Consumer Behavior PDF

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This is an overview of notes taken during my consumer behavior class. This includes the topics: Consumer Behavior and Marketing Strategy, Cross Cultural Variations in Consumer Behavior, The Changing American Society - Values, The Changing American Society – Demographics and Social Stratification, an...

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Chapter 1: Consumer Behavior and Marketing Strategy Define the field of consumer behavior, and know the areas of psychology that are important to the field ➔ study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. ◆ Explicit behavior theory, assumptions, research ◆ Marketing management, regulatory policy, social marketing, informed consumers (individuals) Know the different steps involved in marketing a product or service (market analysis, market segmentation, etc.) ➔ Market analysis ◆ Consumers: demographics, lifestyle, needs ◆ Company: product development, advertising budget, skills ◆ Competitors: who else can do a better job, opportunity costs (benefits an individual/business/investor misses out on when choosing one alternative over another)

◆ Conditions: economic factors, physical environment, government regulations ➔ Market segmentation ◆ Portion of larger market whose needs differ in some ways from that larger market

● Behavioral Targeting - tracks activity and delivers ads based on that activity ● 4 steps in market segmentation: 1. Identify product-related needs sets 2. Group consumers with similar need sets 3. Describe each group 4. Select attractive segment to serve: identify our Target Market ➔ Marketing strategy ◆ Provide the best to identified target market ◆ Requires consistent marketing mix: ● Product ○ Anything we acquire to meet perceived need ● Communications ○ Advertising, sales force, packaging, public relations ● Price ○ “Symbolic role” of product? ○ Costs associated with product? ● Distribution ○ Where and how can I get this product? ● Service ○ What peripheral activities enhance product or service? ➔ Consumer decision process ◆ Intervenes between marketing strategy (as implemented in the marketing mix) and the outcomes ◆ Firms can only succeed if… - consumers see a need that the product can solve - become aware of the product and its capabilities - decide that it is the best available solution

- proceed to buy it - become satisfied with the result of the purchase ➔ Outcomes ◆ To the company ● Product position: what is products image relative to competing products and brands ● Sales and profits ● Customer satisfaction: easier to maintain customers rather than replace them ◆ To the individual ● Need satisfaction ● Injurious consumption: make consumption decisions that have negative consequences for their long-term well-being ◆ To the society ● Economic, environmental, and social welfare consequences What are the “4 Cs” involved in market analysis? Consumers Company Competitors Conditions What are the steps involved in market segmentation? 4 steps in market segmentation: 1. Identify product-related needs sets 2. Group consumers with similar need sets 3. Describe each group 4. Select attractive segment to serve: identify our Target Market What are the elements involved in a marketing mix, and what types of decisions go into each of these categories?

➔ Price: amount of money one must pay to obtain right to use the product ◆ **price of product is not same as cost of product to customer** ◆ Consumer cost = everything consumer must surrender in order to receive benefits of owning/using product ➔ Product: anything a consumer acquires or might acquire to meet perceived need ➔ Communications: advertising, sales force, public relations, packaging, and other signals that the firm provides about itself and its product ➔ Distribution: having product available where target customers can buy it ➔ Service: auxiliary or peripheral activities that are performed to enhance primary product or primary service - Provided to desired target market What types of outcomes for the organization, individual, and society are involved in marketing? ➔ Firm/Organization outcomes: ◆ Product position: image of product or brand in consumers mind relative to competing products and brands ◆ Sales and profits: necessary for firm to continue business ● Occur only if initial consumer analysis was correct and if marketing mix matches consumer decision process

◆ Customer satisfaction: major concern of marketers, more profitable to maintain customers rather than replace them with new ones ➔ Individual outcomes: ◆ Need satisfaction: whether purchased or not, some level of satisfaction of the need that initiated the consumption process ◆ Injurious consumption: occurs when individuals or groups make consumption decisions that have negative consequences for their long-run well-being ➔ Society outcomes: ◆ Economic: cumulative impact of consumers’ purchase decisions, including decision to forgo consumption, is major determinant of the state of a given country’s economy ● Consumers' decision on whether to buy or save affects economic growth, employment levels, etc. ◆ Physical environment: ● Decisions of people in most developed and some developing countries to consume meat as primary source of protein results in clearing rainforests for grazing land ◆ Social welfare: ● How much to spend for private goods (personal purchases) rather than public goods (support public education, parks, health care) are made indirectly by consumers elected representatives ● These decisions have major impact on overall quality of life in society

