Research Builds on the three primary research methods to examine how people use products and services rather than how they buy them

Understanding How Consumers Use Products

Consumer Research Methods Consumption Research Builds on the three primary research methods to examine how people use products and services rather than how they buy them May use ethnographic tools to under-stand how values and culture influence usage of products and other behaviors

Consumer Research Methods Consumption Research Builds on the three primary research methods to examine how people use products and services rather than how they buy them May use ethnographic tools to under-stand how values and culture influence usage of products and other behaviors May identify new uses for existing products or new product to satisfy unmet or changing consumer needs

The Underlying Principles of Consumer Behavior The Consumer Is Sovereign

The Underlying Principles of Consumer Behavior The Consumer Is Sovereign The Consumer Is Global

The Underlying Principles of Consumer Behavior The Consumer Is Sovereign The Consumer Is Global Consumers Are Different; Consumers Are Alike

Consumers appear different but respond in similar ways to brands

Consumers appear different but respond in similar ways to brands

The Underlying Principles of Consumer Behavior The Consumer Is Sovereign The Consumer Is Global Consumers Are Different; Consumers Are Alike The Consumer Has Rights

Consumer Bill of Rights

Challenges for the Future Gathering and interpreting information that organizations need to meet changing needs of consumers Developing effective consumer research methods to capture changes in trends and lifestyles Understanding consumer behavior from a broader perspective as an important part of life

Permissions Department, Thomson Business and Economics Roger D. Blackwell Paul W. Miniard James F. Engel Consumer Behavior Requests for permission to make copies of any part of the work should be mailed to the following address: Permissions Department, Thomson Business and Economics 5109 Natorp Boulevard Mason, OH 45040 800–423–0563

Creating Marketing Strategies for Customer-Centric Organizations CHAPTER 2 Creating Marketing Strategies for Customer-Centric Organizations

Consumer Analysis The process of understanding consumer trends, global consumer markets, models to predict purchase and consumption patterns, and communication methods to reach target markets most effectively

Strategy A decisive allocation of resources (capital, technology, and people) in a particular direction

Customer-Centric Organizations A strategic commitment to focus every resource of the firm on serving and delighting profitable customers

Characteristics of Customer-Centric Organizations Shared Vision and Values Cross-Functional Integration System-Wide Simultaneous Training Customer Based Metrics

Characteristics of Customer-Centric Organizations Shared Vision and Values Cross-Functional Integration System-Wide Simultaneous Training Customer Based Metrics The goal of a customer-centric organization is to provide a consumer with more value than its competitors

Value The difference between what consumers give up (pay with time, money, or other resources) for a product and the benefits they receive

Marketing Strategy Involves the allocation of resources to develop and sell products or services that consumers will perceive to provide more value than competitive products or services

Where Does Consumer Behavior Fit In?

Marketing Strategy Involves the allocation of resources to develop and sell products or services that consumers will perceive to provide more value than competitive products or services The process includes market analysis, market segmentation, brand strategy, and implementation with the consumer at the core

Market Analysis Consumer Company Environmental Political/Legal Implementation in Marketplace Segmentation Demographic Situational Psychographic Marketing Mix Product, Brand, Price, Place Promotion, and 7Rs

Market Analysis The process of analyzing changing consumer trends, current and potential competitors, company strengths and resources, and the technological, legal, and economic environments

Market Analysis The process of analyzing changing consumer trends, current and potential competitors, company strengths and resources, and the technological, legal, and economic environments One goal is to minimize the number of failed products introduced to the market by better understanding the wants and needs of the market

Market Analysis: Consumer Insight and Product Development Consumer Insight: an understanding of consumers’ expressed and unspoken needs and realities that affect how they make life, brand, and product choices. Combines fact (from research) and intuition to yield an insight that can lead to a new product, existing product innovation, brand extension, or revised communication plan

Market Analysis: Consumer Environment Includes demographic trends, personal and group influences, knowledge, attitudes, motivation, purchase and consumption patterns, changing consumer needs, wants, and lifestyles

Market Analysis: Consumer Environment Includes demographic trends, personal and group influences, knowledge, attitudes, motivation, purchase and consumption patterns, changing consumer needs, wants, and lifestyles Changes in the consumer environment can lead to new product ideas, product adaptations, new packaging or new services to help consumers meet their changing needs -iPod Accessories

Market Analysis: Corporate Strengths and Resources - Financial - Technological - Personnel / managerial - Production - Development and design - Research - Marketing / advertising

Market Analysis: Corporate Strengths and Resources - Financial - Technological - Personnel / managerial - Production - Development and design - Research - Marketing / advertising -Proctor and Gamble once developed everything internally. Currently 35% of its innovations are based on licensing and strategic acquisitions

Market Analysis: Current and Potential Competitors - Who are current competitors and which firms are likely to become competitors? - What are advantages/disadvantages of competitors and competitive products? What do alternative scenarios show of how competitors react to new products or innovations?

Market Analysis: Market Environment Government Stability and Regulations State of Economy Market Environment Physical Conditions Technology

Market Analysis Consumer Company Environmental Political/Legal Implementation in Marketplace Segmentation Demographic Situational Psychographic Marketing Mix Product, Brand, Price, Place Promotion, and 7Rs

Market Segmentation Process of identifying groups of people who behave in similar ways to each other, but somewhat differently than other groups

Inferring Other Behaviors From Product Usage

Inferring Other Behaviors From Product Usage

Market Segmentation Process of identifying groups of people who behave in similar ways to each other, but somewhat differently than other groups Results in market segment: a group of consumers with similar behaviors and needs that differ from those of the entire mass market Goal: minimize variance within groups and maximize variance between groups Opposite of market aggregation

Market Segmentation Market aggregation: when organizations choose to market and sell the same product or service to all customers (also known as mass marketing)

Market Segmentation Identifying Segments

Market Segmentation Increasing diversity in consumer needs and wants leads to mass customization: customizing goods for individual customers in high volumes and at relatively low costs

Market Segmentation Increasing diversity in consumer needs and wants leads to mass customization: customizing goods for individual customers in high volumes and at relatively low costs Key is understanding which customized features customers value the most

Market Segmentation Increasing diversity in consumer needs and wants leads to mass customization: customizing goods for individual customers in high volumes and at relatively low costs Key is understanding which customized features customers value the most Ability to reach “segment of one”

Market Segmentation Segmentation can increase customer satisfaction and profitability - decreases marketing expenses - increases value (and therefore price) to consumers

Criteria for Choosing Segments Measurability: ability to obtain information about the size, nature, and behavior of a market segment Accessibility: degree to which segments can be reached, either through targeted advertising and communication programs or multiple retail channels

Criteria for Choosing Segments Substantiality: size of the market—is it large enough to be profitable? Congruity: how similar members within the segment exhibit behaviors or characteristics that correlate with consumption behavior

Bayesian Analysis Statistical technique based on a theorem that expresses uncertainty in probability terms Allows consumer analysts to make “educated guesses” on how the human mind affects behavior or “why people buy” Analyzes data collected from point-of-sale (POS) scanners to identify patterns of behavior that define market segments

Market Analysis Consumer Company Environmental Political/Legal Implementation in Marketplace Segmentation Demographic Situational Psychographic Marketing Mix Product, Brand, Price, Place Promotion, and 7Rs

Market Mix Strategies: Product Product: the total bundle of utilities (or benefits) obtained by consumers in the exchange process

Market Mix Strategies: Product Product: the total bundle of utilities (or benefits) obtained by consumers in the exchange process Internal considerations External considerations

Market Mix Strategies: Product Internal considerations include: - What are the costs of developing, producing, distributing, and selling the product? External considerations include: - What form of product best serves consumption patterns for the target segment - What packaging will most likely attract consumers and fulfill transportation, usage, and disposal of the product? - How will consumers compare this product to competitive or substitute products?

Market Mix Strategies: Place Place: physical distribution and location of sale - Where will consumers expect and want to buy this product? - What are the most effective outlets through which to sell the product and how best to get it there?

