Consumer Behavior, Global Edition, 12th edition Leon G Schiffman Solution Manual.pdf

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Solution Manual

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Consumer Behavior

Edition: Author(s):

12th Edition Leon Schiffman

Instructor’s Resource Manual for Consumer Behavior Christy Ashley

Consumer Behavior 12e, Global Edition

Leon Schiffman Joseph Wisenblit

CHAPTER 1 Consumer Behavior and Technology LEARNING OBJECTIVES After reading, studying and analyzing this chapter, students should be able: 1.1 and To understand the evolution of the marketing concept, what consumer behavior is, the components of strategic marketing.

1.2 To understand how technology has benefited both marketers and consumers.

1.3 To understand providing value and satisfaction and how technology has enhanced customer loyalty and retention.

1.4 To understand marketers’ social and ethical responsibilities.

1.5 To understand consumer decision-making as the foundation of this book.

1.6 To explain how the knowledge of consumer behavior advances seeking employment after graduation.

CHAPTER SUMMARY Learning Objective 1.1: To understand the evolution of the marketing concept, what consumer behavior is, and the components of strategic marketing.

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society. Consumer behavior consists of consumers’ actions taken while searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. Consumer behavior influences how marketers can communicate and deliver products that offer value to customers and society and explains how individuals make decisions to spend their available resources on products and services.

Marketing and consumer behavior stem from the marketing concept, which maintains that the essence of marketing consists of satisfying consumers’ needs, creating value, and retaining customers. Companies must produce only those goods they have already determined that consumers will buy. Marketing myopia is a focus on the product rather than on the needs that the product presumes to satisfy.

The marketing mix (also known as the four Ps) consists of product, price, place (distribution), and promotion. Market segmentation, targeting, and positioning are the foundation of turning consumers into customers. Market segmentation is the process of dividing a market into subsets of consumers who share common needs or characteristics.

Targeting means selecting the segments that the company views as prospective customers and pursuing them. Positioning is the process by which a company creates a distinct image and identity for its products, services, and brands in consumers’ minds. The societal marketing concept requires marketers to fulfill the needs of their target markets

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in ways that improve, preserve, and enhance society’s well-being and simultaneously meet their business objectives.

Learning Objective 1.2: To understand how technology has benefited both marketers and consumers.

Technology has revolutionized the marketing mix, segmentation, targeting, positioning, and customer retention. When consumers use their computers, cell phones, electronic readers, tablets, and other electronic devices, they provide marketers with the kind of information that enables companies to target them immeasurably more effectively than during the pre-internet days. Online technologies create a “value exchange:” marketers provide value to consumers in the form of information, opportunities to customize products easily, entertainment content, and much more. While online, consumers provide value to marketers by “revealing themselves,” thereby enabling companies to market their products more efficiently and precisely. Surfing online allows consumers to locate the best prices for products or services, bid on various offerings, bypass distribution outlets and middlemen, and shop for goods around the globe and around the clock. Online communication abilities have created sophisticated and discerning consumers who are hard to attract, satisfy, and retain. More than ever before, marketers must customize their products, add value to the physical product or the core of a service, provide the right benefits to the right consumer segments, and position their products effectively.

Technology also enables marketers to refine their strategies because they can readily customize their offerings and promotional messages, offer more effective pricing and shorter distribution channels, and build long-term relationships with customers. By using rapidly advancing technologies to track consumers, marketers can identify opportunities for creating new offerings, as well as improving and extending existing products and services. They can gather comprehensive consumer information by tracking consumers online, requiring prospective buyers to register at their websites, and combining this knowledge with demographic and lifestyle data gathered offline.

Learning Objective 1.3: To understand providing value and satisfaction and how technology has enhanced customer loyalty and retention.

Customer value is the ratio between customers’ perceived benefits and the resources they use to obtain those benefits. Customer satisfaction is customers’ perceptions of the performance of the product or service in relation to their expectations. Customer retention . involves turning individual consumer transactions into long-term customer relationships by making it in the best interests of customers to stay with the company rather than switch to another firm.

