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Chapter 5 Consumer Markets and Consumer Buyer Behavior
Learning Objectives Define the consumer market and construct a simple model of consumer buyer behavior. Name the four major factors that influence consumer buyer behavior. List and understand the major types of buying decision behavior and the stages in the buyer decision process. Describe the adoption and diffusion process for new products. Chapter Overview This chapter explores the dynamics of consumer buying behavior and consumer markets. Markets (and those which they serve) have to be understood before marketing strategies can be developed. The consumer market buys goods and services for personal consumption. At present, the world consumer market consists of 6.2 billion people. As will be shown in the next chapter, the consumer market differs from the business market. With respect to the individuals in the consumer market, the behavior of the consumer is influenced by the buyer’s decision process. Buyer characteristics include four major factors: cultural, social, personal, and psychological. Each of these factors is explored in detail. Relationships are drawn between the factors (and factor subparts) and the consumption purchases made by consumers. Because many of these factors are deep and long lasting in their effect, the marketing manager should pay special attention to acquiring information about them with respect to the organization’s target markets. Several examples are presented to illustrate how this might be done. After the chapter examines the influences that affect buyers, a discussion is presented which examines how consumers make actual buying decisions. Decisions vary based on the degree of buyer involvement and the degree of differences among brands. A summary discussion is presented that outlines complex buying behavior, dissonance-reducing buying behavior, habitual buying behavior, and variety-seeking buying behavior. Special focus is directed toward a simple model of buying behavior that explains most of the terms pertinent to the study of buying behavior. The simple model (consisting of five stages—need recognition, information search, evaluation of alternatives, purchase decision, and postpurchase behavior) ties together material about the buying decision process. For new products, special situations affect the consumer choice decision. It has been found that consumers respond at different rates (depending on consumer and product characteristics), gain knowledge about the products in different ways, and become aware of “newness” with varying rates of consideration. Factors that speed the rate of adoption of new products are covered and explained. Understanding consumer behavior is difficult enough for companies marketing within the borders of a single country. The problem is compounded when a firm attempts to market in the global environment. The chapter briefly discloses differences between global and local consumer markets. Lastly, marketers must decide whether to adapt their products to match the demands of the global marketplace or not. The question of adaptation or standardization will be a topic for debate for several years to come. Chapter 5 Consumer Markets and Consumer Buyer Behavior
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Case Study Harley Davidson
Building Success Understanding the customers’ emotions and motivation Determining the factors of loyalty Translating this information to effective advertising Measuring Success Currently 22% of all U.S. bike sales Demand above supply Sales doubled in the past 5 years with earnings tripled Chapter Outline Introduction Few brands engender such intense loyalty as that found in the hearts of Harley-Davidson owners. Harley-Davidson’s marketers spend a great deal of time thinking about customers and their buying behavior. The Harley-Davidson example shows that many factors affect consumer buying behavior. Consumer buyer behavior refers to the buying behavior of final consumers—individuals and households who buy goods and services for personal consumption. All of these final consumers combine to make up the consumer market. Use Key Terms Consumer Buyer Behavior, Consumer Market here. 5 - 2
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Definitions Consumer buyer behavior refers to the buying behavior of final consumers – individuals and households who buy goods and services for personal consumption All of these final consumers combine to make up the consumer market
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Model of Buyer Behavior Figure 5.1
Model of Consumer Behavior Most large companies research consumer buying decisions in great detail to answer questions about what consumers buy, where they buy, how and how much they buy, when they buy, and why they buy. Learning about the whys of consumer buying behavior is not so easy—the answers are often locked deep within the consumer’s head. How do consumers respond to various marketing efforts? The starting point is the stimulus-response model of buyer behavior shown in Figure 5.1. Marketing and other stimuli enter the consumer’s “black box” and produce certain responses. Marketers must figure out what is in the buyer’s black box. Marketing stimuli consist of the 4 Ps: product, price, place, and promotion. Other stimuli include major forces and events in the buyer’s environment. The buyer’s characteristics influence how he or she perceives and reacts to the stimuli. The buyer’s decision process itself affects the buyer’s behavior. Use Chapter Objective 1 here. Use Figure 5.1 here. 5 - 4
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Characteristics Affecting Consumer Behavior
Culture Forms a person’s wants and behavior Subculture Groups with shared value systems Social Class Society’s divisions who share values, interests and behaviors Key Factors Cultural Social Personal Psychological Characteristics Affecting Consumer Behavior Consumer purchases are influenced strongly by several characteristics, shown in figure 5.2. Cultural Factors Cultural factors exert a broad and deep influence on consumer behavior. Culture is the most basic cause of a person’s wants and behavior. Human behavior is largely learned. Growing up in a society, a child learns basic values, perceptions, wants, and behaviors from the family and other important institutions. Marketers are always trying to spot cultural shifts in order to discover new products that might be wanted. Use Key Term Culture here. Use Figure 5.2 here. Each culture contains smaller subcultures, or groups of people with shared value systems based on common life experiences and situations. Subcultures include nationalities, religions, racial groups, and geographic regions. The U.S. Hispanic market consists of almost 39 million consumers. Last year, Hispanic consumers bought more than $580 billion worth of goods and services, up 25 percent from just two years earlier. Expected to double in the next 25 years, this group will make up more than 20 percent of the total U.S. population by Hispanic consumers tend to buy more branded, higher-quality products. Generics do not sell well to this group. If the U.S. population of 39 million African Americas were a separate nation, its buyer power of $630 billion annually would rank among the top 15 in the world. The black population in the United States is growing in affluence and sophistication. Although more price conscious than other segments, blacks are also strongly motivated by quality and selection. Brands are important. Asian Americans, the fastest-growing and most affluent U.S. demographic segment, now number more than 12 million, with disposable income of $296 billion annually. The U.S. Asian American population is expected to more than double by 2050, when it will make up more than 9 percent of the U.S. population. Asian consumers may be the most tech savvy segment. As a group, Asian consumers shop frequently and are the most brand-conscious of all the ethnic groups. Interestingly, they are also the least brand loyal. As the U.S. population ages, mature consumers are becoming a very attractive market. Now 75 million strong, the population of U.S. seniors will more than double during the next 25 years. The 65-and-over crowd alone numbers 36 million, more than 12 percent of the population. Mature consumers are better off financially than are younger consumer groups. Almost every society has some form of social class structure. Social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. Social scientists have identified the seven American social classes shown in Figure 5.3. Social class is not determined by a single factor, such as income, but is measured as a combination of occupation, income, education, wealth, and other variables. Use Key Terms Subculture, Social Classes here. Use Figure 5.3 here. Use Discussing the Concepts 1 here.