Market Mix Strategies: Price Price: total bundle of disutilities (costs) given up by consumers in exchange for the product

Market Mix Strategies: Price Pricing considerations include: - What is the best pricing policy for the product or for the store? - How will consumers react to Everyday Low Prices or promotional prices? - Is it more important to have the “lowest price” or prices in the range consumers expect to pay? - What effect does price reduction or price ending have on perceived quality of product? - What does pricing policy need to be to maintain a healthy profit margin?

Market Mix Strategies: Promotion Promotion: activities involved in selling a product, including advertising, public relations, sales promotions, and personal sales - What message should be sent to consumers? - Which forms of communication will best reach specific segments? - What type of communication should occur at various stages of purchase and consumption - How should different product attributes be positioned through different forms of media?

Market Mix Strategies: Brand Brand: A product or product line, store, or service with an identifiable set of benefits, wrapped in a recognizable personality Functional elements Emotional elements Brand Promise

Market Mix Strategies: Brand Functional elements - Performance, quality, price, reliability, logistics Does the brand solve a problem as expected and do what it is supposed to do? Emotional elements - Image, personality, style, evoked feelings Does the brand create an emotional connections between the customer and the product or firm? Brand Promise What can consumer expect in exchange for their money?

Market Mix Strategies: Brand Brand: A product or product line, store or service with an identifiable set of benefits, wrapped in a recognizable personality Brand Equity Brand Personality Brand Protection

Market Mix Strategies: Brand Brand Equity Difference in value created by the brand minus the cost of creating the brand Brand Personality Reflection consumers see of themselves or think will develop by using a brand Brand Protection By promising a certain outcome, brands reduce the risk to consumers that the product may not deliver as expected

Transforming Customers into Friends and Fans

Market Analysis Consumer Company Environmental Political/Legal Implementation in Marketplace Segmentation Demographic Situational Psychographic Marketing Mix Product, Brand, Price, Place Promotion, and 7Rs

Strategy Implementation Even the best strategies are worthless if not implemented well in the marketplace

Strategy Implementation Even the best strategies are worthless if not implemented well in the marketplace 7Rs for formulation and implementation

Customer Loyalty and Customer Relationship Management

Customer Loyalty It is less costly and easier to keep a customer than it is to create a new one

Customer Loyalty It is less costly and easier to keep a customer than it is to create a new one Loyal customers generate superior margins and recruit additional customers

Customer Loyalty It is less costly and easier to keep a customer than it is to create a new one Loyal customers generate superior margins and recruit additional customers With increased choices, consumers are becoming more fickle and less loyal

Customer Loyalty It is less costly and easier to keep a customer than it is to create a new one Loyal customers generate superior margins and recruit additional customers With increased choices, consumers are becoming more fickle and less loyal Consumer feel entitled to try new brands and switching behavior increases

Customer Loyalty It is less costly and easier to keep a customer than it is to create a new one Loyal customers generate superior margins and recruit additional customers With increased choices, consumers are becoming more fickle and less loyal Consumer feel entitled to try new brands and switching behavior increases To retain current customers, firms must focus on customer expectations of future benefits

Customer Relationship Management Process of managing all the elements of the relationship a firm has with its customers and potential customers with CRM solutions and enterprise systems

Customer Relationship Management Implementing CRM

Customer Relationship Management Implementing CRM Identify all customers and the nature of contacts with them - Identify which types of customers are most profitable - Identify and understand behaviors of the most profitable customers Manage contact with most profitable customers Manage firm activities including strategies and tactics to please the most profitable customers

Customer Relationship Management Provides the ability to calculate the Customer Lifetime Value - The value to the company of a customer over the whole time the customer relates to the company

Global Marketing Strategy

Global Marketing Strategy Thinking Globally: involves ability to understand markets beyond one’s own country of origin with respect to: Sources of demand Sources of supply Management & marketing methods

Global Marketing Strategy Organizations must understand markets on a global basis in terms of people Consumers have a myriad array of foreign-made and globally branded products Cultural, ethnic, and motivation variables also affect consumer decisions

Global Marketing Strategy Can marketing be standardized?

Global Marketing Strategy Can marketing be standardized? - Can a firm use the same marketing program in all target countries, or must it create a different program for each? - Which are greater—the similarities among or differences between consumers in different countries? - How do advantages of economies of scale and unified brand image compare to advantages of culture-specific messages?

Global Marketing Strategy Cross-Cultural analysis: the comparison of similarities and differences in behavioral and physical aspects of cultures

Global Marketing Strategy Cross-Cultural analysis: the comparison of similarities and differences in behavioral and physical aspects of cultures Cultural empathy: the ability to understand the inner logic and coherence of other ways of life and refrain from judging other value systems

Global Marketing Strategy Cross-Cultural analysis: the comparison of similarities and differences in behavioral and physical aspects of cultures Cultural empathy: the ability to understand the inner logic and coherence of other ways of life and refrain from judging other value systems Ethnography: describing and understanding consumer behavior by interviewing and observing consumers in real-world situations

Global Marketing Strategy Intermarket segmentation: the identification of groups of customers who transcend traditional market or geographic boundaries (similar segments around the world) Intermarket segmentation plays a key role in understanding the similarities and differences between consumers and countries that become the foundation of market standardization

Global Advertising Effectiveness Global advertising sends the same message to consumers around the world Localized campaigns adapt messages to the norms of the different cultures

Global Advertising Effectiveness Global advertising sends the same message to consumers around the world Localized campaigns adapt messages to the norms of the different cultures When is global advertising most effective? - Message is based on similar lifestyle - Ad appeals to basic human needs and emotions - Product satisfies universal needs and desires

Global Advertising Effectiveness Global advertising sends the same message to consumers around the world Localized campaigns adapt messages to the norms of the different cultures When is global advertising most effective? Language problems may occur, but back- translation, visual language, and local experts (advice) helps overcome them

Global Advertising Effectiveness Before choosing a brand name, marketers should consider the following:

Global Advertising Effectiveness Before choosing a brand name, marketers should consider the following: - Does the name of the product have another meaning in one or more of the countries where it might be marketed? - Can the name be pronounced everywhere? - Is the name close to that of a foreign brand, or does it duplicate another product sold in other markets? - If the product is distinctly American, will national pride and prejudice work against the acceptance of the product?

Permissions Department, Thomson Business and Economics Roger D. Blackwell Paul W. Miniard James F. Engel Consumer Behavior Requests for permission to make copies of any part of the work should be mailed to the following address: Permissions Department, Thomson Business and Economics 5109 Natorp Boulevard Mason, OH 45040 800–423–0563

Family and Household Influences CHAPTER 12 Family and Household Influences

The Importance of Families and Households on Consumer Behavior

The Importance of Families and Households on Consumer Behavior Many products are purchased by a family unit Individual’s buying decisions may be heavily influenced by other family members

The Importance of Families and Households on Consumer Behavior How families make purchase decisions depends on the roles of the various members in the purchase, consumption, and influence of products

Families and Households Family: a group of two or more persons related by blood, marriage, or adoption who reside together Nuclear family: immediate group of father, mother, and child(ren) living together

Families and Households Extended family: nuclear family, plus other relatives such as grandparents, uncles and aunts, cousins, and parents-in-law Family of orientation: family into which one is born Family of procreation: family established by marriage Some families are extending these definitions to include pets

Pets Are Family Members Too © AP/Wide World Photos

Families and Households Household: all persons, both related and unrelated, who occupy a housing unit

Families and Households Nonfamily households include: Elderly persons living with nonfamily members Persons of the opposite sex sharing living quarters Friends living together Same-sex couples

Families and Households Families are the largest single category of households Rapid rise in the number of nontraditional families and non-family households Any of these types of households may or may not include children Buying behavior is best described by the term consumer unit (CU) or minimal household unit (MHU)

Families and Households Structural variables affecting families and households:

Families and Households Structural variables affecting families and households: Age of head of household or family Marital status Presence of children Employment status

Families and Households Structural variables affecting families and households: Age of head of household Marital status Presence of children Employment status Marketers monitor these variables to predict changes in demand for specific products and categories

Families and Households Sociological variables affecting families and households:

Families and Households Sociological variables affecting families and households: Cohesion: emotional bonding between family members Adaptability: ability of a family to change its power structure, role relationships, and relationship rules in response to situational and developmental stress Communication: facilitating dimension, critical to movement on the other two dimensions

Families Celebrations and Gift Giving Marketers frequently refer to resilient families who emphasize time spent together through family traditions, rituals, and celebrations

Families Celebrations and Gift Giving Gift giving and family holidays are increasing in importance Traditional holiday spending and promotions have shifted to other holidays throughout the year Physical movement of large gifts have become difficult leading to increase sales of gift certificates, gift cards, and Internet gift purchases

Appeal to Different Ways Market Segments Celebrate Holidays

Appeal to Different Ways Market Segments Celebrate Holidays

Who Determines What the Family Buys?