What are the various types of external and internal influences involved in consumer behavior (e.g., culture and subculture, perception and learning?) ➔ External influences: ◆ Culture: most pervasive influence on consumer behavior ◆ Subculture ◆ Demographics ◆ Social status: SES ◆ Reference groups ◆ Family and households ◆ Marketing activities ➔ Internal influences: ◆ Perception ◆ Learning ◆ Memory ◆ Motives ◆ Personality ◆ Emotions ◆ Attitudes What are the definitions of self-concept and lifestyle? ➔ Self-concept: totality of an individual's thoughts and feelings about oneself ➔ Lifestyle: how one lives, including products one buys, how to use them, what one thinks about them, and how one feels about them What does research say about the relationship between money and happiness, and why does a “tipping point” exist beyond which more money has a negligible effect on happiness? ➔ Money is not as strongly associated with happiness as people may think ➔ “Impact bias” overestimate the length of intensity

➔ Lack of $$ to fulfill basic needs obviously associated with unhappiness and stress ➔ Tipping point (2018) 90k: making over that does not make them necessarily happier, they are most satisfied with 90k salary

Chapter 2: Cross Cultural Variations in Consumer Behavior What is globalization and how does it impact upon consumer behavior? ➔ Exporting and importing values, lifestyles, and attitudes ➔ Mutual influence as products, brands, cultures, and values move back and forth across the world ➔ Younger generations of consumers appear more similar, modern, and in some cases Western, older consumers in same markets cling to traditional values that must be respected Be able to define the term culture and recognize various aspects of culture, such as norms, values, and sanctions. ➔ Culture: complex whole that includes knowledge, belief, art, law, moral, customs, and other capabilities/habits - acquired by humans as member of society ➔ Culture is… acquired, not static, seldom described outright ➔ Involves… ◆ Norms: boundaries that culture sets on behavior ● Rules that specify or prohibit certain behaviors ● Derived from cultural values ◆ Cultural values: widely held beliefs that affirm what is desirable ● Violations of cultural norms results in sanctions

◆ Sanctions: penalties ranging from mild social disapproval to banishment from the groups ● From violating norms Know the difference between other-oriented, environment-oriented, and self-oriented values and be able to recognize and define important variations in cultural values (note that the ones most emphasized are individualism/collectivism, masculinity/femininity, competitive/cooperative). ➔ Other-oriented values: society’s view of appropriate relationships between individuals and groups within society ◆ individualism/collectivism ● Are individual activity and initiative valued more highly than collective activity and conformity? ◆ youth/age ● Is family life organized to meet the needs of children or adults? ● Are younger or older people viewed as leaders and role models? ◆ extended/limited family ◆ masculine/feminine ● To what extent does social power automatically go to males? ◆ competitive/cooperative ● Does one obtain success by excelling over others or by cooperating with them? ◆ Diversity/uniformy ➔ Environment-oriented values: society’s relationship to its economic and technical as well as physical environment ◆ Cleanliness ◆ performance/status

● Is the culture's reward system based on performance or on inherited factors such as family or class? ● Power distance ◆ dominance/harmony ● Nature ◆ traditional/change ◆ Problem solving/fatalistic ◆ Nature ➔ Self-oriented values: reflect objectives and approaches to life that the individual members of society find desirable ◆ active/passive ● Is a physically active approach to live valued more highly than a less active orientation? ◆ Sensual gratification/abstinence ◆ material/nonmaterial ● Instrumental vs terminal materialism ● Material wealth ◆ Hard work/leisure ◆ Postponed gratification/immediate gratification ◆ Religious/secular Be able to distinguish between terminal and instrumental materialism. ➔ Terminal materialism: acquisition of items for the sake of owning the item itself (art) ➔ Instrumental materialism: acquisition of things to enable one to do something (skis to ski) How might verbal communication differences result in difficulties in marketing communication? ➔ Verbal communication: word meanings, translations, slang ➔ Languages change when entering different countries

