Lecture notes - Consumer Behaviour Chapter 1-5 PDF

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Download Lecture notes - Consumer Behaviour Chapter 1-5 PDF

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Chapter 1 – An Introduction to Consumer Behaviour Introduction: Consumer Behaviour: People in the Marketplace - Typical Consumer (Aspects of Consumer Behaviour): o Described and compared with other  Useful to categorize you in terms of age, sex, income, occupation  Demographics: objectively measurable descriptive characteristics  Psychographics: includes aspects of a person’s lifestyle, interests, attitudes, values and personality  Important role in deciding the market for a product or deciding upon an appropriate techniques to employ when targeting a certain group o Purchase Decisions  Consumption communalities: online location where members share views an product recommendations about anything o Cultural Values  Subcultures: smaller groups within the overall culture o Image individual ID’s with  Market segmentation strategies: targeting a brand only to a specific group o f consumers rather than everybody o Brands have clear Personalities  People often choose product that fits their image or that product corrects their own image o Evaluations of products are affected by the products appearance, taste, texture or smell o Opinions and desires are shaped by outside world What is Consumer Behaviour? - Consumer Behvaiour: study of the processes involved when individuals or groups select, purchase, use or dispose of products, services or ideas they need to satisfy needs and desires Consumer Behaviour is a Process - Early stages of CB is referred to as buying behaviour o Reflects the emphasis on the interaction between consumers and producers at the time of purchase o Ongoing process - Exchange: two or more organizations or people give and receive something of value is an integral part of marketing Consumers’ Impact on Marketing Strategy - Why do we learn about CB? o Good business o Marketing concepts states that firms exit to satisfy consumer needs o Needs are only satisfied to the extent that the marketer understands the people or organizations that will use the products and services they are trying to sell Segmenting Consumers - Market Segmentation: ID’s groups of consumers who are similar to one another in more than one way and the devise specific marketing strategies that appeal to one or more groups - Important to ID distinct marketing segments and develop specialized messages and products - Must also deliver messages through specialized channel - Demographics is used to locate and predict the sizes od markets - Demographic Dimensions: o Age:  Consumer of different age groups have very different needs and wants  Tend to share a set of values and common cultural experiences that are carried throughout life  Try to develop a product for one age group then try to broaden its appeal later  EX: Red Bull  Started as energy drink for Young Adults, now moved into Adults such as cab drivers, etc

Gender:  Products are targets at either men or women  Differentiating by gender starts at a very early age o Family Structure and Life Stage:  Person’s family structure and marital status  Has big effect on a consumer’s spending priorities  Young Singles & newlyweds – most likely to exercise, go to bars, concert, and movies and consume alcohol  Families with young – purchasers of health foods and fruit juices  Single parents & older children – more like to consumer junk food o Social Class and Income  Approximately equal in terms of their incomes and social standings in the community  Work similar occupations tend to have similar tastes  Socialize with one another and share many ideas and values  Determines which groups have the greatest buying power and market potential o Ethnicity  Canadians blend together from many different racial and cultural backgrounds, we also blend together in our consumption heritage o Geography  Climate changes drastically from region to region  Makes segmenting some products by region obvious  Ex: snow blowers and fur coats are sold east of rockies, more umbrellas and raincoats West o Lifestyles: Beyond Demographics  Consumers also have very different lifestyles, even if they share other characteristics  Way we feel about ourselves, the things we value, the things were like to do in our spare time determine what products we will choose  Ex: VW  Designed ads based on Pimp my Ride TV series to attract consumers interested in that show Relationship Marketing: Building Bonds with Consumers - Relationship Marketing: making an effort to interact with customers on a regular basis, giving them reasons to maintain a bond with the company over time o