Who Determines What the Family Buys? Instrumental roles: financial, performance, and other functions performed by group members (also known as functional or economic roles)

Who Determines What the Family Buys? Expressive roles: involve supporting other family members in the decision-making process and expressing the family’s aesthetic or emotional needs including upholding family norms

Role Behavior Individual roles in family purchases

Role Behavior Individual roles in family purchases Initiator/gatekeeper: initiator of family thinking about buying products and gathering information to aid decisions Influencer: individual whose opinions are sought concerning criteria and which products or brands most likely to fit those criteria Decider: person with the financial authority or power to choose how the family’s money will be spent on which products and brands

Role Behavior Individual roles in family purchases Buyer: person who acts as the purchasing agent by visiting the store, calling suppliers, writing checks, bringing products into the home and so on User: person or persons who use the product

Role Behavior Different family members will assume different roles depending on the situation and product Children may be influencers and users for items (such as cereals and toys) while parents may be the decider and the buyer

Role Behavior Family marketing focuses on the relationships between family members based on the roles they assume, including the relationship between purchaser and family consumer and between purchaser and purchase decision maker

Role Behavior Family marketing differentiates scenarios in which some purchases may have more than one decision maker from those that have more than one consumer

Role Behavior Identifying different purchaser-consumer relationships:

Role Behavior Identifying different purchaser-consumer relationships: Who’s buying for whom? Who are the principal characters? What’s the plot for the purchase? Who wants what when? What can we assume?

Role Behavior Spousal roles in buying decisions

Role Behavior Spousal roles in buying decisions Autonomic: an equal number of decisions is made by each spouse, but each decision is individually made by one spouse or the other Husband dominant: the husband or male head-of-household makes a majority of the decisions

Role Behavior Spousal roles in buying decisions Wife dominant: the wife or female head-of-household makes a majority of the decisions Joint: most decisions made with equal involvement by both spouses

Influences on the Decision Process

Influences on the Decision Process Marketers evaluate which types of products are typically purchased by wives, husbands, or jointly Marketers can determine which attributes of specific products to advertise to different household members Which media will best reach the most influential family member? Which ad appeals are most effective?

Influences on the Decision Process Influence of Decision Stage Spouses exert different degrees of influence when passing through the different stages of the decision process Movement from information search to final decision may be minimal for many low-involvement goods and more pronounced for goods that are risky or have high involvement for the family

Influences on the Decision Process Influence of Decision Stage The decision process tends to more toward joint participation and away from autonomic behavior as a final decision nears

Influences on the Decision Process Influence of Employment More women working outside the home Changing spousal roles has affected how couples divide their buying responsibilities

Influences on the Decision Process Influence of Gender As the gender gap narrows, decisions are increasingly made jointly Due to waning gender identification of products, marketers are transitioning gender-dependent products to a dual-gender positioning

Family Life Cycles

Family Life Cycles Family life cycle (FLC) : the process of families passing through a series of stages that change them over time The concept may need to be changed to household life cycle or consumer life cycle to reflect changes in society

Family Life Cycles Eleven primary stages have been identified, but households do not necessarily go through all stages Which stages families go through is based in part on their lifestyle choices

Activities and Behaviors Life Stage Young Singles Newly Married Couples Full Nest I, II, III Married, No Kids Older Singles Empty Nest I, II Solitary Survivor Retired Solitary Survivor

Family Life Cycles FLC affects demand for many products

Family Life Cycles FLC affects demand for many products Descriptions of life stages can be combined with additional information about consumer markets to analyze consumer's needs, identify niches, and develop consumer-specific marketing plans

Family Life Cycles Individuals may repeat family stages if their family situations change or they may be in stages different from most people their age

Family Life Cycles Individuals may repeat family stages if their family situations change or they may be in stages different from most people their age FLC helps explain how families change over time and can identify core target markets when modified with market data

Family Life Cycles Family and household spending The FLC is an important predictor of family or household spending In the last decade, consumers have changed their household spending from “things” to “services”

Changing Family and Household Structure

Changing Family and Household Structure Marketers must evaluate how changes in family and household structures affect marketing strategy

Changing Family and Household Structure What is the structure of contemporary families? How is that structure changing? How does structure affect the various stages of the consumer decision process? Are the changing realities of family structure a problem or an opportunity for growth?

Changing Family and Household Structure Marriage Trends Delaying age of marriage Increased incidence of cohabitation before marriage Over half of marriages end in divorce As a result, individuals shift between married and single status

Changing Family and Household Structure Marriage Trends What are the affects on markets for household products, homes, counseling, travel, etc.?

Changing Family and Household Structure The Singles Boom Rise in number of single households in developed nations Co-habitating singles are the fastest growing segment of singles market

Changing Family and Household Structure The Singles Boom: Mature Singles In the U.S., 61 percent of the singles market is made up of women, with a median age of 66 years Older women living single are often widows; older men living single are usually divorced or were never married Marketers have targeted the mature singles market with travel, financial services, entertainment, social activities

Changing Family and Household Structure Gay and Lesbian Markets This market is gaining attention because of its recent growth (often because people are now classifying themselves as gay when they may not have in the past) This market tends to be urban, has above average income, travels more than average consumers, and express more interest in the arts

Changing Family and Household Structure Gay and Lesbian Markets Marketers are having more success reaching this market with relationship building marketing activities Sponsoring gay-oriented events Advertising in gay-oriented media

Changing Family and Household Structure Household Characteristics The average household size has fallen in most industrialized countries Nonfamily households are projected to grow more rapidly than families over the next few decades, but the highest incomes are found among family households

U.S. Median Income by Households by Type Median Change in Income Real Income (2003) (2002-2003) All households Family households $53,991 0.1% Married couples 62,405 -0.4 Female householder 29,307 -1.2 Male householder 41,959 -1.7 Non-family households 25,741 -1.0 Female householders 21,313 -0.4 Male householders 31,928 -0.6

Changing Roles of Women

Changing Roles of Women Female consumers now outnumber male consumers as women tend to liver longer than men do Women represent a greater proportion in the population, improved purchasing ability, and assume greater importance in the workplace

Changing Roles of Women Female employment Female employment is increasing around the world Employment outside the home increases income and family buying power, but it may also increase expenditures for specific items such as child care, clothing, food away from home, and gasoline

Working Families Want Fashion

Changing Roles of Women Career Orientation Career or “just-a-job” orientation Reach segments in different media

Changing Roles of Women Women and Time As roles outside the home increase, women have less leisure time Marketers have developed time-saving products to appeal to women, including convenience foods Marketers have also developed products to help women enjoy the leisure time they do have

Changing Roles of Women Role Overload Exists when the total demands on time and energy associated with prescribed activities of multiple roles are too great to perform roles adequately or comfortably As women contribute more to the family income, they expect in return a more equal division of the household responsibilities

Relaxation or Self-Indulgence

Changing Roles of Women Marketing to Women

Changing Roles of Women Marketing to Women Appealing to the “mother” category Different segments exist and they look at advertising, the Internet, products, time, and brands differently Depending on career orientation, responsibilities in and out of the home, time pressures, messages, and ads need to be adapted Retailers can appeal to women with special services or extended hours

Changing Masculine Roles

Changing Masculine Roles Roles of men in families are changing substantially as well Men are more involved in family functions and household activities Men may buy items traditionally purchased by women (groceries) Many men are achieving gender role transcendence and use products previously seen as “feminine”