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Characteristics Affecting Consumer Behavior
Groups Membership Reference Aspirational Opinion leaders Buzz marketing Family Many influencers Roles and status Key Factors Cultural Social Personal Psychological Social Factors A consumer’s behavior is also influenced by social factors. A person’s behavior is influenced by many small groups. Groups that have a direct influence and to which a person belongs are called membership groups. In contrast, reference groups serve as direct or indirect points of comparison or reference in forming a person’s attitudes or behavior. An aspirational group is one to which the individual wishes to belong. Manufacturers of products and brands subjected to strong group influence must figure out how to reach opinion leaders—people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert influence on others. Many marketers use buzz marketing by enlisting or even creating opinion leaders to spread the word about their brands. Use Key Terms Groups, Opinion Leaders here. Use Discussing the Concepts 6 here. Family members can strongly influence buyer behavior. The family is the most important consumer buying organization in society, and it has been researched extensively. Marketers are interested in the roles and influence of the husband, wife, and children on the purchase of different products and services. Husband-wife involvement varies widely by product category and by stage in the buying process. Children may also have a strong influence on family buying decisions. A person belongs to many groups—family, clubs, and organizations. The person’s position in each group can be defined in terms of both role and status. A role consists of the activities people are expected to perform according to the persons around them. Each role carries a status reflecting the general esteem given to it by society. People usually choose products appropriate to their roles and status.
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This advertiser knows teens are strongly influenced by groups when purchasing fashion items
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Characteristics Affecting Consumer Behavior
Age and life cycle Occupation Economic situation Lifestyle Activities, interests and opinions Lifestyle segmentation Personality and self-concept Key Factors Cultural Social Personal Psychological Personal Factors A buyer’s decisions also are influenced by personal characteristics. People change the goods and services they buy over their lifetimes. Buying is also shaped by the stage of the family life cycle—the stages through which families might pass they mature over time. Traditional family life-cycle stages include young singles and married couples with children. Marketers are increasingly catering to a growing number of alternative, nontraditional stages such as unmarried couples, singles marrying later in life, childless couples, same-sex couples, single parents, extended parents (those with young children returning home), and others. A person’s occupation affects the goods and services bought. A person’s economic situation will affect product choice. People coming from the same subculture, social class, and occupation may have quite different lifestyles. Lifestyle is a person’s pattern of living as expressed in his or her psychographics. It involves measuring consumers’ major AIO dimensions. Activities—work, hobbies, shopping sports, social events. Interests—food, fashion, family, recreation. Opinions—about themselves, social issues, business, products. Several research firms have developed lifestyle classifications. The most widely used is the SRI Consulting’s Values and Lifestyles (VALS) typology shown in Figure 5.4. VALS classifies people according to how they spend their time and money. It divides consumers into eight groups based on two major dimensions: primary motivation and resources. Primary motivations include ideals, achievement, and self-expression. Consumers within each orientation are further classified into those with high resources and those with low resources. Lifestyle segmentation can also be used to understand how consumers use the Internet, computers, and other technology. Forrester developed its “technographics” scheme, which segments consumers according to motivation, desire, and ability to invest in technology. Use Key Term Lifestyle here. Use Figure 5.4 here. Use Discussing the Concepts 2 here. Each person’s distinct personality influences his or her buying behavior. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. The idea is that brands also have personalities, and that consumers are likely to choose brands whose personalities match their own. Use Key Terms Personality, Brand Personality here. Related to personality is a person’s self-concept. The basic self-concept premise is that people’s possessions contribute to and reflect their identities.
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VALS Figure 5.4 Values and Lifestyles (VALS)
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Brand Personality Dimensions
Sincerity Ruggedness Excitement Competence Sophistication
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Characteristics Affecting Consumer Behavior
Key Factors Motivation Perception Learning Beliefs and attitudes Cultural Social Personal Psychological Psychological Factors A person’s buying choices are further influenced by four major psychological factors. A person has many needs at any given time. Some are biological, others psychological. A need becomes a motive when it is aroused to a sufficient level of intensity. A motive or drive is a need that is sufficiently pressing to direct the person to seek satisfaction.
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Psychological Factors Motivation
A motive is a need that is sufficiently pressing to direct the person to seek satisfaction Motivation research is based on Freud. Looks for hidden and subconscious motivation Maslow ordered needs based on how pressing they are to the consumer Use Key Term Motive (or Drive) here. Sigmund Freud assumed that people are largely unconscious about the real psychological forces shaping their behavior. He saw the person as growing up and repressing many urges. Freud’s theory suggests that a person’s buying decisions are affected by subconscious motives that even the buyer may not fully understand. The term motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations. Many companies employ teams of psychologists, anthropologists, and other social scientists to carry out motivation research.
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Maslow’s Hierarchy of Needs Figure 5.5
Use Real Marketing 5.1 here. Abraham Maslow sought to explain why people are driven by particular needs at particular times. Human needs are arranged in a hierarchy, as shown in Figure 5.5, from the most pressing at the bottom to the least pressing at the top. They include physiological needs, safety needs, social needs, esteem needs, and self-actualization needs. A person tries to satisfy the most important need first. When that need is satisfied, it will stop being a motivator and the person will then try to satisfy the next most important need. Use Figure 5.5 here. 5 - 13
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This ad demonstrates a product meeting physiological and social needs
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Psychological Factors Perception
Perception is the process by which people select, organize, and interpret information. Perception Includes: Selective attention Consumers screen out information Selective distortion People interpret to support beliefs Selective retention People retain points to support attitudes A motivated person is ready to act. How that person acts is influenced by his or her own perception of the situation. Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. People can form different perceptions of the same stimulus because of three perceptual processes. Selective attention is the tendency for people to screen out most of the information to which they are exposed. Selective distortion describes the tendency of people to interpret information in a way that will support what they already believe. Because of selective retention, consumers are likely to remember good points about a brand they favor and to forget good points made about competing brands.