Marketing Impact on Consumers - Marketers filter what we learn about the world o Through affluence they depict in glamorous magazines o Roles actors play in commercials - Ads show us how we should act with regards to many social ideas o Ex: How we should recycle, types of houses we should buy, cars we want to own Marketing & Culture - Popular Culture: music, movies, sports, books, celebrities and other forms of entertainment consumed by the mass market o Product of and inspiration for marketers - Cultural influence is difficult to overlook o BUT, people tend to not realize the world around them is affected by marketers o Ex: product icons that marketers use to create an ID for their products - Consumer-generated content; consumer themselves choice their opinions about products, brands, companies o Important part of marketing on culture o Ex: Doritos use in superbowl ads since 2006

The Meaning of Consumption - Fundamental premises of consumer behavior is that people often buy products not for what they do but for what they mean - Roles products play in our lives goes well beyond the tasks they perform - Other thing being equal, a person will choose the brand that has an image consistent with his or her underlying needs - Allegiances to particular cultural items help us define our place in modern society o These choice form bonds with other who share similar preferences Global Consumer - Global consumer culture – people around the world are united by their common devotion to brand-name consumer goods, movies stars 7 celebrities - U-commerce: use of ubiquitous networks o Whether in the form of wearable computer or customized ads beamed to our cellphones o Enable real-time connections in business and CB o Ex: RFID Tag - Rise of global marketing means that even smaller companies are look to expand overseas o Increases the pressure to understand how customers in other countries are the same or different from host country consumers Virtual Consumption - B2C Commerce: selling business to consumer o Electronic marketing increases convenience by breaking down many of the barriers caused by time and location - C2C Commerce: consumer – consumer o Virtual commerce has greatly facilitated C2C o People around the world share passion for products o 1) Virtual Brand Communities o 2) Web  Provides an easy way for consumers around the world to exchange info about their experiences  Digital Native: students who have grown up “wired” where digital tech has always existed  Internet allows consumers to engage in conversations around the world by sharing experiences  Horizontal Revolution: sharing of information across people vs from companies/gov to consumers  Characterized by social media  Synchronous Interactions: something that occurs in real-time (texting)  Asychronous interactions: don’t require participants to respond immediately  Culture of Participation: ability to freely interact with other people, companies and organizations  Enabled through social media platforms  Power to build on content from others own POV Marketing Ethics and Public Policy - Conflicts arise between: o 1) goal of succeeding in marketplace & desire to conduct business honestly o 2) Maximize well-being of customers by providing safe and effective products Business Ethics - Business Ethics: rules of conduct that guide actions in marketplace - Universal rules: honesty, trustworthy, fairness, respect, justice, integrity - Each culture has own values beliefs, customs = ethical business behaviors vary across different cultures o Influence whether business practices are acceptable

Prescribing Ethical Standards of Conduct - Orgs often devise a code of ethics for their members - Guidelines for Marketing Practices o Disclosure of all substantial risks o ID of added features that will increase the cost o Avoidance of false or misleading advertising o Rejection of high-pressure sales tactics o Prohibition of selling or fundraising under the guise of conducting market research - Bait & Switch strategy  consumers are lured into the store with promises of inexpensive products with sole intent of getting them to switch to higher-priced ones - Ethical behaviour is good business in the long run because it leads to consumer trust - Problems: o Consumer buying behaviour is not consistent with their positive attitudes about ethical behaviour Needs & Wants: Do Marketers Manipulate Consumers Do Marketers create artificial Needs? - Need: basic biological motive - Want: something that society has taught us to satisfy a need o Need is already there, marketers just recommend a way to satisfy it o Basic objective – create awareness that the needs exist, rather than create one Are Ads and Marketing Necessary? - Radio & TV are important tools to accomplish this manipulation of the masses – John Kenneth Galbraith o No literacy is required to use these media, they can reach anyone - Good ads arbitrarily linked to desirable social attributes o Do not sufficiently value good for the utilitarian functions they deliver o Focus on irrational value of good they symbolize - Products are designed to meet existing needs, ads just communicate products availability - Economics of Information Perspective – advertising is an important source of consumer information o Economic cost of time spent searching for products o Argues that consumer are willing to pay for advertising because the information it provides reduces search time Welcome to Consumer Space - Marketer space – companies called the shots and deiced what they wanted their customers to know - Consumer space – people determine how, when or if they will interact with a product o Companies develop and leverage brand equity to attract loyalty of these consumer nomads o We have potential to shape our own marketing destines Public Policy & Consumerism - Main idea of regulations is to protect consumers - Cooling-off periods: try to protect average consumers from getting into things they later regret - Labeling of harmful products: meant to protect the health of consumers o Table 1-2 - Field of CB can play an important role in improving our lives as consumers o Research assist in formulating or evaluating public policies Consumer Activism and Its impact on Marketing - Cultural Jamming: aims to disrupt efforts by the corporate world to dominate our cultural landscape - CSR: voluntarily choose to protect or enhance their positive social and environmental impacts as they perform business activities o Driven by consumer demand as companies try to differentiate themselves in market o Corporate Giving: donations of own money to good cause o Cause-related marketing: donations to charity as purchase incentives o Green marketing: offer products that are less harmful to environment - Social Marketing: using marketing techniques normally employed to sell products to encourage positive behaviors (increased literacy, drinking and driving)