Personal Care Products for Men

Children and Household Consumer Behavior

Children and Household Consumer Behavior Children change dramatically how the family functions, in terms of relationships, employment, and purchases Children reduce parents’ participation in the labor force, change how families spend their money and reduce the amount of time and money available for leisure

Children and Household Consumer Behavior Children influence about $1.88 trillion of purchases globally each year

Children and Household Consumer Behavior Children exert direct influence over parental spending when they request specific products and brands They exert indirect influence when parents buy products and brands that they know children prefer without being asked or told to make a specific purchase

Children and Household Consumer Behavior Children also make their own purchases with family money or with their own Children like to shop for candy, toys, clothing, school supplies, and other personal use items Retailers study ways to adapt specific departments to these young, but significant, consumers

Children and Household Consumer Behavior Childhood Socialization Children learn their consumer behaviors through socialization Children learn shopping behaviors from shopping with parents

Children and Household Consumer Behavior Childhood Socialization Co-shoppers explain to their children why they buy certain products over others, thereby, teaching their children how to shop

Research Methodology for Family Decision Studies

Research Methodology for Family Decision Studies Measuring Influences

Research Methodology for Family Decision Studies Measuring Influences Who was responsible for initial need recognition? Who was responsible for acquiring information about the purchase alternatives? Who made the final decision on which alternative should be purchased? Who made the actual purchase of the product?

Research Methodology for Family Decision Studies Interviewer Bias Gender of the interviewer may influence the roles of husbands and wives say they play in a purchase situation

Research Methodology for Family Decision Studies Respondent Selection In measuring family buying, it is necessary to determine who to ask about the influence of various family members Results often vary considerably depending on which family members are interviewed

Permissions Department, Thomson Business and Economics Roger D. Blackwell Paul W. Miniard James F. Engel Consumer Behavior Requests for permission to make copies of any part of the work should be mailed to the following address: Permissions Department, Thomson Business and Economics 5109 Natorp Boulevard Mason, OH 45040 800–423–0563

Group and Personal Influence CHAPTER 13 Group and Personal Influence

Group and Personal Influences on Individuals

Group and Personal Influences on Individuals Other people, whether as individuals or groups, exert enormous influence on consumers Belonging to groups, trying to “fit in,” and striving to please others affects every stage in the decision process

Group and Personal Influences on Individuals Reference group: any person or group of people who significantly influences an individual’s behavior May be individuals (celebrities, athletes, or political leaders) or groups of individuals with similarities (musical groups or sports teams)

High Degree of Influence Personal and Group Influence on Individuals High Degree of Influence Types of Influence Normative Value Expressive Informational Transmission Personal Influences: •Groups •Individuals Lifestyles Behaviors Purchases Consumption Low Degree of Influence

Personal Influences: •Groups •Individuals Personal and Group Influence on Individuals Personal Influences: •Groups •Individuals

Types of Reference Groups Primary Groups: a social aggregation that is sufficiently intimate to permit and facilitate unrestricted direct interaction (e.g., family)

Types of Reference Groups Secondary Groups: also have direct interaction, but it is more sporadic, less comprehensive, and less influential in shaping thought and behavior (e.g., professional associations or community organizations)

Types of Reference Groups Formal Groups: characterized by a defined structure (often written) and a known list of members and requirements for membership Informal Groups: have less structure than formal groups and are likely to be based on friendship or interests

Types of Reference Groups Membership: when individuals are recognized as members of a group, they have achieved formal acceptance status in the group Aspirational Groups: exhibit a desire to adopt the norms, values, and behaviors of others with whom the individuals aspire to associate

Types of Reference Groups Dissociative Groups: groups from which an individual tries to avoid association Virtual Groups: groups that are based on virtual communities rather than geographic ones

Personal Influences: •Groups •Individuals Personal and Group Influence on Individuals Personal Influences: •Groups •Individuals

Personal Influences: •Groups •Individuals Personal and Group Influence on Individuals Types of Influence Normative Value Expressive Informational Personal Influences: •Groups •Individuals

Types of Group Influence Normative: when individuals alter their behaviors or beliefs to meet the expectations of a particular group

Types of Group Influence Normative: when individuals alter their behaviors or beliefs to meet the expectations of a particular group Value-expressive: when a need for psychological association with a group causes acceptance of its norms, values, attitudes, or behaviors

Types of Group Influence Normative: when individuals alter their behaviors or beliefs to meet the expectations of a particular group Value-expressive: when a need for psychological association with a group causes acceptance of its norms, values, attitudes, or behaviors Informational: when people have difficulty assessing product or brand characteristics by their own observations or contact

Personal Influences: •Groups •Individuals Personal and Group Influence on Individuals Types of Influence Normative Value Expressive Informational Personal Influences: •Groups •Individuals

Personal Influences: •Groups •Individuals Personal and Group Influence on Individuals Transmission Types of Influence Normative Value Expressive Informational Personal Influences: •Groups •Individuals

Personal and Group Influence on Individuals High Degree of Influence Types of Influence Normative Value Expressive Informational Transmission Lifestyles Behaviors Purchases Consumption Personal Influences: •Groups •Individuals Low Degree of Influence

How Reference Groups Influence Individuals

How Reference Groups Influence Individuals Socialization: permits an individual to know what behavior is likely to result in stability both for the individual and the group Company manual may explain the dress code in the workplace Informal groups may tell them what styles are most comfortable and easiest to maintain

How Reference Groups Influence Individuals Self-concept: people protect and modify their self-concept by their interactions with group members People can maintain self-concept by conforming to learned roles Testimonial advertising is effective when the self projected in the ad is consistent with the idealized self of the target consumer

Reference Groups Help Define Self-Concept

How Reference Groups Influence Individuals Social comparison: individuals often evaluate themselves by comparing themselves to others Consumers often use reference groups as benchmarks to measure their own behaviors, opinions, abilities, and possessions Advertising or television can be sources of social comparison

How Reference Groups Influence Individuals Conformity: a change in beliefs or actions based on real or perceived group pressures Compliance: when an individual conforms to the wishes of the group without accepting all its beliefs or behaviors Acceptance: when an individual actually changes his or her beliefs and values to those of the group

How Reference Groups Influence Individuals Factors affecting how likely people are to conform to group norms:

How Reference Groups Influence Individuals When are people more likely to conform to norms?

How Reference Groups Influence Individuals Factors affecting how likely people are to conform to group norms: Desire for social acceptance Degree of experience in situation or with decision Conspicuousness Complex product or luxury item

Reference Group Influence on Product and Brand Purchase Decisions Weak Reference Group Influence Strong Reference Group Influence PUBLIC NECESSITIES Influence: Weak product & strong brand (watch, autos, suits) PUBLIC LUXURIES Influence: Strong product & strong brand (golf clubs, skis, boat) Strong Group Influences (+) BRAND PRIVATE NECESSITIES Influence: Weak product & weak brand (mattress, refrigerator) PRIVATE LUXURIES Influence: Strong product & weak brand (TV, icemaker) Weak Group Influences (-)

How Reference Groups Influence Individuals Profits of conformity More likely to occur when the rewards of compliance exceeds its costs The degree of influence on final outcome is determined by an individual’s perception of the “profit” inherent in the transaction

How Reference Groups Influence Individuals Conspicuousness Conformity pressures are not sufficient to induce behavior unless the product or service is publicly conspicuous in its purchase and use Because other will see the product, many consumers will conform rather than risk embarrassment or ridicule Peers send clear signals about product alternatives

Appealing to Normative Influence in Marketing Strategy Normative compliance may be less important in industrialized nations as many consumers are putting personal needs ahead of group loyalty Extended families have less face-to-face contact and people are more socially isolated than in the past Television and mass media expand people’s horizons beyond social circles

Appealing to Normative Influence in Marketing Strategy A weakened respect for social norms (anomie) leads some consumers to desire expression of individuality more than group affiliation

High Product Visibility Raises Reference Group Influence

Self-Expression Outside of Social Norms

Celebrity and Other Reference Group Appeals in Advertising Testimonials: celebrities tout products based on personal usage