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Discussion Question Perception
How many ads were you exposed to today? Which ones do you remember? Why? Did students include Internet ads, logos on clothing, ads in the subway, billboards, logos on drinks, in the classroom, TV or radio ads? This should prompt discussion of selective attention, distortion and retention. Was it that they are loyal to these brands? Did they break through the clutter? Were they bombarded by a particular brand message? 5 - 16
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Psychological Factors Learning
Learning describes changes in an individual’s behavior arising from experience Learning occurs through Drives Internal stimulus that calls for action Stimuli Objects that move drive to motive Cues Minor stimuli that affect response Reinforcement Feedback on action Use Key Term Perception here. Learning describes changes in an individual’s behavior arising from experience. Learning theorists say that most human behavior is learned. Learning occurs through the interplay of drives, stimuli, cues, responses, and reinforcement. A drive is a strong internal stimulus that calls for action. A drive becomes a motive when it is directed toward a particular stimulus object. Cues are minor stimuli that determine when, where, and how the person responds. The practical significance of learning theory for marketers is that they can build up demand for a product by associating it with strong drives, using motivating cues, and providing positive reinforcement. Use Key Term Learning here.
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Psychological Factors Beliefs and Attitudes
a descriptive thought about a brand or service may be based on real knowledge, opinion, or faith Attitude describes a person’s evaluations, feelings and tendencies toward an object or idea They are difficult to change A belief is a descriptive thought that a person has about something. An attitude describers a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea. Attitudes are difficult to change. A person’s attitude fit into a pattern, and to change one attitude may require difficult adjustments in many others. Use Chapter Objective 2 here. Use Key Terms Belief, Attitude here. Use Discussing the Concepts 3 here.
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Types of Buying Decision Behavior Figure 5.6
Figure 5.6 shows types of consumer buying behavior based on the degree of buyer involvement and the degree of differences among brands. Use Figure 5.6 here. Complex Buying Behavior Consumers undertake complex buying behavior when they are highly involved in a purchase and perceive significant differences among brands. Consumers may be highly involved when the product is expensive, risky, purchased infrequently, and highly self-expressive. Typically, the consumer has much to learn about the product category. Marketers of high-involvement products must understand the information-gathering and evaluation behavior of high-involvement consumers. Use Key Term Complex Buying Behavior here. Use Discussing the Concepts 4 here. Dissonance-Reducing Buying Behavior Dissonance-reducing buying behavior occurs when consumers are highly involved with an expensive, infrequent, or risky purchase, but see little difference among brands. After the purchase, consumers might experience postpurchase dissonance (after-sale discomfort) when they notice certain disadvantages of the purchased brand or hear favorable things about brands not purchased. To counter such dissonance, the marketer’s after-sale communications should provide evidence and support to help consumers feel good about their brand choices. Use Key Term Dissonance-Reducing Buying Behavior here. Habitual Buying Behavior Habitual buying behavior occurs under conditions of low consumer involvement and little significant brand difference. Consumer behavior does not pass through the usual belief-attitude-behavior sequence. Consumers do not search extensively for information about the brands, evaluate brand characteristics, and make weighty decisions about which brands to buy. They passively receive information as they watch television or read magazines. Because buyers are not highly committed to any brands, marketers of low-involvement products with few brand differences often use price and sales promotions to stimulate product trial. Use Key Term Habitual Buying Behavior here. Variety-Seeking Buying Behavior Consumers undertake variety-seeking buying behavior in situations characterized by low consumer involvement but significant perceived brand differences. In such cases, consumers often do a lot of brand switching. Use Chapter Objective 3 here. Use Key Term Variety-Seeking Buying Behavior here. Use Discussing the Concepts 5 here. The Buyer Decision Process Figure 5.7 shows that the buyer decision process consists of five stages. The buying process begins long before actual purchase and continues long after. Marketers need to focus on the entire buying process rather than just on the purchase decision. Use Figure 5.7 here. 5 - 19
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The Buyer Decision Process Figure 5.7
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The Buyer Decision Process
Needs can be triggered by: Internal stimuli Normal needs become strong enough to drive behavior External stimuli Advertisements Friends of friends Process Stages Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior Need Recognition The buying process starts with need recognition—the buyer recognizes a problem or need. The need can be triggered by internal stimuli when one of the person’s normal needs—hunger, thirst, or sex—rises to a level high enough to become a drive. A need can also be triggered by external stimuli, e.g., an advertisement or a discussion with a friend. Use Key Term Need Recognition here.
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The Buyer Decision Process
Consumers exhibit heightened attention or actively search for information Sources of information: Personal Commercial Public Experiential Word-of-mouth Process Stages Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior Information Search An interested consumer may or may not search for more information. If so, a consumer will undertake an information search related to the need. The amount of searching you will do depends on the strength of your drive, the amount of information you start with, the ease of obtaining more information, the value you place on additional information, and the satisfaction you get from searching. Consumers can obtain information from several sources. Personal sources. Commercial sources. Public sources. Experiential sources. The relative influence of these information sources varies with the product and the buyer. As more information is obtained, the consumer’s awareness and knowledge of the available brands and features increases. Use Key Term Information Search here.
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The Buyer Decision Process
Evaluation procedure depends on the consumer and the buying situation. Most buyers evaluate multiple attributes, each of which is weighted differently. At the end of the evaluation stage, purchase intentions are formed. Process Stages Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior Evaluation of Alternatives The marketer needs to know about alternative evaluation—that is, how the consumer processes information to arrive at brand choices. Consumers do not use a simple and single evaluation process in all buying situations. Instead, several evaluation processes are at work. How consumers go about evaluating purchase alternatives depends on the individual consumer and the specific buying situation. Use Key Term Alternative Evaluation here. Use Applying the Concepts 3 here. Use Focus on Ethics here.