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Transformative Consumer Research: Consumer research are themselves organizing to not only study but to rectify what they see as pressing social problems in the market place o Promotes research projects that include the goal of helping or brining social change

Dark Side of Consumer Behaviour - Consumers desires, choices and actions often result in negative consequences to the individual or the society in which he or she lives o Some consumer activities stem form social pressures and cultural value put upon money o Exposure to unattainable media ideals of beauty and success can create dissatisfaction with the self - Consumer Addiction: physiological or psychological dependency on products or services o Addiction to alcohol, drugs o Many companies profit from the sale of addictive products or solutions to addiction o Technology can also be addictive  Ex: Crackberry o Internet addiction - Compulsive addiction: repetitive shopping, often excessive done as an antidote to tension, anxiety, depression or boredom o Difference from impulse buying  Impulse buy is temporary and centered on a specific product at a certain moment  Compulsive buying is enduring behaviour that centers on process of buying not purchase itself o Characterized by 3 common elements  1) Behaviour is not engaged by choice  2) Gratification is short-lived  3) Person experiences strong feelings of regret or guilt afterwards  Ex: Gambling Illegal Activities - McCann-Erickson advertising agency illegal an ethical behaviour findings o 91% of people lie regularly o 19% say they’ve snuck into a theaters to avoid paying admission - Shrinkage: inventory and cash losses form shoplifting and employee theft o Cost is passed on to consumers in the form of higher prices - Trends o Majority of shoplifting is done by high-income people vs those who genuinely need the item o More likely to occur if the adolescent does not belive the behavior is morally wrong o Serial Wardrobers:  People who buy an outfit, wear it once, and return it  Customers who change price tag and return one item for the higher amount  Shoppers who use fake or old receipts when making returns - Anticonsumption: involves rebelling against the idea of consumption itself o Range from product tampering to boycotting a particular brand o Political protests

How do we Find out About Consumers? - 2 ways - 1) Secondary Research: researcher uses data collected by another entity to answer a new research question - 2) Primary Research – data collected by researcher specifically for research question at hand o A) Survey Research  Method of data collection in which the respondents self-report answers to a set of questions posed by the researcher  Pros - Allows researcher to collect data from a lot of people within a relatively short period of time  Con – not allow consumer to provide as rich and detailed response o B) Interviews  Involve direct contact with the consumer  One-on-one interactions  Pro – topic is sensitive, embarrassing or polarizing  Con – takes longer time and more expensive o C) Focus Groups  Small group sessions with approx. 6 – 12 people  Used when new idea or product is being tested  When researchers want to generate new ideas for what strategic direction to take next  Pros – Tend to elicit more rich, detailed responses  Cons – social influence o D) Observational Research  Researchers directly observe consumers in either natural or controlled environments  Pro – directly tracks and measure real behaviors  Cons – Subjective reporting by consumers  Ethnographic research: researchers observe and record how consumer behave in real-world contexts  To understand the meanings consumers subscribe to different consumptions experiences o E) Qualitative Research  Things like: Story telling, role-playing, photos or pictures and diaries  Projective Techniques: presentation of ambiguous stimuli that the observer is asked to ID  Used when collecting data regarding unbiased responses o F) Experimental Research  Used to make cause-effect claims  Random Assignments: P into groups or conditions  Manipulation of Dependent and Independent variables on the environment