It is more expensive to win new customers than to retain existing ones. Technologies allow marketers to retain more customers and collect highly sophisticated data about shoppers’ preferences and post-purchase evaluations. Consumers who are highly

to others, and often become “customers for life.” Those who are less satisfied or feel neutral either switch to a competitor immediately or wait until another marketer offers them a somewhat lower price and then switch. Dissatisfied customers spread negative and often exaggerated word-of-mouth. Internal marketing is marketing the organization to its personnel.

Learning Objective 1.4: To understand marketers’ social and ethical responsibilities.

The marketing concept—fulfilling the needs of target audiences— is shortsighted. Some products that satisfy customer needs are harmful to individuals and society, and others cause environmental deterioration. Studying consumer behavior results in an understanding of why and how consumers make purchase decisions. The societal marketing concept requires marketers to fulfill the needs of the target audience in ways that improve, preserve, and enhance society’s well-being while simultaneously meeting their business objectives.

Learning Objective 1.5: To understand consumer decision-making as the foundation of this book.

Consumer behavior stems from four disciplines: (1) psychology, which is the study of the human mind and the mental factors that affect behavior; (2) sociology, which is the study of the development, structure, functioning, and problems of human society; (3) anthropology, which compares human societies’ cultures and development; and (4) communication, which is the process of imparting or exchanging information.

The process of consumer decision-making consists of the input, process, and output stages. The input stage includes two influencing factors: the firm’s marketing efforts and sociocultural influences. This stage also includes the methods by which information from firms and sociocultural sources is transmitted to consumers. The process stage focuses on how consumers make decisions. Psychological factors affect how the external inputs influence the consumer’s recognition of a need, pre-purchase search for information, and evaluation of alternatives. The output stage consists of two post-decision activities: purchase behavior and post-purchase evaluation.

This book includes five parts. Part I provides an overview of marketing and consumer behavior and the components of strategic marketing. Part II describes the consumer as an individual and explains the psychological factors that affect consumer behavior. Part III addresses the communication and persuasion process, the revolutionary impact of new media, and the roles of reference groups, opinion leaders, and word-of-mouth. Part IV examines consumers in their social and cultural settings. Part V includes discussions of the consumer decision-making process, consumers’ reactions to innovative products, marketers’ social responsibility and ethically questionable practices, and the methodology of consumer research.

Learning Objective 1.6: To explain how the knowledge of consumer behavior advances seeking employment after graduation.

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Students with expertise in consumer behavior should pursue employment in three areas: brand management, advertising, and consumer research.

CHAPTER OUTLINE INTRODUCTION 1. Marketing is the activity, set of institutions, and processes for creating, communicating, and delivering offerings that have value for customers, clients, partners, and society.

2. Consumer behavior is the study of consumers’ actions during searching, evaluating, purchasing, and using products and services that they believe would satisfy their needs.

3. Consumer purchases are determined not by needs alone, but also by how the product helps owners express their characteristics. *****Use Key Termsmarketing, consumer behavior Here, Use Figure #1.1 Here***** The Marketing Concept 1. Marketing and consumer behavior stem from the marketing concept, which

maintains that marketing consists of satisfying consumers’ needs, creating value, and retaining customers, and that companies must produce only those goods that they have already determined would satisfy consumer needs and meet organizational goals. *****Use Key Term marketing concept Here, Use Learning Objective #1.1 Here; Use Figure #1.2 Here; Use Review and Discussion Question 1.1 Here***** 2. The production concept focused on cheap, efficient production and intensive

distribution.

3. The product concept assumes consumers will buy the product that offers the most features.

4. A product orientation may lead to marketing myopia, or a nearsighted focus on the product and its direct competitors vs. the market’s needs.

5. The selling concept maintains that marketers should sell the products they made instead of only making products they could sell. *****Use Key Termsproduction concept, product concept, marketing myopia, selling concept Here*****

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Market Segmentation, Targeting, and Positioning 1. Market segmentation is the process of dividing a market into subsets of consumers with common needs or characteristics. Each subset represents a consumer group with shared needs that are different from those shared by other groups. Targeting 2. is selecting the segments identified as prospective customers and pursuing them with distinct offerings. Positioning refers to the development of a distinct image 3. for the product or service in the mind of the consumer. The image should differentiate the offering from the competition by stressing the product’s unique benefits. *****Use Key Termsmarket segmentation, targeting, and positioning Here; Use Review and Discussion Question #1.2 Here ***** 4. The marketing mix consists of a company’s service and/or product offerings to consumers and the methods and tools it selects to accomplish the exchange.