➔ Problems of literal translations and slang expressions are compounded by symbolic meanings associated with words, absence of some words from various languages, and difficulty of pronouncing certain words ➔ Communication factors that can cause problems include: humor, style, and pace, for which preferences vary across cultures, even those speaking same basic language Know the variables that influence nonverbal communication and how differences impact upon consumer behavior and marketing efforts. ➔ Nonverbal communication: arbitrary meanings a culture assigns actions, events, and things other than words ◆ Time: seen as physical object; we can schedule it, waste it, lost it ● Monochronic time perspective: person does 1 thing at a time, have strong orientation toward present and short term future, take deadlines serious, concentrate on job at hand ● Polychronic time perspective: do many things at once, highly distractible, activities occur at own pace rather than according to predetermined timetable ◆ Space: bigger is better (America), authority has big space ● Personal space: nearest others can come to you without it feeling uncomfortable ◆ Symbols: colors, animals, shapes, numbers and music have varying meanings across country; failure to recognize meaning assigned to symbol can cause problems ● pink outfit = female in America

● Thumbs up in some countries can be offensive Relationships - casual or lasting Agreements - formal or informal, negotiated by business or individuals Things - “meaning of status” Etiquette - represents generally accepted ways of behaving in social situations - “Duchess Slant” when lady has sit for extended period of time while keeping poise and posture Why do marketers say a global youth culture is emerging, and what are the shared aspects that drive its growth? ➔ Values and lifestyles of 14-29yr olds converging ➔ Due to internet ➔ Music, sports, and fashion are main points: ◆ Technology is mainstream ◆ America brands aren't leaders ● Japan, Germany, Finland ● America finds ways to connect with these ➔ American teens aren't in forefront ◆ “Creatives” from Europe are ◆ Major distinctions between urban and rural youth What areas of global demographics impact most strongly upon marketing efforts? ➔ Demographics ◆ Size: # of individuals in society ◆ Structure: age, income, education, occupation ◆ Distribution: physical location, geographic dispersal ➔ Income (distribution of) is critical aspect for marketers ◆ Purchasing Power Parity (PPP): better indicator for evaluating markets than median income Be able to define and recognize the strategy of globalization.

➔ Glocalization: global localization ◆ Uniformity often possible but companies most often adapt to cultural differences ◆ How much should companies standardize or customize their strategies? ● Ex. McDonalds: great at adapting to local marketplace ○ Mcshrimp - Russia ○ Ovomaltine Flurry - Brazil ○ McNoodles - Australia ◆ When approaching foreign market, consider: ● Cultural homogeneity vs heterogeneity ● Need fulfillment ● Can many afford it?

Chapter 3: The Changing American Society Values Be able to identify the economic and social forces that are slowly changing American values. ➔ Observable shifts in behavior, including consumption behavior, often reflect shifts in cultural values: widely held beliefs that affirm what is desirable ➔ Shifts in consumption behavior reflect shift in cultural values ◆ Gender roles (starting in 1970s) ◆ Post-recession economic woes differentially affected millennials and gen z ◆ Changes in values occur slowly and unevenly across consumer groups (slow evolution is common)

Know where Americans generally stand on self-oriented values such as the religious/secular, material/nonmaterial, and postponed/immediate gratification dimensions. ➔ Self-oriented values ◆ religion/secular: America largely secular (non religious) ◆ material/nonmaterial: were consumption driven ● Voluntary (conscious) simplicity as an alternative ◆ postponed/immediate gratification: immediate gratification is emphasized (treat yo self) ◆ Increased emphasis on leisure, immediate gratification, and sensual gratification What is voluntary simplicity? The Protestant ethic? ➔ Voluntary simplicity: consumers’ efforts to reduce their reliance on consumption and material possessions ➔ Protestant ethic: (hard work/leisure) view that a person's duty is to achieve success through hard work and thrift, such success being a sign that one is saved Similarly, know where Americans stand in general in terms of dimensions of environment and other-oriented values. ➔ Environment-oriented values ◆ Cleanliness - is messier more acceptable today? ◆ Trade/change - most embrace new and improved (especially creative class workers) ◆ Risk taking/security - risk taking is embraced ◆ Problem solving/fantastic = Americans are “fixers” ◆ Admire/overcome nature - conquer the obstacle ● May depend on how you define environmentalism ○ Concern about and action aimed at protecting the environment ◆ Performance/status - shifting toward performance and less toward status