Chapter 2 – Perception Introduction - Sensation: immediate response of our sensory receptors to basic stimuli - Perception: process by which these sensations are selected, organized and interpreted o More influential in determining consumer preferences o Ultimate preferences are shaped by our perceptions – how we organize, interpret and form associations about the brand Sensory Systems - Meaning of stimulus is interpreted by individual who is influenced by his or her unique biases, needs and experiences - 3 stages of perception: o Exposure o Attention o Interpretation - External stimuli (sensory inputs) are received on a number of channels o Inputs picked up constitute raw data and generate many types of responses Sensory Marketing: Harnessing Perception for a Competitive Advantage - Sensory Marketing: companies pay extra attention to the impact of sensation on our product experiences o Senses help us decide which products appeal to us o Which ones stand out from similar products Sight - A) Affect of Colour o Influence our emotions directly  Can create feelings of arousal and stimulate appetite, be relaxing o Rick in symbolic value and cultural meanings  Central aspect of marketing strategy because of powerful cultural meanings  Reactions to colours can be learned behaviors o Depends on physical wavelength and how mind response to stimulus  Brightest colour that attracts attention is yellow  Reactions to colours may be a result of biological differences  Older = more yellow  Explains why they like white better o Used in package design  Change consumer assumptions about the product  Must align with product contents in order to be effective o Can be associated with corporation (Trade Dress)  Ex: Tiffany and Co. box colours - B) Affect on Health o Affects how much we consume  Eating from larger box gives subjective implication that we can have more  Ex: Movie pop-corn study  More likely to each large free popcorn if given choice between med and large o Influence how much we pour/drink  Focus on the height of the glass not the width o Influences our Serving size  Smaller snack packs give illusion that it is okay to eat more than one  Consumer assume that small package will control their food intake o Influence on our variety  Assortment of foods = okay to eat more of them

Smell - Axe Effect – women chasing after men who wear axe products (from commercials) o Worked for women who watched videos with no sound o Supports idea that self-confidence is translated into body language which relates to attractiveness - Can stir emotions OR create calming feelings o Influence our moods and cognitions o Pleasant scent can increase recall of a brand especially if scent is paired with image - Consumer reactions to odors depend on cultural background - Limbic System – primitive part of brain and where experience emotions o Process smell here - Sense of smell can lead to different behaviour o “Clean scents” (products)  more virtuous activities - Strategies: o Microencapsulating scents in direct mail communications o Introduction of scratch-and-sniff ads in newspapers o More effective when targeting 1 sex Hearing - Many aspects of sound affect peoples feelings and behaviors - Phonemes: decomposing brand into individual sounds o Affects consumers evaluation and convey unique meanings about inherent properties of the product o Brand names with repetition in phonetic structure produce positive affect when spoken aloud  increased performance of brand - Functional music – music played in stores, shopping malls, offices to relax or stimulate customers o Stimulus progression: tempo of music increases during slack times - Aging ear: loss of ability to hear higher frequencies Touch - Factor in sales interactions o Ability to touch items for >30s created greater level of attachment  boosted willingness to buy o Ex: Coke bottle designed for anyone to ID in dark - Touch Experience/Judgment confidence o Touch appear to moderate the relationships between products experience and judgment confidence o Confirms that common-sense notion that we are more sure about what we perceive when we can touch - Low autotelic: people who do not possess need to touch product o Influenced by the fell of the package - High autotelic: have compulsion to touch o Do not rely on this cue to infer product quality - Aspects of touch are inherent in the retail setting might influence customer evaluations - Kansei engineering: philosophy that translates consumer feelings into product design elements o Ex: Chrysler 300C H-Points o Ex: Mazda redesign of shift stick to emulate body-consumer relationship Taste - Main ...