5. Four basic elements (known as the four Ps) include: a) The product or service —features, designs, brands, packaging, post-purchase benefits, etc. b) The price—list price (including discounts, allowances, and payment methods). c) The place—distribution of the product or service. d) Promotion—advertising, sales promotion, public relations, and sales efforts designed to build awareness of and demand for the product or service. *****Use Key Term marketing mix (the four Ps) Here***** Technology Benefits Consumers and Marketers *****Use Learning Objective #1.2 Here ***** 1. Technology shifted communications from a one-way process to a two-way interactive exchange.

2. Marketers provide value to consumers via opportunities to shop more efficiently, customize products easily, and access entertainment content and information.

3. Consumers provide value to marketers by “revealing themselves” while online, which enables companies to market their products more efficiently and precisely. ***** Use Hands-on Assignment #1.9 Here***** 4. Marketers have been offering more personalized products.

5. Figure 1.3 illustrates that across age groups, most Americans own technological gadgets.

6. Figure 1.4 details Americans’ most prominent online activities (percentages).

7. Marketers can target consumers based on their searches for more precise targeting.

8. Promotional messages are more interactive, personalized and targeted.

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9. Cross-screen marketing consists of tracking and targeting users across their computers, mobile phones and tablets. ***** Use Key Term cross-screen marketing Here; Use Figures 1.5, 1.6 and 1.7 Here; Use Review and Discussion Question 1.4 Here ***** Customer Value, Satisfaction, Trust, and Retention *****Use Learning Objective #1.3 Here***** 1.Customer value is defined as the ratio between the customer’s perceived benefits (economic, functional, and psychological) and the resources (monetary, time, effort, psychological) used to obtain those benefits.

2. Customer satisfaction is the individual’s perception of the performance of the product or service in relation to his or her expectations.

3. The overall objective of providing value to customers continuously and more effectively than the competition is to have and to retain highly satisfied customers.

This strategy of customer retention makes it in the best interest of customers to stay with the company rather than switch to another company. ***** Use Key Termscustomer value, customer satisfaction, customer retention Here ***** 4. It is more expensive to win new customers than to retain existing ones for several

reasons: a) Loyal customers buy more products and constitute a ready-made market for new models of existing products as well as new ones, and also represent an opportunity for cross-selling. b) Long-term customers who are thoroughly familiar with the company’s products c) are an important asset when new products and services are developed and tested. d) Loyal customers are less price-sensitive and pay less attention to competitors’ advertising. Thus, they make it harder for competitors to enter markets.

Servicing existing customers, who are familiar with the firm’s offerings and processes, is cheaper. It is expensive to “train” new customers and get them acquainted with a seller’s processes and policies. The cost of acquisition occurs only at the beginning of a relationship, so the longer the relationship, the lower the amortized cost. e) Loyal customers spread positive word-of-mouth and refer other customers. f) Marketing efforts aimed at attracting new customers are expensive; indeed, in saturated markets, it may be impossible to find new customers. Low customer turnover is correlated with higher profits. g) Increased customer retention and loyalty make the employees’ jobs easier and more satisfying. In turn, happy employees feed back into higher customer satisfaction by providing good service and customer support systems.

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***** Use Review and Discussion Questions #1.6 & #1.7 Here; Use Hands-on Assignment #1.11 Here***** Technology and Customer Relationships 1. Technologies often enhance customer relationships and retention by engaging consumers with brands. a. Emotional bonds represent a customer’s high level of personal commitment and attachment to the company. b. Transactional bonds are the mechanics and structures that facilitate exchanges between consumers and sellers. c. Social media include means of interaction among people in which they create, share and exchange information and ideas in virtual communities and networks. ***** Use Key Termsemotional bonds, transactional bonds, social media Here ***** 2. Emotional and transactional motives should be discerned to understand drivers of customer satisfaction, which leads to retention and long-term relationships. a. Determinants of customer satisfaction online include adaptation, interactivity, nurturing, commitment, network, assortment, transaction ease, engagement, loyalty, inertia and trust. b. Table 1.1 applies a four-way categorization of transaction-based and emotional bond-based customer relationships with marketers to Amazon’s customers. ***** Use Table 1.1 Here***** 3. Customers who are highly satisfied or delighted keep purchasing the same products and brands, provide positive and encouraging word-of-mouth to others, and often become life-long customers.