Celebrity and Other Reference Group Appeals in Advertising Testimonials: celebrities tout products based on personal usage Endorsements: celebrities lend their name or likeness to a product without necessarily being an expert in the area

Celebrity and Other Reference Group Appeals in Advertising Actor or Spokesperson: someone who represents a brand or company for an extended time period

Celebrity and Other Reference Group Appeals in Advertising Expert appeal: appeal from a person possessing unique information or skills that can help consumers make better purchase decisions than other types of spokespersons Common-man appeal: testimonials from “regular” consumers with whom most consumers can relate

Transmission of Influence Through Dyadic Exchanges

Transmission of Influence Through Dyadic Exchanges Exchange between two individuals that influence these individual’s behaviors or beliefs Dyadic exchange requires the exchange of resources (opinions and comments)

Dyadic Exchanges Word-of-mouth Communication Service Encounters Opinion Leadership

Word-of-Mouth Communication Word-of-mouth communication: informal transmission of ideas, comments, opinions, and information between two people, neither one of which is a marketer The receiver gains information about behaviors and choices, which is valuable to the receiver in the decision process

Word-of-Mouth Communication The sender increases their confidence in the personal product or behavior choice by persuading others to do the same

Benefits of Word-of-Mouth

Opinion Leadership Opinion leadership: the sender of information is often considered an opinion leader—a person who influences the decisions of others Opinion leaders might be experts in one area but not in others The greater the perceived knowledge of a category, the more likely that person’s opinions are to influence others’ decisions

Opinion Leadership Personal influence in the form of opinion leadership is likely to occur when:

Opinion Leadership Personal influence in the form of opinion leadership is likely to occur when: An individual has limited knowledge of a product or brand The person lacks the ability to evaluate the product or service The consumer does not trust advertising and other sources of information Other information sources have low credibility with the consumer

Opinion Leadership The individual has a high need for social approval Strong social ties exist between sender and receiver The product is complex The product is difficult to test against objective criterion The product is highly visible to others

Characteristics of Opinion Leaders Opinion leaders and receivers often share similar demographic characteristics and lifestyles, yet they may have greater social status within the same group as followers The most common characteristic is that opinion leaders are involved with a particular product category

Opinion Leadership Product innovators: similar to opinion leaders, these individuals are the first to try new products

Overlapping Opinion Leadership Market mavens: gather much of their information from shopping experiences, openness to information and general market awareness, making them more aware of new products than other people

Overlapping Opinion Leadership Surrogate consumers (shoppers): an individual who acts as an agent to guide, direct, and conduct activities in the marketplace

Service Encounters Service encounters: occurs when there is personal communication between a consumer and a marketer May be a consumption experience within a store—the various trans-actions and services that occur during a retail purchase May be an experience consuming the specific service a consumer purchases

Service Encounters Service providers must understand the needs of different customers and match the appropriate sales associate or sales approach to each individual customer Which customers desire a great deal of assistance and which ones prefer little interaction Salespeople foster a relationship between buyer and seller

Service Encounters Customer intimacy: detailed understanding and focus on customers’ needs lifestyles and behaviors in an effort to create a deep cultural connections with the customers Reverse customer intimacy: how well marketers facilitate customers knowing the marketer

How Personal Influences Are Transmitted

How Personal Influences Are Transmitted Trickle-down: alleges that lower classes often emulate the behavior of their higher-class counterparts Influence is transmitted vertically through social classes, when higher classes express wealth through conspicuous consumption, and lower classes copy their behavior

How Personal Influences Are Transmitted Today, trends are transmitted through mass media and there is very little direct, personal contact between social classes

How Personal Influences Are Transmitted Two-step Flow Opinion leaders are the direct receivers of information from advertisements and they interpret and transmit the information to others through word-of-mouth

Information and Influence How Personal Influences Are Transmitted Two-step Flow Information and Influence Information Mass Media Opinion Leader Opinion Seekers

How Personal Influences Are Transmitted Multistep Flow Information can flow directly to different types of consumers, including opinion leaders, gatekeepers, and opinion seekers and receivers

How Personal Influences Are Transmitted Multistep Flow Mass Media Opinion Seekers Opinion Leader Gatekeepers

WOM and Opinion Leaders in Advertising and Marketing Strategy

WOM and Opinion Leaders in Advertising and Marketing Strategy WOM and personal communication can have a more decisive role in influencing behavior than advertising and other marketer-dominated sources Viewed as a more trustworthy and credible source of information than salespeople or paid advertising

WOM and Opinion Leaders in Advertising and Marketing Strategy Advertising can provide information to consumers about products they might seek from other sources and which may be discussed in WOM However, consumers don’t always trust that the advertiser has their best interests in mind

WOM and Opinion Leaders in Advertising and Marketing Strategy Advertising influences the effectiveness of WOM and vice versa Advertising can provide information about products consumers might not seek from other sources Advertising can create WOM among consumers and peer groups

Primary Reliance on Word-Of-Mouth For some occasions, companies rely on WOM as a substitute for advertising

Primary Reliance on Word-Of-Mouth For some occasions, companies rely on WOM as a substitute for advertising Retailers such as Wal*Mart and Victoria’s Secret have demonstrated that advertising can be sharply reduced when word-of-mouth is strong

Targeting Opinion Leaders Firms can market to opinion leaders as a distinct segment (once they can be identified) Mass media can be used to target leadership roles and responsibilities with other options such as association memberships, direct mail, and trade or special interest magazines

Stimulating Word-Of-Mouth Firms may stimulate WOM by giving away or loaning products to opinion leaders to display and use Organizations may induce opinion leaders to influence consumers

Creating Opinion Leaders Firms can create opinion leaders by providing incentives for new customers to attract others to the store Companies can activate search through advertising that encourages consumers to “ask a person who owns one” or “share the experience with a friend”

Creating Opinion Leaders

Managing Negative WOM Just as positive word-of-mouth can be a great asset to marketers, the opposite can be true when the content in negative Negative WOM is usually given high priority and weighs heavily in decision making The dissatisfied buyer is more motivated to share information

Monitoring the Content of WOM Firms can monitor the presence and impact of WOM—what dissatisfied consumers are saying about the product or company Monitoring rumors which do not always appear in customer complaint reports Creating a strategy to respond to rumors and negative WOM

Curbing Negative WOM When something goes terribly wrong, denying the problem is not the answer The best strategy is immediate acknowledgement by a credible company spokesperson as negative WOM rarely goes away by itself Make sure you have all your facts straight and tell the truth

Diffusion of Innovations

Diffusion of Innovations Innovation: any idea or product perceived by the potential adopter to be new Product innovation: any new product recently introduced to the market or perceived to be new when compared to existing products Consumers can view innovations subjectively or objectively

Diffusion of Innovations Subjective Innovation: a definition derived from the thought structure of a particular individual or entity Objective innovation: based on external criteria; innovations are ideas, behaviors, or things that are qualitatively different from existing forms

Innovations and New Products Marketers often use the word “new” to call attention to products recently introduced to the marketplace The use of the word “new” in advertising is limited to products available for less than six months New products can change the way consumers live and how society is organized

Types of Innovations

Types of Innovations Classified based on the impact of the innovation on behavior in the social structure

Types of Innovations Classified based on the impact of the innovation on behavior in the social structure Continuous innovation Dynamically continuous innovation Discontinuous innovation

Continuous Innovation The modification of an existing product rather than the establishment of a totally new product Modification may be in the taste, appearance, performance, or reliability of the existing product

Continuous Innovation

Dynamically Continuous Innovation May involve either the creation of a new product or a significant alteration of an existing one Does not generally alter established purchase or usage patterns

Dynamically Continuous Innovation

Discontinuous Innovation Involves the introduction of an entirely new product that significantly alters consumers’ behavior patterns and lifestyles Examples include automobiles, televisions, videocassette recorders, and computers

Types of Innovations While innovations are usually considered in terms of new products, they might also be usage based—finding new uses for old products

Why Some Innovations Succeed and Others Don’t Successful products are those that become culturally anchored—so inextricably a part of a consumer’s life and sociocultural surroundings that the person-product interface is an important part of the individual’s self-concept Imagine being without personal computers or microwave ovens

Why Some Innovations Succeed and Others Don’t Relative Advantage Compatibility Complexity Trialability Observability

Relative Advantage The degree to which consumers may perceive the innovation to offer substantially greater benefits than the product they currently use

Relative Advantage The degree to which consumers may perceive the innovation to offer substantially greater benefits than the product they currently use To what degree will the new product be a substitute for existing ones or complement those already in consumers’ inventories? New products most likely to succeed appeal strongly to felt consumer needs

Compatibility The degree to which a new product is consistent with an individual’s existing practices, values, needs, and past experiences of the potential adopters

Compatibility The degree to which a new product is consistent with an individual’s existing practices, values, needs, and past experiences of the potential adopters How does the innovation blend with products consumers might own? Will it replace other products or will it become a part of an existing system? How does the innovation fit current purchase or consumption behaviors?