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The Buyer Decision Process
Two factors intercede between purchase intentions and the actual decision: Attitudes of others Unexpected situational factors Process Stages Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior Purchase Decision In the evaluation stage, the consumer ranks brands and forms purchase intentions. Generally, the consumer’s purchase decision will be to buy the most preferred brand, but two factors can come between the purchase intention and the purchase decision. The first factor is the attitudes of others. The second factor is unexpected situational factors. Use Key Term Purchase Decision here. Video Snippet Wild Planet realizes that kids and parents make the decision for toys
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The Buyer Decision Process
Process Stages Satisfaction is important: Delighted consumers engage in positive word-of-mouth. Unhappy customers tell on average 11 other people. Cognitive dissonance is common Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior Postpurchase Behavior After purchasing the product, the consumer will be satisfied or dissatisfied and will engage in postpurchase behavior of interest to the marketer. Determining if the consumer is satisfied or not is the relationship between the consumer’s expectations and the product’s perceived performance. The larger the gap between expectations and performance, the greater the consumer’s dissatisfaction. Almost all major purchases result in cognitive dissonance, or discomfort caused by postpurchase conflict. Use Key Terms Postpurchase Behavior, Cognitive Dissonance here. Use Real Marketing 5.2 here. Use Applying the Concepts 2 here.
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Click on screenshot for website
Discussion Question How is a site like Consumer Reports used in the decision- making process? Go to the site and ask students which type of decision this is best for. They should agree that the site is helpful for highly involved products. It is used in the information search to determine what attributes are important. It then helps them evaluate the alternatives as they can see how the brands compare. Marketing in Action Click on screenshot for website 5 - 26
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Buyer Decision Process for New Products
Good, service or idea that is perceived by customers as new. Stages in the Adoption Process Marketers should help consumers move through these stages. The Buyer Decision Process for New Products A new product is a good, service, or idea that is perceived by some potential customers as new. It may have been around for a while, but our interest is in how consumers learn about products for the first time and make decisions on whether to adopt them. The adoption process is defined as the mental process through which an individual passes from first learning about an innovation to final adoption. Adoption is defined as the decision by an individual to become a regular user of the product. Use Key Term New Product here.
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Stages in the Adoption Process
Awareness Evaluation Interest Trial Adoption Stages in the Adoption Process Consumers go through five stages in the process of adopting a new product. Awareness Interest Evaluation Trial Adoption This model suggests that the new-product marketer should think about how to help consumers move through these stages. Use Key Term Adoption Process here. Use Focus on Technology here. I
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Buyer Decision Process for New Products
Individual Differences in Innovativeness Consumers can be classified into five adopter categories, each of which behaves differently toward new products. Product Characteristics and Adoption Five product characteristics influence the adoption rate. ndividual Differences in Innovativeness People differ greatly in their readiness to try new products. People can be classified into the major adopter categories shown in Figure 5.8. This adopter classification suggests that an innovating firm should research the characteristics of innovators and early adopters and should direct marketing efforts towards them. Use Figure 5.8 here. Use Applying the Concepts 1 here.
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Adoption Process Figure 5.8
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Product Characteristics
Relative Advantage Compatibility Complexity Divisibility Communicability Influence of Product Characteristics on Rate of Adoption The characteristics of the new product affect its rate of adoption. Relative advantage—the degree to which the innovation appears superior to existing products. Compatibility—the degree to which the innovation fits the values and experiences of potential consumers. Complexity—the degree to which the innovation is difficult to understand or use. Divisibility—the degree to which the innovation may be tried on a limited basis. Communicability—the degree to which the results of using the innovation can be observed or described by others. Use Chapter Objective 4 here.
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Discussion Question Why might the adoption process be slow for a home robot? Computers are doing more for us at home. We already have TiVo-type products which scan databases and decide what to record. Other products include the Roomba and other home vacuum systems. New robots can conduct an orchestra (Sony) and assist the blind. 5 - 32 Marketing in Action Source: Business Week Source: Business Week
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Buyer Decision Process for New Products
International Consumer Behavior Values, attitudes and behaviors differ greatly in other countries. Physical differences exist which require changes in the marketing mix. Customs vary from country to country. Marketers must decide the degree to which they will adapt their marketing efforts. Consumer Behavior Across International Borders For companies operating in many countries, understanding and serving the needs of consumers can be daunting. Although consumers in different countries may have some things in common, their values, attitudes, and behaviors often vary greatly. Sometimes the differences are obvious. But often they are subtle There may be physical differences in consumers and their environments. Other differences result from varying customs. Marketers must decide on the degree to which they will adapt their products and marketing programs to meet the unique cultures and needs of consumers in various markets. On the one hand, they want to standardize their offerings in order to simplify operations and take advantage of cost economies. On the other hand, adapting marketing efforts within each country results in products and programs that better satisfy the needs of local consumers. End of Chapter Material Discussing the Concepts Which of the following general characteristics affecting consumer behavior would most influence the purchase of a new music CD: social class, age and life-cycle stage, or beliefs and attitudes? All three of the characteristics would have an influence but a strong argument can be made in support of “age and lifestyle”; e.g., Sony’s consumer Segment Marketing Division that has identified seven life-stage segments. A bank used SRI’s Consulting Business Intelligence Values and Lifestyles (VALS) research to profile customer segments that did not use any automated or electronic services. Based on your knowledge of this lifestyle classification system, speculate what might be the primary and secondary VALS type for this customer segment. Choosing among the eight classifications/types—these customer segments would more than likely be self-oriented with lower resources, and that would make them a “Believer.” SRI has a site with detailed explanations on each of the eight classifications at: On a trip to Best Buy, suppose you overhear the following comment made in a conversation between two salespeople. “I think that the sales director really knows our products and the market, and I’ve thought so for years.” Is the salesperson expressing a belief or an attitude? Why? The first part of the sentence, “I think that the sales director really knows our products and the market” meets the definition of a belief—a