➔ Other-oriented values ◆ Individual/collective - individualism defines us ◆ diversity/uniformity - diversity valued (sometimes not as much as we hope) ◆ limited/extended family - quite limited ◆ youth/age - americans obsessed with youth ● Other people starting to be more influential ◆ competition/cooperation - hyper-competitive ◆ masculine/feminine - cleary leaning masculine ● Do-ers not be-ers ➔ Core American values ◆ Equal opportunity, achievement/success, material comfort, activity/work, practicality/efficiency, progress, science, democracy/enterprise, freedom (as per socialists) What are some ways in which these values are expressed in marketing (e.g., green marketing, cause-related marketing). ➔ Enviropreneurial marketing: environmentally friendly marketing practices, strategies, and tactics initiated by firm to achieve competitive differentiation ➔ Green marketing: developing products with less harmful or more of an actual positive impact on the environment ◆ Eco-friendly cars ➔ Green washing: firm promotes environmental benefits that are unsubstantiated (unconfirmed), which they don't deliver ➔ Cause-related marketing (CRM): social marketing, tie a product or company to a social issue or cause ◆ Dove products and self esteem ◆ Toms shoes ➔ Marketing to LGBTQ+ community: legal protection becoming normative (slowly)

◆ Consumers in this group tend to be more tech-savvy, have high purchasing power What are the “traditional” gender roles as identified in psychology (e.g., agentic versus communal). ➔ Roles shift in both directions ➔ Gender identity: traits of femininity (tenderness and compassion) and masculinity (aggressive and dominance) ➔ Gender roles: what is considered “appropriate” for men and women (prescribed roles [ascribed]) ➔ Ascribed vs achievement - can't really choose ascribed but can choose achievement ◆ Ascribed = attribute over which individual has little or no control ◆ Achievement = performance/criteria which an individual has some degree of control ➔ Traditional vs modern gender orientation ◆ Traditional: men works and gets money, women takes care of children and cleans ◆ Modern: husband and wife share responsibilities, both work/both clean/both take care of child How does social roles theory say that such roles impact upon our behavior? ➔ Americans prefer modern lifestyle ➔ Women do like to be in charge of childcare and men like to focus on work duties ➔ They like to have options of changes How do marketers view the segmentation of the female market? ➔ Traditional housewife: married, prefer to stay at home, family-centered, desired to please husband/children ➔ Trapped housewife: married, prefer to work but stays home because of children, lack of outside opportunities

➔ Trapped working women: married/single, prefer to stay at home but works for necessity or family pressure, does not get satisfaction out of employment ➔ Career working women: married/single, prefer to work, gets meaning out of employment rather than (or addition to) home/family, views homemaintence as evil, feels pressured by time ➔ Male market features broader segments: ◆ Traditional ◆ Modern (more focused on cooking, shopping, fashion) What are some differences in gender responses toward advertising? ➔ Products losing traditional gender typing ➔ Women respond to “help others”; men respond to “self help” ➔ Genders use social media differently ➔ Women still diverse group: ◆ Women still more likely to be featured in household products and children products ◆ Advertising needs to focus on avoiding potentially offensive content

Chapter 4: The Changing American Society – Demographics and Social Stratification Why are demographics so critical to consumer behavior and marketing? ➔ Demographics: statistics used to describe population in terms of size, distribution, and structure

➔ Influence consumption directly and by affecting other attribution of individuals such as their personal values and decisions styles ➔ Use information on particular demographics to select appropriate media and develop effective promotional themes Know some very general facts about the demographics of America (size, educational attainment, income distribution). ➔ Statistics on demographics ◆ US has ~328mil people ◆ Relatively stable population growth, but might slow down in coming decades ◆ Population grown in Western states and Florida expected to grow ➔ Socioeconomic Status SES: based on occupation, education, income ◆ Occupation strongly associated with consumption preferences, values, lifestyles, hobbies ◆ Education also has strong influence on preferences ● NJ 5th in nation with # of citizens with college degrees (39.7%) ● Technical skills and critical thinking skills increasingly needed for jobs that pay about min. wage (NJ 11$/hr) ● Education increasingly drives economy ➔ Income ◆ Nationwide concern is income disparity ● NJ family income = $81,740 ● NJ individual income = $40,895 ● Income disparity in NJ is extreme - 37% of NJ citizens cannot afford basic needs

◆ Income enables purchases but does not typically cause/explain them ● Plumbers make more money than clinical psychologists ◆ Subjective discretionary income (SDI): how much you believe you ...