4. With respect to customer satisfaction there might be several types of customers: a) Loyalists—completely satisfied customers who keep purchasing. b) Apostles—those whose experiences exceed their expectations and who provide very positive word of mouth about the company to others. c) Defectors—those who feel neutral or merely satisfied and are likely to stop doing business with the company. d) Terrorists—those who have had negative experiences with the company and who spread negative word of mouth. e) Hostages—unhappy customers who stay with the company because of no choice (or other reasons). f) Mercenaries—very satisfied customers but who have no real loyalty to the company and may defect.

5. Companies classify customers according to profitability by tracking revenues obtained from individual customers and categorizes them. For example:

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a. Diamonds – customers who travelled at least 250,000 miles in first class in one year b. Emeralds – customers who travelled in first class, but not as frequently as the diamonds or customers who travel very frequently in business class. c. Sapphires – a profitable segment because they fly frequently and in business class. d. Elite and select – heavy flyers, mostly in premium economy. ***** Use Figure 1.5 Here ***** 6. Companies must develop measures to assess customer retention strategies, which may include: a. Customer Valuation b. Retention Rates c. Analyzing Defections Social Responsibility and Ethics ***** Use Learning Objective 1.4 Here***** 1. Socially responsible marketing suggests marketers would be better off if they

integrated social responsibility into their marketing strategies because companies prosper when society prospers.

2.The societal marketing concept requires marketers to fulfill the needs of the target audience in ways that improve, preserve and enhance society’s well-being while simultaneously meeting their business objectives.

3.Some marketers ignore laws and market potentially harmful products (e.g. Monster Beverage Corp.)

4.Some companies incorporated social goals into their mission statements because they believe it is important for organizational effectiveness.

5.Non-profit organizations also advance causes they believe are ethically and morally right. *****Use Key Term societal marketing concept Here; Use Figure 1.4 Here; Use Review and Discussion Question 1.3 Here; Use Hands-On Assignment 1.10 Here ***** Consumer Decision-Making ***** Use Learning Objective 1.5 Here***** 1. Marketing theorists borrowed heavily from concepts developed in other scientific

disciplines to understand consumer behavior: a) Psychology—the study of the human mind and mental factors that affect behavior.

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b) c) Sociology—the study of the development, structure, functioning and problems

of human society. d) Communication Anthropology—compares human societies’ culture and development.

—the process of imparting or exchanging information. ***** Use Key Termspsychology, sociology, anthropology, communication Here***** 2. The process of consumer decision making can be viewed as three distinct but interlocking stages: the input stage, the process stage, and the output stage. a) The input stage influences the consumer’s recognition of a product need and consists of: i) The firm’s marketing mix (the product itself, its price, promotion, and distribution). ii) The external sociocultural influences on the consumer (reference groups, family, social class, culture and subculture). iii) Both are communicated using different communication sources. b) The process stage focuses on how consumers make decisions. i) The psychological factors inherent in each individual (motivation, perception, personality, attitudes, perception) affect how the external inputs influence the consumer’s recognition of a need, prepurchase search for information, and evaluation of alternatives. The experience gained ii) through evaluation of alternatives, in turn, affects the consumer’s existing psychological attributes. c) The output stage of the consumer decision-making model consists of two closely-related post decision activities: i) Purchase behavior ii) The post-purchase evaluation *****Use Figure #1-10 Here***** This Book The book is divided into five parts: 1. Part I provides an overview of marketing and consumer behavior and the components of strategic marketing. a) Chapter 1 explains the evolution of the marketing concept and the importance of researching and analyzing consumers’ behavior in order to target them effectively. b) Chapter 2 explains market segmentation, the criteria for selecting target markets, behavioral targeting, and differentiating offerings among competitors.