descriptive thought about something. The second half of the sentence turns the entire quote into an attitude—a person’s consistently favorable or unfavorable evaluation, feelings, and tendencies toward and object or idea. It is the “consistent or enduring” descriptive evaluation that drives the conversion from belief to attitude. The vice president of marketing for a regional doughnut retailer says, “We believe our customers exhibit high involvement buying behaviors.” Do you agree? Why or why not? Do not agree. Using Assael’s model of buyer behavior, that details types of consumer buying behavior based on the degree of buyer involvement and the degree of differences among brands, the donut buyer does not meet the criteria of high-involvement. The decision to buy a donut is not complex, risky, expensive, purchased infrequently, highly self-expressive, etc. Other than Krispy Kreme there are few differences in donuts. The buyer behavior fits the “habitual buying behavior” nicely—low involvement, few differences between brands. Compare and contrast the consumer decision process someone might use in purchasing a new notebook PC at Comp USA with that of purchasing a 16 oz. jar of Jif creamy style peanut butter at Wal-Mart. Need recognition—different need recognition/problem. Jif is hunger, none in the cupboard. Notebook PC may be need for greater productivity. Information search—different search process. Notebook PC would go into active information search. A Jif buyer would already know where to go. Evaluation of alternatives—if the buyer is not familiar with notebook PC brands, they may develop an elaborate evaluation process. With a strong brand preference for Jif, the evaluation process would be much easier. Rather than which brand to buy, it would more than likely have been what size to purchase. Purchase decision—differences in the length of time to arrive at a decision. It would be much longer for the notebook PC. The buyer may never purchase the notebook PC (interference: other’s attitudes, or unexpected situational attitudes). A much shorter decision period for Jif, and the only situation that would interfere with the purchase would be if it were sold-out or out of stock. Postpurchase behavior—there would big difference between the two items. Much more attention would be focused on assessing how satisfied or dissatisfied the buyer of the notebook PC is in relation to the performance expectations. There would not be similar postpurchase behavior with the Jif purchase. In a small group, discuss the following question: Who do you believe would be the better opinion leader for a high-technology cellular service, Bill Clinton or Bill Gates? Support your choice. Bill Gates is by far the better choice of the two candidates. He is a person of special skills, knowledge, personality, or other characteristics and is a member of reference group (progressive and innovative information technology development—not Microsoft) that can influence the formation of buyer behavior. Applying the Concepts You are the vice president of marketing for a small software company that has developed new and quite novel spam blocking software. You are charged with selecting the target market and segment for the product launch. How would you use Roger’s Diffusion of Innovations framework to help you with this choice? What are some of the likely characteristics of this customer group? Roger’s Diffusion of Innovations framework would help the marketer segment the target market even further. This framework would allow the marketer to identify potential buyers based on the likelihood of adoption (purchase) of an innovative technology based products/services. Two groups that comprise about 16 percent form the core of these early potential buyers. Innovators (2.5 percent) are buyers that are adventuresome. They often try new ideas at some risk. The Early Adopters (13.5 percent) are opinion leaders; they try new ideas early, but carefully. In a small group discuss how the buyer decision process for a college student would differ from that of a snowboarder in purchasing a backpack. How would you use this knowledge to develop an advertising plan? With knowledge of the backpack decision buying process of a college student, the marketer would understand: The needs and motives of the buyer. How the buyer searches out information that will help them with the decision. The evaluation process and criteria used in making a choice between alternative brands. How buyer’s ranks and form purchase decisions. The elements that form the postpurchase actions based on satisfaction or dissatisfaction. The chapter defines “alternative evaluation” as: “how the consumer processes information to arrive at brand choices.” Suppose as discussed in the chapter that you have narrowed your choice of new cars to brand A, B, or C. You have finalized the four most important new car attributes and their weights, and have created and filled in the evaluation matrix below. Which new car alternative will you more than likely select? Brand B yields the highest preference based on attributes and importance weight. Styling has an importance weight of 50 percent. Brand B has the highest styling attribute score (7). Brand B does not lead any other attribute category, but because so much weight is placed on styling, it drives the decision/preference. Focus on Technology Biometric technology is emerging from the 9/11 tragedy as one of the most important and accurate systems of personal identification. Biometric systems discriminate based on measurement of a physical feature or repeatable behavior or action of the individual. They recognize individuals based on hand geometry, retinal scan, iris scan, fingerprint patterns, facial characteristics, DNA sequence characteristics, voice prints, and hand written signature. What does a biometric device do? Three things: The biometric device takes an observation. The type of reading and observation taken depends on the type of biometric device used. This observation gives us a ‘biometric signature’ of the individual—fingerprint, handprint, face-print, RFID (implants), retinal scans, voice, etc. A computer algorithm normalizes the biometric response (signature) so that it is in the same format (size, resolution, etc.) as the signatures on the system’s database. The normalization of the biometric signature gives us a ‘Normalized Signature’ of the individual. A matcher compares the normalized signature with the set (or sub-set) of normalized signatures on the system’s database and provides a ’similarity score’ that compare the individual’s normalized signature with each signature in the database set (or sub-set). What is then done with the similarity scores depends on the biometric system’s application. Name five situations where biometric technology would help with an issue or problem at your university or college. How would this technology help you as a student or personally? The five situations where biometric technology would help with an issue or problem at your university or college are: Registration—quicker and more accurate Testing—reduce the amount of “anonymous” test takers and level of cheating Class attendance—on the students present and checked-in will get attendance credit Charging at the campus bookstore and restaurants—reduce the amount of fraudulent and inaccurate charging that takes place Housing—better than a key, and inherently more secure In what situations might this technology help marketers to understand consumer buying or decision process better? Explain. There are a number of ways marketers could use this biometric technology to understand consumer buying or decision processes better: Collecting and analyzing customer usage based on biometric data is one way a marketer would use this data. Alone or combined with other customer data, this biometric information would help the marketer gain a better understanding of the consumer behavior and preferences. Examples: Sea World uses handprint data to identify season pass holders. What type of marketing data is gained? Frequency of use and dates of use. One article suggests that brand building is possible with biometric devices. With face recognition techniques marketers may have the ability to increase the loyalty of customers by providing them with better customer service. Quicker recognition at sign-in or