Complexity The degree to which an innovation is perceived as difficult to understand and use The more complex, the more difficult it will be to gain acceptance Complexity is a deterrent of trying new technology

Complexity How difficult is the innovation to understand? How easy is it to explain to consumers in written form and oral communication? How frustrating will it be to consumers when evaluating products or learning how to use new innovation? How much time will consumers have to devote to learning how to use and care for the product?

Trialability New products are more apt to succeed when consumers can experiment with or try the idea on a limited basis, with limited financial risk How can a company encourage consumers to try a new product? Where will consumers be able to try the innovation and how will they receive answers to their questions?

Observability The degree to which results from using a new product are visible to friends and neighbors If consumers can see others benefiting from the use of a new product, that innovation is more likely to be successful and diffuse faster

The Diffusion Process

The Diffusion Process Diffusion: the process by which an innovation (new idea) is communicated through certain channels over time among the members of a social system

The Diffusion Process Diffusion: the process by which an innovation (new idea) is communicated through certain channels over time among the members of a social system Includes: Diffusion of information and communication Consumer decision process Diffusion or demise of innovation

The Diffusion Process Diffusion of Innovation Accept Consume r Organi-zation Influencer (X number of people) Demise of Innovation Reject Diffusion of Information and Communication Consumer decision process

Factors Affecting Diffusion Communication (how consumers learn about new products) Time (how long it takes for a person to move from product awareness to product purchase or rejection) Social system (groups or segments to which individuals belong affect adoption or rejection)

Speed of Diffusion Diffusion will be faster if:

Speed of Diffusion Diffusion will be faster if: Supplier is intensely competitive Supplier’s reputation is good Standardized technology is used Vertical coordination among channel members exists Resource commitments are significant

Consumer Decision Process for Innovations

Rogers Model of Innovation Decision Process Knowledge: begins when the consumer receives physical or social stimuli that gives exposure and attention to the new product and how it works How a person receives and interprets the knowledge is affected by their personal characteristics

Rogers Model of Innovation Decision Process Knowledge Characteristics of the Decision Making Unit

Rogers Model of Innovation Decision Process Persuasion: refers to the formation of favorable or unfavorable attitudes towards the innovation Persuasiveness is related to the perceived risks and consequences of adopting and using the new product

Rogers Model of Innovation Decision Process Knowledge Persuasion Perceived Characteristics of the Innovation

Rogers Model of Innovation Decision Process Decision: involves a choice between adopting and rejecting the innovation Adoptors are people who have made a decision to use a new product whereas other are nonadoptors Rejection may be active or passive

Rogers Model of Innovation Decision Process Knowledge Persuasion Decision Continued adoption Later adoption Discontinuance Continued Rejection Adoption Rejection

Rogers Model of Innovation Decision Process Implementation: occurs when the consumer puts an innovation to use The process has been a mental exercise until this point where it requires a behavioral change The strength of the marketing plan may be the critical determinant in a sale resulting

Rogers Model of Innovation Decision Process Knowledge Persuasion Decision Implemen- tation

Rogers Model of Innovation Decision Process Confirmation: during this stage, consumer seek reinforcement for their innovation decision Consumer may reverse previous decision due to conflicting messages resulting in dissonance Discontinuance is a serious concern to marketers who strive for continued acceptance

Rogers Model of Innovation Decision Process Knowledge Persuasion Decision Implemen- tation Confirmation

Rogers Model of Innovation Decision Process Communication Channels Knowledge Persuasion Decision Implemen- tation Confirmation

Consumer Most Likely to Buy New Products

Consumer Most Likely to Buy New Products Marketers need to determine who is most likely to buy the new product while in the development process Determinants include individual’s personalities, social status, education level, and aversion to or acceptance of risk Different adoptor classifications behave differently during the decision process

Adopter Classes A= Innovators (2.5%) B= Early Adopters (13.5%) C= Early Majority (34%) D= Late Majority (34%) E= Laggards (16%)

Consumers Likely to Buy New Products Innovators: the first consumer group to adopt products Early adopters: opinion leaders and role models for others, with good social skills and respect within larger social systems Early majority: consumers who deliberate extensively before buying new products, yet adopt them just before the average time it takes the target population as a whole

Consumers Likely to Buy New Products Late majority: tends to be cautious when evaluating innovations, taking more time than average to adopt them, and often at the pressure of peers Laggards: the last groups that tend to be anchored in the past, are suspicious of the new, and exhibit the lowest level of innovativeness among adopters

Consumers Likely to Buy New Products Innovativeness: the degree to which an individual adopts an innovation earlier than other members of a social system Cognitive innovators: have a strong preference for new mental experiences Sensory innovators: have a strong preference for new sensory experiences Advertising and other communications can be targeted accordingly

Managerial Perspectives on Adoption and Diffusion of Innovation

Managerial Perspectives on Adoption and Diffusion of Innovation New products for the profitability and long-term financial success of firms While development groups are produc- ing line and brand extensions, breakthroughs are needed to fuel growth and profits New product development requires the coordination of marketing, engineering, research and other parts of the firm

Managerial Perspectives on Adoption and Diffusion of Innovation Consumer insight helps create products that consumers are likely to adopt Intuition and information (often gained from consumers through research) leads to the formation of an insight Insights drive the creation of a new or adaptation of an existing product Research is important to the innovation development process

Positioning New Products on Insight

Permissions Department, Thomson Business and Economics Roger D. Blackwell Paul W. Miniard James F. Engel Consumer Behavior Requests for permission to make copies of any part of the work should be mailed to the following address: Permissions Department, Thomson Business and Economics 5109 Natorp Boulevard Mason, OH 45040 800–423–0563

Culture, Ethnicity, and Social Class CHAPTER 11 Culture, Ethnicity, and Social Class

What Is Culture?

What Is Culture? A set of values, ideas, artifacts, and other meaningful symbols that help individuals communicate, interpret, and evaluate as members of society

What Is Culture? A set of values, ideas, artifacts, and other meaningful symbols that help individuals communicate, interpret, and evaluate as members of society Blueprint of human activity, determining coordinates of social action and productive activity

What Is Culture? A set of values, ideas, artifacts, and other meaningful symbols that help individuals communicate, interpret, and evaluate as members of society Blueprint of human activity, determining coordinates of social action and productive activity A set of socially acquired behavior patterns transmitted symbolically through language and other means to the members of a particular society

Influences Ethnicity Race Religion Regional or national identity

Influences Ethnicity Race Religion Regional or national identity CULTURE

CULTURE Influences Abstract/behavioral Physical/material Ethnicity Race Religion Regional or national identity CULTURE Abstract/behavioral Physical/material Values Norms Rituals Symbols Artifacts Technology Infrastructure

What Is Culture? Abstract elements: values, attitudes, ideas, personality types, and summary constructs such as religion or politics Symbol may evolve to represent a culture Symbols (with three components of language, aesthetic styles, and story themes) often act as shorthand for a culture, defining its characteristics and values similar to a brand