2. Part II explains the psychological factors that affect consumer behavior. a) Chapter 3 discusses consumer motivation and the impact of personality characteristics on consumer behavior. b) Chapter 4 explores consumer perception/how the way we view the world around us affects our shopping patterns. .

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Chapter 5 explains how we learn through applying past experiences and behavior to future purchase decisions. d) Chapter 6 explores how attitudes influence buying behavior.

3. Part III addresses the communication and persuasion process along its components: sender, message, media, receiver, and feedback. a) Chapter 7 introduces the elements of the communication process and explains how to overcome the barriers to effective communications. It examines the differences between advertising in mass media and promoting products online and via social media. b) Chapter 8 explores the transition from print to broadcast media to social media and mobile advertising. c) Chapter 9 covers source credibility and word-of-mouth.

4. Part IV examines consumers in their social and cultural settings. a) Chapter 10 discusses the family as a consumption unit and its standing within the social-class structure. b) Chapter 11 explains how culture is expressed through values, rituals, and customs. c) Chapter 12 describes the impact of subcultures. d) Chapter 13 explores cross-cultural analysis, which includes the basic strategic elements for all companies pursuing markets in countries other than the United States.

5. Part V consists of three chapters. a) Chapter 14 discusses the consumer decision-making process and integrates parts II, III, IV. b) Chapter 15 explores marketers’ social responsibility and potential ethically questionable practices. c) Chapter 16 describes the methodology of consumer research.

Employability *****Use Learning Objective #1.6 Here***** 1. Students with expertise in consumer behavior should pursue employment in three areas: brand management, advertising, and consumer research.

2. Brand management is the process of maintaining, improving, and upholding a brand so that it is clearly differentiated from other offerings in the same product category.

3. Understanding perception is particularly important.

4. Students understand how consumers’ purchases are influenced by their peers, family, and social standing, and their values and customs.

5. Advertising includes writing advertising copy, creating visuals, ensuring that the right messages reach the right consumers at the right time, and determining in which media to place ads, including when and for how long.

6. Consumer research is the process and tools used to study consumer behavior.

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REVIEW AND DISCUSSION QUESTIONS 1.1 Describe the interrelationship between consumer behavior and the marketing concept.

The term consumer behavior refers to the behavior that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. The study of consumer behavior is the study of how individuals make consumption-related decisions. The key assumption underlying the marketing concept is that a company must determine the needs and wants of specific target markets and deliver the desired satisfaction better than the competition. The marketing concept is based on the premise that a marketer should make what they can sell, instead of trying to sell what they have made. Thus, a company which adopts the marketing concept must continuously research and monitor its customers’ and potential clients’ needs and consumption-related behavior in order to develop, effectively promote, and deliver products and services which satisfy clients’ needs better than the competition. Individual, Easy, 3-5 minutes Objective 1.1: To understand the evolution of the marketing concept, what consumer behavior is, and the components of strategic marketing. AACSB: Reflective thinking

1.2 Explore the different categories of segmentation criteria for companies in the writing utensils industry versus the industry of paper notebooks. The focus of the marketing concept is consumer needs. Three elements for creating a strategic framework for discovering and analyzing those needs are market segmentation, market targeting, and positioning. Market segmentation is the process of dividing a market into subsets of consumers with common needs or characteristics. Because most companies have limited resources, few companies can pursue all of the segments identified for the company to pursue.

In answering this question, students need to think about the need for writing utensils and whatpaper the notebooks. As thought starters, the instructor may ask the students different tools they use for writing are and when they use writing utensils. These questions should get the conversation started.

With regard to the industry of writing utensils (fountain pens, ballpoint pens, • Socio-demographic criterion (age, generation, and profession: older people pencils,tend to write more by hand using classic pens than younger people, who might use digital pens may for their tablets; people incriteria: different professions, such as in crayons, etc.), students identify the following architecture and craftsmanship, use different writing instruments) • Psychological criterion (conservative vs. traditional) .

For the paper notebook industry, students might mention other segmentation categories: • Geographic criterion (different countries have different paper formats or sizes) Individual, Moderate, 5 minutes Objective 1.1: Understand the evolution of the marketing concept, what consumer behavior is, and the components of strategic marketing.