check-out could lead to greater preference for the brand. ( Focus on Ethics You are the product manager of Red Zone, a personal credit financial services product, that provides consumers with information on their personal financial situations. Marketed directly to consumers via the Internet and direct mail, Red Zone is sold in the form of an annual prepaid membership for $79.95, after a 30 day free trial. To help attract subscribers, the company provides a “free Red Zone Score” report along with the trial membership. Promotion focuses on the “Free Red Zone Score” with little mention of the Red Zone “trial membership.” All the promotional language, ads, and the order form have been approved by your legal department. The “Free Red Zone Score” offer has great impact on the evaluation stage of the consumer decision process—it provides a 50 percent lift in membership trials over the basic offer. Your research that a significant portion of the paid members do not realize that they have signed a $79.95 Red Zone annual membership agreement that is charged to their credit card at the end of the 30-day free trial. When these unaware Red Zone members receive their monthly credit card bill and sees the $79.95 charge, they often file a complaint for a fraudulent charge with the credit card company., Moreover, they often followed up with a complaint to a state attorney general or the Better Business Bureau. Your boss, the marketing VP, has scheduled a meeting with you for tomorrow to ask what the company should do about the number of “complaint” letters that the company is receiving from customers, state attorney general’s offices, and the BBB concerning how Red Zone is marketed. Assess the consumer buying process for Red Zone. How do current promotion practices affect the buying process? The consumer buying process for Red Zone would be as follows: Need recognition—the need for Red Zone is triggered by external stimuli, more than likely an ad, , or direct mail. Information search—in this case, the consumer will not pursue more information. Evaluation of alternatives—since there is only one brand (Red Zone), little real evaluation of alternatives is conducted. Purchase decisions—see the answer below; the purchase decision is influenced by the premium offer. Postpurchase behavior—once the premium is received, the consumer engages in postpurchase behavior evaluation of Red Zone. In 60 plus percent of the orders, the consumer dissatisfaction with the service (difference between expectations and perceived performance/value) is so great that they cancel. Offering a free premium (unexpected situational factor) places undue emphasis on an “unexpected situational element” (free Red Zone score) and influences the purchase in favor of Red Zone. This is a standard process for many marketers, both traditional and direct. Is the current Red Zone promotion legal? Is it ethical? Is it good business practice? Yes, Red Zone as described in “Focus on Ethics” is legal. But no, in the view of most consumers, the practice is not ethical. In the short-run the practice can be successful, but in the long-run, the practice will most likely self-destruct. Therefore, it is not a good practice. What will you recommend tomorrow? Should the company redirect the focus of the promotion toward the value of the Red Zone membership and away from the “Free Red Zone Score,”, even if this will lead to profit erosion? Or should you tell the boss that it is all legal and recommend that the company continue selling Red Zone as it is presently configured and promoted? This is a difficult decision in most organizations. Making the recommendation to promote the real value of the service will certainly reduce short-term revenues, and reduced profits may lead to lay-offs or other cost reduction methods. But, when all is said and done, the right decision, the ethical decision, and the decision that is most consumer-oriented, is to recommend redirecting the promotional efforts toward the real value of the membership and away from the “Free Red Zone Score.” Note: You still have the obligation as a product manager to explain as simply as possible both options—what the consequences to the organization will be, both short-term and long-term, of redirection of the promotion efforts toward the value proposition of Red Zone and away from the “Free Red Zone Score.” Company Case Notes Weight? I’m on Atkins Synopsis “Weight? I’m on Atkins” is not a traditional case; instead it is an essay addressing the topic of obesity and how Americans deal with that issue. The beginning of the case makes the point that obesity is growing in the United States; then discusses reasons why it is growing; what Americans are doing about it in terms of diets, pills, and exercise (or lack thereof) that provide business opportunities; and finally touches on the cultural, social and emotional problems frequently associated with obesity. The case provides students with an opportunity to analyze the issue of obesity using all of the concepts presented in Chapter 5 (from culture through psychological factors). When you come down to it, we all know how to lose weight. Reduce how much we eat; watch what we eat, and exercise. Yet millions of Americans are constantly on the diet of the month/year or are doing the latest craze in exercise and yet obesity is growing. The case provides an opportunity to discuss how social class, economics, lifestyle ethnicity, etc. lead to obesity and why Americans are resistant to losing weight. This can then lead to a discussion of whether businesses mentioned in the case such as low carb grocery stores are likely to be successful. Teaching Objectives Analyze a consumer “problem” situation using consumer behavior concepts. Explain how and why social, psychological, and personal factors prevent consumers from solving their problem. Evaluate the likelihood of success of businesses founded as solutions to the problem of obesity. Explain why such a social and consumer problem persists. Discussion Questions What are the social, cultural and personal factors associated with obesity? With eating disorders? What are the psychological factors? Obesity: Culture: Americans eat more, too much fast food, and all you can eat—typical eating patterns within our culture. Subculture/ ethnicity: African Americans and Hispanics tend to be more obese (not mentioned in the case, but well known is that Southeast Asians tend to be slimmer). Could be diets preferred by the ethnic group, lower quality food, or even less money to spend on higher quality/lower fat foods or excess consumption of fast foods. Social Factors: Social class is strongly related to income and the case indicates that lower income consumers are more likely to be obese (again poorer quality, cheaper foods, perhaps). Personal Factors: Lifestyle is of major importance here. Americans are becoming more sedentary—not only adults, but children as well. They are eating fast food more frequently. This could be driven by low income (economics and occupation). Self-concept is likely to be poor (remember the children with the semi-suicidal tendencies due to poor social interactions). Psychological Factors: The case suggests that obese people are low or unfulfilled on the social, esteem, and self actualization needs of Maslow. They eat too much (physiological needs) and then suffer a lack of the higher order needs that, in turn, leads to poor self concept and possibly solace by eating more. In short, there seems to be a relationship between low income/low social status, ethnicity, and self concept. To some extent this may be a matter of economics. For those of higher income, obesity may be more psychological in nature. Eating Disorders: There is not enough information in the case to relate how culture, subculture, or social factors to eating disorders. Personal Factors: Eating disorders seem to be more prevalent among women and children (gender and age). These groups seem to feel more pressure to be thin, but have difficulty resolving that with eating desires. A well-known bulimic was Princess Diana which helps to convey that these disorders are not limited to any class. Psychological Factors: Case states obsessiveness, dependency, overcontrolled hostility, assertiveness, locus of control, and lower self-esteem associated with eating disorders. Like obesity, individuals