A Simple Model of Consumer Decision Making

Reference Group A group that serves as a point of comparison (or reference) for an individual in the formation of either general or specific values, attitudes, or behavior.

Indirect Reference Groups Individuals or groups with whom a person identifies but does not have direct face-to-face contact, such as movie stars, sports heroes, political leaders, or TV personalities.

Teens are very influenced by indirect reference groups. weblink

Major Consumer Reference Groups

A Reference Group Must... Inform or make the individual aware of a specific product or brand Provide the individual with the opportunity to compare his or her own thinking with the attitudes and behavior of the group Influence the individual to adopt attitudes and behavior that are consistent with the norms of the group Legitimize the decision to use the same products as the group

Copyright 2007 by Prentice Hall Brand Communities Harley-Davidson Owner Groups Amul advertisement likers in Social Networking sites Apple product users’ groups

Influence of Family

Households Family Households: Married couple, Nuclear family, Extended family Nonfamily Households: Unmarried couples, Friends/ Roommates, Boarders

Evidence of the Dynamic Nature of U.S. Households (Refer Page 316 – text book for Indian scenario)

Consumer Socialization The process by which children acquire the skills, knowledge and attitudes necessary to function as consumers.

A Simple Model of the Socialization Process

Family Decision-Making Process – Aspect 1ROLEDESCRIPTION InfluencersFamily member(s) who provide information to other members about a product or service GatekeepersFamily member(s) who control the flow of information about a product or service into the family DecidersFamily member(s) with the power to determine unilaterally or jointly whether to shop for, purchase, use, consume, or dispose of a specific product or service BuyersFamily member(s) who make the actual purchase of a particular product or service PreparersFamily member(s) who transform the product into a form suitable for consumption by other family members UsersFamily member(s) who use or consume a particular product or service MaintainersFamily member(s) who service or repair the product so that it will provide continued satisfaction. DisposersFamily member(s) who initiate or carry out the disposal or discontinuation of a particular product or service

Family Decision-Making Process – Aspects 2 Husband-Dominated Wife-Dominated Joint

The Family Life Cycle Traditional Family Life Cycle –Stage I: Bachelorhood –Stage II: Honeymooners –Stage III: Parenthood –Stage IV: Post-parenthood (Empty nest stage) –Stage V: Dissolution Modifications - the Nontraditional FLC

Influence of Social Class

Social Class The division of members of a society into a hierarchy of distinct status classes, so that members of each class have relatively the same status and members of other classes have either higher or lower status

Copyright 2007 by Prentice Hall Social Class Measurement Subjective Measures –individuals are asked to estimate their own social-class positions Objective Measures –individuals answer specific socio-economic questions and then are categorized according to answers

Copyright 2007 by Prentice Hall Objective Measures Single-variable indexes –Occupation –Education –Income –Other Variables Composite-variable indexes –Index of Status Characteristics –Socioeconomic Status Score

Copyright 2007 by Prentice Hall Socioeconomic Status Score (SES) A multivariable social class measure used by the United States Bureau of the Census that combines occupational status, family income, and educational attainment into a single measure of social class standing.

Copyright 2007 by Prentice Hall Geodemographic Clusters A composite segmentation strategy that uses both geographic variables (zip codes, neighborhoods) and demographic variables (e.g., income, occupation) to identify target markets.

Copyright 2007 by Prentice Hall PRIZM (Potential Rating Index by Zip Market) A composite index of geographic and socioeconomic factors expressed in residential zip code neighborhoods from which geodemographic consumer segments are formed.

Copyright 2007 by Prentice Hall Explore the Prizm Product at Clarita’s Web site. weblink

Consumer Behavior and Social Class Clothing, Fashion, Accessories and Shopping The Pursuit of Luxury, Leisure Saving, Spending, and Credit Social Class and Media / Communication

Influence of Culture

Culture The sum total of learned beliefs, values and customs that serve to regulate the consumer behavior of members of a particular society.

A Theoretical Model of Cultures’ Influence on Behavior

Culture Is Learned Enculturation and acculturation Language and symbols Ritual Sharing of culture Enculturation –The learning of one’s own culture Acculturation –The learning of a new or foreign culture Issues

The Measurement of Culture Content Analysis Consumer Fieldwork Value Measurement Instruments

Content Analysis A method for systematically analyzing the content of verbal and/or pictorial communication. The method is frequently used to determine prevailing social values of a society.

Field Observation A cultural measurement technique that takes place within a natural environment that focuses on observing behavior (sometimes without the subjects’ awareness).

Characteristics of Field Observation Takes place within a natural environment Performed sometimes without the subject’s awareness Focuses on observation of behavior

Participant- Observers Researchers who participate in the environment that they are studying without notifying those who are being observed.

Value Measurement Survey Instruments Rokeach Value Survey (RVS) –A self-administered inventory consisting of eighteen “terminal” values (i.e., personal goals) and eighteen “instrumental” values (i.e., ways of reaching personal goals) List of Values (LOV) – A value measurement instrument that asks consumers to identify their two most important values from a nine-value list that is based on the terminal values of the Rokeach Value Survey Values and Lifestyles (VALS) –A value measurement based on Values, Attitudes and Lifestyles

Table 12.5 Excerpt from the Rokeach Value Survey TERMINAL VALUESINSTRMENTAL VALUES A comfortable lifeAmbitious An exciting lifeBroad-minded A world at peaceCapable EqualityCheerful FreedomClean HappinessCourageous National securityForgiving PleasureHelpful SalvationHonest Social recognitionImaginative True friendshipIndependent WisdomIntellectual

Page 231: HSBC’s “Different Values” campaign

Copyright 2007 by Prentice Hall Subculture A distinct cultural group that exists as an identifiable segment within a larger, more complex society.