What Is Culture? Material components (cultural artifacts): include such things as books, tools, buildings, and specific products Products provide symbols of meaning Products may be used in ritual behavior such as food eaten on certain holidays Material components may become icons such as McDonald’s arches

Characteristics Influenced by Culture

Characteristics Influenced by Culture Sense of self and space Communication and language Dress and appearance Food and feeding habits Time and time consciousness Relationships Values and norms Beliefs and attitudes Mental processes and learning Work habits and practices

Characteristics Influenced by Culture Sense of self and space Communication and language Dress and appearance Food and feeding habits Time and time consciousness Relationships Values and norms Beliefs and attitudes Mental processes and learning Work habits and practices Used to define and differentiate cultures

Values and Norms Norms: rules of behavior held by a majority or at least a consensus of a group about how individuals should behave Cultural (social) values: values shared broadly across groups of people Personal values: terminal (goals) or instrumental (behaviors) beliefs of individuals

Values and Norms Values and norms represent the beliefs of various groups within a society Macroculture: values and symbols that apply to an entire society or most of its citizens Microculture: values and symbols of a restrictive group or segment of consumers, defined according to variables such as age, religion, ethnicity, or social class

Values and Norms Socialization: the process by which people develop their values, motivations, and habitual activity The Values Transfusion Model shows how the values of a society are reflected in families, religious institutions, and schools, all of which expose and transmit values to individuals

Values and Norms People adopt values that influence how they live, how they define right and wrong, how they shop, and what is important to them The values adopted by individuals today shape the values of society in the future

The Values Transfusion Model Values of Society

The Values Transfusion Model Values of Society Educational Institutions Religious Institutions Early Lifetime Experiences Family

The Values Transfusion Model Values of Society Educational Institutions Religious Institutions Early Lifetime Experiences Family Individual Internalized Values Peers Media

The Values Transfusion Model Values of Society Educational Institutions Religious Institutions Early Lifetime Experiences Family Individual Internalized Values Peers Media Society of Future

Educational Institutions Religious Institutions The Values Transfusion Model Educational Institutions Religious Institutions Family

Adapting Strategies to Changing Cultures Culture is adaptive, and marketing strategies based on values of society must also be adaptive Marketers must address consumer socialization: the acquisition of consumption-related cognitions, attitudes, and behavior

Adapting Strategies to Changing Cultures Advertising and marketing efforts have difficulty changing behaviors or norms learned early in life

How Culture Affects Consumer Behavior: Pre-purchase and Purchase Activities Consumption and Divestment Activities

Influence of Culture on Pre-purchase and Purchase Activities

Influence of Culture on Pre-purchase and Purchase Activities Culture affects what consumers think they need and what they perceive as frivolous Culture affects how consumers are likely to search for information Culture affects the importance placed on certain attributes of alternatives Culture affects the amount of price negotiation during the purchase process

Influence of Culture on Consumption and Divestment Activities

Influence of Culture on Consumption and Divestment Activities Culture affects how consumers use or consume products Consumers’ expectations about form and function vary between cultures Culture influences how individuals dispose of products—reselling products after use, giving them to others for use, or recycling them and their packaging when possible

How Core Values Affect Marketing

How Core Values Affect Marketing Core values define how products are used in a society Core values define acceptable market relationships Core values define ethical behavior

Changing Values

Changing Values Society’s values change continuously even though core values are relatively permanent Changes in values may alter the response to advertising, service offerings, and retailing formats

Changing Values Life-cycle explanation: values change according to life-cycle (as individuals grow older, their values change) Theory of behavioral assimilation: Younger people grow into the values of their parents as they get older Generational change: gradual replacement of existing values by those of young people who form the leading generation in value terms

Changing Values Will people become more like their parents as they get older, or will they carry with them the values of their generation? Depends on elements in the Cultural Transfusive Triad and early lifetime experiences

The Values Transfusion Model Cultural Transfusive Triad Educational Institutions Religious Institutions Early Lifetime Experiences Family

Changing Family Influences Less time for in-home or parent-child influence Increasing divorce rates Isolated nuclear family (geographic separation of generations)

Changing Religious Influences Traditional churches and religions have seen a decline in loyalty Increase in non-Christian religions A shift from traditional religion to spirituality Women are more religious Religion and spirituality are big business and influence big business

Changing Educational Influences Dramatic increase in formal education Teaching has evolved from memorization to questioning Digital learning has increased in popularity

Influence of Age-Related Microcultures on Values Cohorts: a group of individuals linked as a group in some way—usually by age Cohort analysis: investigates the actual changes in patterns of behavior or attitudes in a cohort, those attributed to the process of aging and those associated with the events of a particular period

Consumer Age Cohorts The Depression Cohort The World War II Cohort The Postwar Cohort Leading Edge Boomers Cohort Trailing Edge Boomers Cohort The Generation X Cohort N Generation Cohort

Consumer Age Cohorts The Depression Cohort The World War II Cohort

Consumer Age Cohorts The Depression Cohort The World War II Cohort The G.I. Generation Born 1912-1921 Living through the Depression has deeply affected this group—they save a lot and spend little. This was the first group to be influenced by contemporary media. Depression Generation Born 1922-1927 This group was unified by a common goal and enemy. It exhibits self-denial characteristics that have outlived the war, especially among veterans and their families.

Leading Edge Boomers Cohort Consumer Age Cohorts The Postwar Cohort Leading Edge Boomers Cohort

Leading Edge Boomers Cohort Consumer Age Cohorts The Postwar Cohort Leading Edge Boomers Cohort The Silent Generation Born 1928-1945 Generation of war babies benefited from years of economic growth and social tranquility. The youngest were the first to listen to folk rock music. Woodstock Generation Born 1946-1954 The Kennedy and King assassinations meant an end to status quo and unified this vast cohort. Early boomers pushed for lifestyles at least as good as their parents.

Trailing Edge Boomers Cohort Consumer Age Cohorts Trailing Edge Boomers Cohort Generation X Cohort

Trailing Edge Boomers Cohort Consumer Age Cohorts Trailing Edge Boomers Cohort Generation X Cohort Zoomers Born 1955-1965 After Watergate, the idealistic youth dis-appeared, giving rise to the self-help move-ment. In an age of downward mobility, debt became a way to maintain lifestyle. Baby-busters Born 1966-1976 A generation of kids raised in daycare and with divorce is born. Searching for an anchor, many resort to “retro” behaviors. “What’s in it for me” cynicism is prevalent.

Consumer Age Cohorts N Generation Cohort

Consumer Age Cohorts N Generation Cohort Millenials Born 1977-1984 The advent of the Internet is defining for N-Gens with a different core value structure than Gen X. More idealistic and team oriented.

National Culture Individualism versus collectivism

Individualism Collectivism Defined by important others, family, friends Self-definition Emphasis on relationships and connectedness Focus on similarity, need to blend in Influenced by personal preferences, needs Defined by internal attributes and personal traits Self-evaluation Emphasis on individuality and separateness Differentiation, need to be unique Reflective of personal preferences, needs Self-construal Role of Others Values Motivational drives Behavior

National Culture Individualism versus collectivism Uncertainty avoidance: how societies react to uncertainties inherent in life Power distance: the degree to which a society accepts inequality in power at different levels in organizations and institutions Masculinity-femininity

National Culture Geographic culture: cultures may exist for an entire country, but areas within a nation sometimes develop their own culture Climate, religious affiliations, nationality influences, and other variables are interrelated to produce a core of cultural values in a geographic area

North American Core Values Foundation of American values American values and advertising What are the core values that provide appeals for advertising? Marketers are most successful when they appeal to core values based on hard work, achievement and success, optimism, and equal opportunity for a better standard of living

North American Core Values Foundation of American values American values and advertising Understanding values helps advertisers avoid violating norms or standards of society

Core Values Provide Appeals to Marketers

How Marketers Adapt to Core American Values Material Well-Being Twofold Moralizing Importance of Work over Play Time Is Money Effort, Optimism, and Entrepreneurship Mastery over Nature Egalitarianism Humanitarianism

Ethnic Microcultures and Their Influences on Consumer Behavior

Ethnic Microcultures and Their Influences on Consumer Behavior An Subjectivist perspective reflects ascriptions people make about themselves An Objectivist definition is derived from sociocultural categories