with eating disorders are unfulfilled on the higher order needs of Maslow. Their motivation to lose weight, however, is high and anorexics are known to perceive themselves as fat even when they are dangerously underweight. The beliefs and attitudes of individuals with eating disorders are strongly ingrained and difficult to overcome. How would obesity, diets, and exercise programs fit into VALS lifestyles? What groups are most likely to take advantage of which means of losing weight? Because obesity is associated with low income, we might assume that it would be more associated with strugglers, and possibly believers, strivers, and makers. Higher resource groups such as fulfilleds, achievers, experiencers, and definitely actualizers would be more likely to take advantage of (be able to afford) diet programs (requiring higher quality food) and more expensive exercise programs. Why have so many consumers chosen Atkins or the South Beach Diet? How has the decision-making process affected their choice? A cynic might characterize Americans’ enthusiasms for diets as variety seeking—they simply “go for” the diet of the moment. Right now Atkins and South Beach are popular whereas in the past, other diets were popular—macrobiotic, grapefruit, etc. If that is true, it would indicate low involvement of Americans with whatever diet they are on. This could account for the lack of success and the fact that many Americans are always on “a diet.” It is simply the “in” thing to do to be able to say “I’m following the _______ diet.” Most Americans perceive a need for weight reduction because so many messages are sent to them daily about the desirability of being slim—ads on the television, seeing models in magazines, actors on TV/movies, frequent discussions of weight, stepping on the scales in the morning and finding one has gained a few pounds or trying on something that has gotten a little tighter. Information search is usually talking to friends or being involved (without actually seeking information) in discussions about diets or weight issues. There may be minimal search for information or evaluation of alternatives. “Atkins is hot and I’m going to do that”—type thinking. For exercise programs, there may be more search for information and evaluation of alternatives—types of programs, personal training or group sessions, times of programs, location of facilities, cost of program, etc. “Purchase decision” is simple for diets—buy the book and tell yourself that you’re going to stick to it. Sign up/pay for the exercise program of your choice. Postpurchase behavior is the major stumbling block—many people go off diets very quickly or drop out of exercise programs. They don’t stick to these. The case indicates that Americans want an instant, easy, no effort solution and neither diets or exercise are quick, easy, or no effort. In addition, most people who lose weight tend to put it back on. How has American business capitalized on obesity and eating disorders? Is this desirable? The case provides many examples of businesses offering solutions to obesity and eating disorders. When restaurants offer low carb or low fat choices on their menus, this would seem to be desirable as long as those choices are low carb and low fat. The same would seem to be true of food processors. But these efforts do not address the over eating or overly large portions issue. All you can eat of a low fat food diet could still pack on a lot of pounds. Exercise programs would seem to be a legitimate business offering to deal with the obesity problem. However, many programs have found that they make much of their money from no-shows. If management devises a strategy (sign up too many people for a class because many of them will drop out quickly) to capitalize on that, then this is not desirable. Low carb grocery stores would seem to be a fad. When Atkins becomes a thing of the past, then the stores will fail and one could argue that economic resources have been misallocated. Diet pills have not proven to be especially effective and in some cases (redux and phen-fen) have proven harmful. Businesses could be accused of selling “snake oil” pills. Programs such as Jenny Craig and Weight Watchers have been criticized for prices that are too high. Consumers choosing these programs then feel committed to buy these brands and some observers think companies fleece their clients. In short, most “solutions” to obesity have not proved to be effective and that allows for criticism of the businesses selling solutions. They simply are not solving the problem for consumers. Americans spend over $100 billion a year on ways to lose weight that doesn’t happen. Next year the same people will spend more. People appear not to care if they don’t get the product they pay for. What social, cultural, and personal factors explain this? How does it benefit business? The case provides one answer—that Americans want “instant gratification” (psychological). They want to lose weight now rather than over a six month period. If quick weight loss does not occur, they give up or try something else. (Ex. One of my friends has shuffled between Atkins, exercise programs, and South Beach continuously for the last year without losing a single pound!) Other possible explanations are: (1) Social Factors: Individuals are not really serious about weight loss; they are “on diets” because it’s the thing to do—is socially acceptable. Also individuals may adjust their eating habits when eating with others—to patronize restaurants (especially fast food) that serve fattening foods and to order fattening meals. (2) Personal: Children have little control over their diet as their parents or caregivers are responsible for it. They may also be encouraged to “eat up” and “clean their plate” that may be full of fattening food. (3) Personal: Low income consumers or recently arrived Americans may not have the money to buy lower calorie foods and instead fill up on potatoes and starches. (Studies have shown that low income consumers buy a disproportionately high amount of rice and potatoes.) (4) Personal: Low income consumers or recently arrived Americans may not have much nutritional knowledge. They may not realize the damage that their diet can cause. (5) Psychological: Obese people use food for comfort. When they are threatened, they may console themselves with cake or other fattening foods. (6) Culture: Foods frequently eaten in the culture are fattening—French fries. Subcultural: Fattening foods are more popular in certain areas—pasta among Italians, fried foods in the Southeast. Fast Food is an American innovation that is decidedly fattening and we’ve shared it with the world. Not only are we reducing the nutritional content of our own meals, but other peoples around the globe as well. From a business perspective: companies offering diet products have a steady stream of customers seemingly ready to try anything. The popularity of the Atkins diet has stimulated a separate corporate enterprise (Atkins Direct) which enriches the Atkins family. Low carb stores offer individuals a chance to own their own businesses and all of these businesses can charge higher prices for these “special” products. There are many, many business opportunities here. Teaching Suggestions You might begin the discussion by asking “How many of you know someone on a diet?” “Did it work?” From there, the discussion could lead into why diets don’t work. That would be a good time to discuss the consumer behavior factors that affect diets and exercise programs and their lack of success. Follow this with a discussion of: (1) How have businesses capitalized on this need? (2) What new opportunities are there? and (3) Are these diet/exercise programs socially desirable? Remember that many offerings such as the Atkins Direct products or low carb store products are higher priced. Shift to thinking about segmenting the obese market by income, social class, ethnicity/ subculture, and age. The result should be two segments (high and low income) subdivided by adults and children. Then, match the marketing offerings of businesses to the segments. The obvious result is that most business offerings are aimed at the smaller segment of higher income adult consumers. At this point, ask “From a social point of view, which segment(s) are most important to do something about?” Children