AACSB: Application of knowledge 1.3 Define the societal marketing concept and discuss the importance of integrating marketing ethics into the company’s philosophy and operations.

The societal marketing concept requires marketers to fulfill the needs of the target audience in ways that improve, preserve, and enhance society’s well-being while Not all companies focustheir on business objectives. simultaneously meeting society, but some companies believe socially responsible marketing is a part of organizational effectiveness. Generally speaking, if society prospers, firms prosper, so it is in the marketer’s best interest, in the long-run, to focus on external stakeholders as well as profits.

Individual, Easy, 3-5 minutes Objective 1.4: To understand marketers’ social and ethical responsibilities.

AACSB: Application of knowledge 1.4 Describe how technology enhances consumers.

the exchange between marketers and

Marketers provide value to consumers in the form of information, including opportunities to customize products easily and entertainment content. Consumers provide value to marketers by “revealing themselves” while online, which enables companies to market their products more efficiently and precisely. Consumers “pay” for the Internet’s seemingly free content by providing virtually unlimited information about themselves to marketers, who gather, analyze, and use it to target buyers. The information allows marketers to customize promotional messages and products.

Technology also improves the ability to compare prices, distribution, and allows consumers with the ability to interact with the firm, which may improve satisfaction and, ultimately, retention.

Individual, Moderate, 3-5 minutes Skill: Concept Objective 1.2: To understand how technology has benefited both marketers and consumers.

AACSB: Information technology; Reflective thinking .

1.5 It is often said that consumers receive “free” content online. Is this true? Why or why not?

Consumers “pay” for the Internet’s seemingly free content by providing virtually unlimited information about themselves to marketers, who gather, analyze, and use it to target buyers.

Individual, Moderate, 1-2 minutes Objective 1.2: To understand how technology has benefited both marketers and consumers.

AACSB: Information technology 1.6 Discuss the interrelationships among customer expectations and satisfaction, perceived value, and customer retention. Why is customer retention essential?

Perceived value is relative and subjective while customer satisfaction is the individual’s perception of the performance of the product or service in relation to his or her expectation. The concept of customer satisfaction is a function of customer expectations. Customers whose experiences match expectations will be satisfied and customers whose expectations are exceeded will be very satisfied or delighted.

The overall objective of providing value to customers continuously and more effectively customers. than to competition is to have and to retain highly satisfied This is called customer retention. The purpose of customer retention is to make it the best interest of customers to stay with the company rather than switch to another firm. The reason that customer retention is essential is that in almost all business situations, it is more expensive to win new customers than to keep existing ones.

Individual, Moderate, 3-5 minutes 1.7 Objective How can marketers use technology to improve customer retention andtechnology enhance 1.3: To understand providing value and satisfaction and how their bonds with customers?

The Internet and cell phones have helped marketers has enhanced customer loyalty and retention. maintain closer relations with their consumers and have opened easier channels for AACSB: Analytical thinking; Reflective thinking the customer to contact the company if they have questions, problems, or suggestions. Marketers also use databases to track revenues by consumer, which allows marketers to categorize customers based on profitability and customize benefits to consumers accordingly. Individual, Easy, 2-3 minutes Objective 1.3: To understand providing value and satisfaction and how technology has enhanced customer loyalty and retention. AACSB: Reflective thinking

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1.8 Discuss the role of the social and behavioral sciences in developing the consumer decision-making model. Consumer behavior was a relatively new field of study in the mid- to late-1960s. Because it had no history or body of research of its own, marketing theorists borrowed heavily from concepts developed in other scientific disciplines. These disciplines were psychology (the study of the individual), sociology (the study of groups), social psychology (the study of how an individual operates in groups), anthropology (the influence of society on the individual), and economics. Many early theories concerning consumer behavior were based on economic theory on the notion that individuals act rationally to maximize their benefits (satisfactions) in the purchase of goods and services. Later research discovered that consumers are just as likely to purchase impulsively and to be influenced not only by family, friends, advertisers, and role models, but also by mood, situation, and emotion. All of these factors combine to form a comprehensive model of consumer behavior that reflects both the cognitive and emotional aspects of consumer decision-making. Individual, Easy, 3-5 minutes Objective 1.4: To understand marketers’ social and ethical responsibilities.