Ethnic Microcultures and Their Influences on Consumer Behavior Ethnicity is an important element in determining culture and predicting consumer preferences and behavior A subjectivist perspective reflects ascriptions people make about themselves, while an objectivist definition is derived from sociocultural categories

America’s Ethnic Microcultures Immigrants bring with them new religions, cultures, and languages Acculturation: measures the degree to which a consumer has learned the ways of a different culture compared to how they were raised Just as individuals adapt to cultural changes, so do companies

America’s Ethnic Microcultures Euro-Descent Americans

America’s Ethnic Microcultures Euro-Descent Americans Most Euro-Descents come from England, Germany, and Ireland European immigration declined for many years, but increased in recent years due to immigration after the fall of Communism Group tends to have a fairly high savings rate although they like to spend on material items

America’s Ethnic Microcultures Native American Culture Native Americans include American Indians, Alaskan Eskimos, Native Hawaiians and Canadian aboriginals Some Native Americans dislike sharing their culture and spiritual practices with outsiders while others welcome people of any race into their culture Increased consumer demand for Native American products

America’s Ethnic Microcultures Multiethnic Microcultures Includes people from multiple ethnic backgrounds How will each of these influences affect behavior and values?

America’s Ethnic Microcultures Multiethnic Microcultures Includes people from multiple ethnic backgrounds How will each of these influences affect behavior and values? Transcultural marketing research: gathers data from specific ethnic groups and compares these data to those collected from other markets, usually the mass market

U.S. Population by Race and Ethnic Group

U.S. Households and Average Incomes

Black or African-American Culture

Black or African-American Culture Refers more to a common heritage rather than to a skin color Controversy over proper terminology still exists and most marketers opt for term Black/African American Has a population base of 32 million with growing buying power

Black or African-American Culture Structural Influences Black families have lower than average incomes, although incomes have risen in recent years 25% of black households had incomes of $50,000 or more by 2003 24.4% still live under poverty line Higher education has become a priority for many young African-American people

Black or African-American Culture Structural Influences A high proportion of families are headed by women Black women influence many purchases that might otherwise be purchased by men Advertising often appeals to the strength black women portray in life The effects of discrimination mean that some black consumers are skeptical or sensitive of white businesses

Black or African-American Culture Consumption Patterns African American consumers view magazines such as Ebony and Essence as credible sources Firms target products to black consumers (hip-hop clothing lines) and for the special needs of black consumers (special make-up products) Advertisers have also increased the number of black models and spokespersons used in campaigns

Asian-American Culture

Asian-American Culture Includes: Chinese, Japanese, Koreans, Vietnamese, Cambodians, Laotians, Filipinos, Asian Indians, Pakistanis, Hawaiians, Samoans, Fiji Islanders, and others This market is expected to continue to grow in the future, and may reach 20 million consumers in the early part of the century

Asian-American Culture Structural Influences Asian-Americans have higher than average incomes and 53% of households have two income earners Highest rate of education among any U.S. population category Emphasis on strong family ties, hard work, and education

Asian-American Culture Consumption Patterns Marketers find that it is effective to reach Asian-Americans through mass media, including cultural and foreign language publications Some consumers are accustomed to bargaining over prices

Advertisements Appealing to the Asian-American Market

Latino (Hispanic) Culture

Latino (Hispanic) Culture Rapid growth, size, and language have fueled interest in this micro-culture Latinos recently surpassed African-Americans as the largest minority group in the United States Great diversity among members of this group make it a heterogeneous segment of wants and behaviors

Latino (Hispanic) Culture Who is Latino? Language and cultural identity, rather than national origin, are key elements in Latino culture Latino describes Americans whose origins are in the Spanish-speaking countries of the Western world Latino consumers are often segmented into four groups: Mexicans, Puerto Ricans, Cubans, and others

Latino (Hispanic) Culture Structural Influences Fastest growing market in the U.S. Buying power around $340 billion, with Cuban-Americans having the highest income in this group Education level is increasing This segment values family (has higher birth rates and larger families) Average age is younger than non-Latino white population

Advertisements Appealing to the Latin-American Market

Advertisements Appealing to the Latin-American Market

Latino (Hispanic) Culture Consumption Patterns Latin culture is affecting tastes and preferences of the majority culture They watch almost as much television as average American, but much time is spent watching Spanish-language programming Tend to shy away from using coupons which they believe are for “people who can’t afford to pay full price”

Latino (Hispanic) Culture Avoiding Marketing Blunders Translation problems Culture misunderstandings Latino idiosyncrasies

French-Canadian Culture

French-Canadian Culture One of the largest and most distinct cultures in North America Quebec accounts for more than 23 percent of the Canadian population Firms marketing in Canada often use two campaigns: one for English- and one for French- Canadians Other times the same ad is used for both segments

Social Class Microcultures

Social Class Microcultures Social class: relatively permanent and homogeneous divisions in a society into which individuals or families sharing similar values, lifestyles, interests, wealth, status, education, economic positions, and behavior can be categorized

Social Class Microcultures Concrete variables that define social classes include occupation, education, friendships, ways of speaking, and possessions Perceived variables that define social class include power, and prestige Social class, in part, determines the mix of goods consumers will buy

Social Class Microcultures Status groups: reflect community’s expectations for style of life among each class as well as the positive or negative social estimation of honor given to each class

Social Class Microcultures Whereas classes are stratified based on relations to production and acquisition of goods, status groups are stratified based on lifestyles and principles of consumption of goods

Social Class Microcultures What determines social class?

Social Class Microcultures What determines social class? Economic Variables Interaction Variables Political Variables

Occupation Income Wealth Social Class Microcultures What determines social class? Occupation Income Wealth Economic Variables Interaction Variables Political Variables

Occupation Income Wealth Personal Prestige Association Socialization Social Class Microcultures What determines social class? Occupation Income Wealth Economic Variables Interaction Variables Political Variables Personal Prestige Association Socialization

Social Class Microcultures What determines social class? Occupation Income Wealth Economic Variables Interaction Variables Political Variables Personal Prestige Association Socialization Power Class consciousness Mobility

Social Class Microcultures Consumer analysts often focus on six variables which determine social class

Social Class Microcultures Consumer analysts often focus on six variables which determine social class Occupation Personal performance Interactions Possessions Value orientations Class consciousness

Social Class Microcultures Occupation: best single indicator of social class Personal performance: a person’s success relative to that of others (often in the same occupation) Interactions: the people with whom one associates and socializes Possessions: symbols of class membership

Social Class Microcultures Value orientations: values are indicators of our social class In some countries, values are more important than possessions and social class is determined more by achievements than by possessions Class consciousness: the degree to which people in a social class are aware of themselves as a distinctive group

Social Class Microcultures Social stratification: perceived hierarchies in which consumers rate others as higher or lower in social status Achieved status: earn a higher status due to work or study Ascribed status: lucky to be born wealthy or beautiful Status inconsistency: when a person rates high on one variable and low in another (some athletes or musicians)

Social Class Microcultures Social mobility: process of passing from one social class to another Parody display: the mockery of status symbols and behavior (upper class individuals using the word “ain’t” to proclaim distaste) Some consumers rebel against their social class by becoming part of a counterculture (perhaps by body piercing or tattooing)

Social Class and Consumer Behavior Products can be positioned as brands appealing to upper social classes (Heineken and Amstel Light) or have every person appeal (Budweiser)

Market Segmentation

Market Segmentation Identification of social class usage of the product Comparison of social class variables for segmentation with other variables Description of social class characteristics identified in target markets Development of marketing program to maximize effectiveness of marketing mix based on consistency with social-class attributes

Positioning Based on Social Class Understanding social class helps marketers create perceptions about products or organizations in consumers’ minds Appeal to those who are in a social class and those who aspire to be there

Positioning Based on Social Class Brands such as Coach and Godiva are positioned to middle class consumers with simple, sleek ads Wanting it all is a hallmark of the middle class and buying the best on at least a few occasions sets them apart and bolsters their self-image