Relationship Between Culture and Subculture

An ad showing many racial subcultures

This ad for Vibe Vixen magazine targets the African American Urban subculture.

Issues in Studying Hispanic American Subcultures Hispanic Consumer Behavior –Stronger preference for well-established brands –Prefer to shop at smaller stores –Some are shifting food shopping to non- ethnic American-style supermarkets –Youths are more fashion conscious than non-Hispanic peers

Regional Subcultures Many regional differences exist in consumption behavior –Westerners have a mug of black coffee –Easterners have a cup of coffee with milk and sugar –White bread is preferred in the South and Midwest –Rye and whole wheat are preferred on the East and West coasts

Copyright 2007 by Prentice Hall Major Age Subcultures Generation X Market Baby Boomer Market Seniors Market Generation Y Market

Generation Y Born between 1980 and 1999; also called echo boomers and millennium generation.

Three Subsegments of Gen Y Gen Y Adults Gen Y Teens Gen Y Tweens

Copyright 2007 by Prentice Hall Generation X Born between 1965 and 1979; post baby boomer segment (also referred to as Xers or busters).

Baby Boomers Individuals born between 1946 and 1964 (approximately 40 percent of the adult population).

Baby Boomers The largest age category alive today Frequently make important consumer purchase decisions Include a small subsegment of trendsetting consumers (yuppies) who influence consumer tastes of other age segments

Seniors Generally older consumers. Consist of subcultures, including the 65-plus market and the “elderly consumers” market.

Gender as a Subculture Gender Roles and Consumer Behavior –Masculine vs Feminine Traits The Working Woman –Segmentation Issues –Shopping Patterns

Cross-Cultures and Consumer Behaviour

Copyright 2007 by Prentice Hall The Imperative to Be Multinational Acquiring Exposure to Other Cultures Country-of-origin Effects

The World’s Most Valuable Brands 1.Coca-Cola 2.Microsoft 3.IBM 4.GE 5.Intel 6.Disney 7.McDonald’s 8.Nokia 9.Toyota 10.Marlboro

Most of these brands offer different Web sites for each country. weblink

Swiss Watches

Can’t Beat the Engineering The “American” Twist

Cross-Cultural Consumer Analysis The effort to determine to what extent the consumers of two or more nations are similar or different.

Cross-Cultural Consumer Analysis Similarities and differences among people The growing global middle class The global teenage market Acculturation The greater the similarity between nations, the more feasible to use relatively similar marketing strategies Marketers often speak to the same “types” of consumers globally Issues

Comparisons of Chinese and American Cultural Traits Chinese Cultural Traits Not-individual centred Submissive to authority Ancestor worship Values a person’s duty to family and state American Cultural Traits Individual centered Emphasis on self- reliance Primary faith in rationalism Values individual personality

Cross-Cultural Consumer Analysis Similarities and differences among people The growing global middle class The global teenage market Acculturation Growing in Asia, South America, and Eastern Europe Marketers should focus on these markets Issues

Cross-Cultural Consumer Analysis Similarities and differences among people The growing global middle class The global teenage market Acculturation There has been growth in an affluent global teenage and young adult market They appear to have similar interests, desires, and consumption behavior no matter where they live… GENERATION Y Issues

The iPod has global appeal to the young market. weblink

Cross-Cultural Consumer Analysis Similarities and differences among people The growing global middle class The global teenage market Acculturation Marketers must learn everything that is relevant about the usage of their product and product categories in foreign countries Issues

Basic Research Issues in Cross-Cultural Analysis FACTORS Differences in language and meaning Differences in market segmentation opportunities Differences in consumption patterns Differences in the perceived benefits of products and services EXAMPLES Words or concepts may not mean the same in two different countries. The income, social class, age, and sex of target customers may differ dramatically in two different countries. Two countries may differ substantially in the level of consumption or use of products or services. Two nations may use or consume the same product in very different ways.

FACTORS Differences in the criteria for evaluating products and services Differences in economic and social conditions and family structure Differences in marketing research and conditions Differences in marketing research possibilities EXAMPLES The benefits sought from a service may differ from country to country. The “style” of family decision making may vary significantly from country to country. The types and quality of retail outlets and direct-mail lists may vary greatly among countries. The availability of professional consumer researchers may vary considerably from country to country.

World Brands Products that are manufactured, packaged, and positioned the same way regardless of the country in which they are sold.

Are Global Brands Different? According to a survey – yes. Global brands have: –Quality signal –Global myth –Social responsibility

Multinational Reactions to Brand Extensions A global brand does not always have success with brand extentions Example Coke brand extension – Coke popcorn –Eastern culture saw fit and accepted the brand extension –Western culture did not see fit

Adaptive Global Marketing Adaptation of advertising message to specific values of particular cultures McDonald’s uses localization –Example Ronald McDonald is Donald McDonald in Japan –Japanese menu includes corn soup and green tea milkshakes Often best to combine global and local marketing strategies

Alternative Multinational Strategies: Global Versus Local Framework for Assessing Multinational Strategies –Global –Local –Mixed

Table 14.8 A Framework for Alternative Global Marketing Strategies PRODUCT STRATEGY COMMUNICATON STRATEGY STANDARDIZED COMMUNICATIONS LOCALIZED COMMUNICATIONS STANDARDIZED PRODUCT Global strategy: Uniform Product/ Uniform Message Mixed Strategy: Uniform Product/ Customized Message LOCALIZED PRODUCT Mixed strategy: Customized Product/ Uniform Message Local Strategy: Customized Product/ Customized Message

Cross-Cultural Psychographic Segmentation The only ultimate truth possible is that humans are both deeply the same and obviously different.

Six Global Consumer Segments – An Example Strivers 23% Altruists 18% Devouts 22% Fun Seekers 12% Creatives 10% Intimates 15%