AACSB: Reflective thinking

HANDS-ON ASSIGNMENTS 1.9 Locate two websites that you visit regularly and discuss how they can (and probably do) track your behavior and enable marketers to target you more effectively.

Instructor’s Discussion In order to answer this question, students should take notice of the use of information technology, databases, interactive communications, and usage of satisfaction surveys. Students might also wish to be aware of how technology’s impact on our understanding of and interactions with consumers might be relevant to the exercise. The idea behind targeting is related to customer value, since collecting information should allow marketers to provide more attractive offerings based on their understanding of your preferences. Note that customer value is defined as being the ratio between the customer’s perceived benefits (economic, functional, and psychological) and the resources (monetary, time, effort, and psychological) used to obtain those benefits. Individual, Moderate, 10-15 minutes, Outside of Class Objective 1.3: To understand providing value and satisfaction and how technology has enhanced customer loyalty and retention. AACSB: Application of knowledge

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1.10Using the internet, locate two examples of magazine advertisements that were retouched for maximum effect using photo-editing software. Discuss the social and ethical responsibilities of marketers in this context.

Instructor’s Discussion The societal marketing concept requires the marketer to adhere to the principles of social responsibility in the marketing of their goods and services; that is, they should endeavor to satisfy the needs and wants of their target markets in ways that preserve and enhance the well-being of consumers and society as a whole. Thus, the restructured definition of the marketing concept calls on marketers to fulfill the needs of the target audience in ways that improve society as a whole while fulfilling the objectives of the organization. A serious deterrent to widespread implementation of the societal marketing concept is the short-term orientation embraced by most business executives in their drive for increased market share and quick profits.

While answering this question, students should understand that retouching advertisements is a delicate balancing act between what is real and what is desirable.

Open the discussion with a clear definition of what the societal marketing concept is (see above). Next, apply this concept to the supplied advertisements. Discuss the potential consequences of the retouched images (Is it misleading? Is it deceptive?

How does it negatively impact customers’ perceptions of themselves?). Take the case of Olay’s advertisement featuring the UK celebrity Twiggy. The ad bore Twiggy’s statement that Olay’s Definity eye illuminator was her secret to brighter-looking eyes.

The UK’s Advertising Standards Authority (ASA) received several hundred complaints regarding the fact that the image of Twiggy on the ad was airbrushed or re-touched, especially around the eyes. The ASA assessed the case and banned the ad for giving a misleading impression of the effect the product could achieve.

Discussion could be further enriched by including the importance of role models.

Conclude the discussion with comments on the fine line in advertisements between the amount of airbrushing or digital maneuvering that is considered acceptable and that which is not.

Individual, Moderate, 15-20 minutes, Outside of Class Objective 1.4: Understand marketers’ social and ethical responsibilities.

AACSB: Application of knowledge

1.11 Using a customer loyalty scheme of your choice, illustrate how technological innovations could add value to this program.

Instructor’s Discussion Customer value portrays the ratio between customers’ perceived benefits and the resources they have used to receive them. Customer satisfaction compares the customers’ perceptions of the performance of a product or service to their expectations. Customer retention deals with creating long-term relationships with customers.

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Students should understand that technological innovations help companies to extensively engage with, satisfy, and retain customers. Open the discussion with a review of the key concepts of customer value, satisfaction, and retention. Next, discuss the impact of technological innovations on customer loyalty schemes.

Explore factors like (depending on the students’ choice of schemes) the increased use of mobile phones, apps, digital payment solutions, as well as social networks with a view to understanding how they can add value to the schemes. Conclude the discussion by exploring opportunities for companies to deepen consumer insights through data mining (big data), geo-tracking, personalization, the spread of social word-of-mouth, and experience-orientation.

Individual, Moderate, 5-10 minutes Objective 1.3: Understand providing value and satisfaction and how technology has enhanced customer loyalty and retention.

AACSB: Application of knowledge S.T.A.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 H&R Block is the 500-pound gorilla of individual income tax preparation. The company has a significant presence in the U.S. market (especially during the spring tax season).

H&R Block has always been an aggressive competitor in this highly competitive market.