might be the first answer, but how do you change children’s eating habits without changing their parents? This is an opportunity to discuss the impact of family on children’s obesity. If students argue that adults are more important, which group—low or higher income? Normally, one might argue for lower income groups because it’s the larger segment, but it’s the one without the resources. What could be done here? Is this an opportunity for fast food companies to provide a social good by encouraging children to consumer more healthy products? Education is needed, but unsought by many adults. What low-cost means of helping this market are available? Could they be developed? Additional Material Barriers to Effective Learning The first major barrier to learning in this chapter occurs because (even though all the students are consumers) the students have had no formal training in understanding the field of consumer behavior. Even though they may have had a behavioral course, the material was probably not presented in a business administration or marketing context. To begin, explain the basic stimulus-response model (the “black box” model) by asking students to describe a stimulus and a response situation in connection with purchasing something (such as food). The second major barrier follows the material begun above. The students must now understand how cultural, social, personal, and psychological factors affect their purchase decisions. Ask the students to relate their understanding of the reading assignment from this section by tracing the effects that these four variables have had on a recent purchase decision that they have made. To keep the example common to the class, you might use their decision to attend the university or college where the class is being conducted as a beginning point. Have the students explain and list the factors that affected their decision (you can also use a physical product like an automobile, if you prefer, or trace the example used in the text). The next barrier, though often not major if students have had a basic course in psychology, is understanding the meaning of the terms motivation, perception, learning, beliefs, and attitudes. These terms are often so much of our slang vocabulary that formal (or business) meaning is forgotten or misunderstood. Confirm the meaning of these terms before moving forward. The next major barrier comes from the fact that buying behavior differs greatly (for example, buying a tennis racket, an expensive camera, or a new car are radically different events and situations) from one product category to another. The students should be able to demonstrate a working knowledge of the four primary types of buying behavior discussed in this section of the chapter. Each of these forms is explained in the text, however it will be beneficial for many students if several examples are applied to the various situations. As an end to the discussion, ask students how strategies would change with the different forms of decision making? The last barrier comes from the material found in the Buyer Decision Process for New Products section. Time is often a major contributor to this barrier. Often it is necessary to spend a great deal of time with preceding sections and slight this one. Try to avoid this if at all possible. When covering the material be sure to carefully cover the adoption process, the degree of innovation, and the rate of adoption. Lastly, small group work is often a good strategy to pursue when pressed for time in attempting to cover this material. Student Projects Discuss the culture and subculture in which you were raised. What sorts of goods and services do you buy that someone raised in a different culture, or even in a different subculture within the United States, might not. Mature consumers have become increasingly important in the U.S. economy. And both the perception and the reality of the interests of mature consumers is changing rapidly as the baby boomers reach that age group. AARP, the American Association of Retired Persons, promotes the organization as the voice of this audience, both for marketers and for our government leaders. Visit their Web site at and review their offerings and the information they provide their own customers. How do they market the organization? How do they use psychological factors to influence this age group? Are they effective? Take the buyer decision process presented in Figure 5.7 and interview five students about how they purchased a common product (such as an automobile or a computer) and compare how they went through the buyer behavior model. How did they acquire information, pick alternatives, make choices, and evaluate the success of their purchase? Be creative in how you compare the subjects. As discussed in the text, people differ greatly in their readiness to try new products. Using the descriptions from the chapter (specifically from Figure 5.8, match the categories to each of the following products: a) a hybrid car; b) Ivory soap; c) satellite television; d) Microsoft’s Xbox; and e) Johnson & Johnson’s Baby Shampoo. Interactive Assignments Small Group Assignment Form students into groups of three to five. Each group should read the opening vignette to the chapter on Harley-Davidson. Each group should then answer the following questions: What was Harley-Davidson’s old strategy? Who rides a Harley? Were you surprised? Who is Harley Davidson’s new market? How has Harley changed its media strategy? What psychological feelings does Harley-Davidson wish to tap in a potential owner? In an existing owner? Evaluate Harley-Davidson’s strategy. Share your findings with the class. Individual Assignment Read the opening vignette to the chapter. Think about the answers to the following questions: Who is Harley-Davidson’s new market? What psychological feelings does Harley-Davidson wish to tape in a potential owner? In an existing owner? How do these feelings match you or your situation? Think-Pair-Share Consider the following questions, formulate an answer, pair with the student on your right, share your thoughts with one another, and respond to the questions from the instructor. As briefly as possible, explain the “black box” concept of buyer behavior. What are the most important “cultural” influences on consumer behavior? What are the most important “social” influences on consumer behavior? How is lifestyle used in marketing products? How can a marketer shape your beliefs and attitudes? How can this be done over the Internet? What is cognitive dissonance? How do marketers attempt to reduce it? Outside Example When asked about their least favorite aspect of TV viewing, most people say it’s the commercials. Although most consumers understand that commercials support free programming, they are bothered by the growing number of commercial interruptions. One way to avoid all the clutter is to channel surf and bypass commercials. But digital video recorders (DVRs) offer another solution—skip commercials altogether while still watching your favorite show on your own schedule. Consumers are discovering DVRs and love the freedom they find through services like TiVo. The service allows consumers to automatically record shows and skip commercials during playback. Statistics show that DVR users watch more TV, channel surf less, enjoy their DVR almost as much as their cell phone, and move many prime-time week shows to the weekend, when they have more leisure time. Many advertising agencies believe that DVRs will be the end to commercial dominance and put the consumer in the driver’s seat as never before. Now that satellite TV companies and cable companies alike have joined in by offering DVRs as part of their service, market penetration should be rapid. How would the elimination of traditional television advertising affect the Buyer Decision Process? What social and personal factors might influence you to buy this product? How might they keep a consumer from buying this product? Describe the buyer decision process for this new product. Who might have adopted this technology 3 years ago? What group of buyers will be purchasing it now? How would you market this product so that you created a need in the consumer’s mind? How would you aid in the consumer’s information search and evaluation of alternatives?
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