A trade organization for accountants believes that H&R Block became too aggressive when it ran an ad campaign that showed a consumer running in a dark alley confronted with neon signs flashing “Prestige CPA,” “Taxes Here,” and “Tax Consortium.” The consumer appears confused and frightened. At the end of the alley a solution to the fear and confusion appeared in the form of a warm and friendly H&R Block sign that promised that consumers do not have to pay until they are completely satisfied. NonBlock CPA professionals question whether H&R Block has fairly represented their businesses and consumer policies. a. Is this form of advertising ethical? Why or why not? b. With respect to what you have learned about the societal marketing concept in the chapter, what suggestions do you have for H&R Block?

Instructor’s Discussion The H&R Block case is a good example of aggressive marketing that might exceed acceptable limits. The ad is much different than the H&R Block approach used on their Web site (see www.hrblock.com). Could a code of ethics help H&R Block? Possibly.

CPA professionals do not see themselves as neon sign merchants nor do they believe that the average citizen has complaints with their preparation practices or guarantees. When does innuendo and appearance become unethical? This should be an interesting issue for

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the students to discuss. It will also be a good way to introduce the concept of a code of ethics. (See the exercise below for more work on a code of ethics.)

S.T.A.R. Project #2 Many consumers trust their medical supply needs to Johnson & Johnson. Johnson & Johnson is very clear as to its mission and commitment to the health and safety of its customers. The company is often cited as an example of how to do things right with respect to relations with customers and the public. Johnson & Johnson has gone so far as to construct a company credo that it features on its Web site (see www.jnj.com : Our Company: Our Credo Values). a. Assume that you have just been hired as a customer relations expert by Johnson & Johnson to answer a growing number of complaints that JNJ products are overpriced and have lost their sense of value for the consumer. The complainants cite lower priced private labels and store brands as illustrations of frustrations with JNJ. As one consumer states, “A band aid is just a band aid after all!” What would be your response? b. How could you use the Johnson & Johnson Credo to aid you in your response?

Instructor’s Discussion First, all students should read the JNJ Credo. The credo itself can be the discussion in this question. Next, students must carefully think about the scenario that has been presented.

How could the company use its commitment to quality as an answer? How could the company comment without disparaging the competition? How can the company focus on value? Take the two to three best responses and read them in class. An additional aid is to download the JNJ credo and prepare it as a handout. What does the JNJ credo say about the company’s commitment to ethical behavior?

Small Group Projects S.T.A.R. Project #3 Who designed the chicken sandwich? According to information provided on the Chickfil-A Web site (www.chick-fil-a.com) it was Chick-fil-A founder Truett Cathy. Mr. Cathy is also known for his unique approach to the fast food business. This unique approach has at its center an appreciation of family values (the restaurants are closed on Sundays and all children’s toys emphasize values rather than gimmicks or cartoon characters). After visiting the company Web site, your group’s assignment is to list the ways that Chick-fil-A provides customer value, satisfaction, and retention for its customers.

Instructor’s Discussion The student group should not have a problem listing the ways that Chick-fil-A provides customer value and satisfaction. Retention may take longer. By making the attempt, however, students will appreciate the chapter comments more fully. After the list is complete, the second assignment sounds easy. Students should, however, observe that Chick-fil-A matches both of the two concepts rather well. The astute student will see that

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Chick-fil-A may still have some way to go with respect to technological application to the business, databases, and customer segmentation.

S.T.A.R. Project #4 Nike is not just for males. This shoe giant has made great strides in market segmentation, customization, and customer relationship development. The result is that Nike is also a premier analyze female shoe company. Your group assignment is split your team and Nike. To do this, one team should review the www.nike.com Web site and analyze its contents colors, based on its appeals to the male market segment (i.e., styles, language, celebrity endorsers, games, customer relationships, etc.). The second team should analyze the Web site based on its appeals to the female segment (i.e., styles, language, colors, celebrity endorsers, games, customer relationships, etc.). The two teams should now match market their findings and write a summary report. What has Nike learned about segments and market targets? How do the two sections of the nike.com Web site assist Nike in its marketing efforts?

Instructor’s Discussion This Nike’sexercise gives two small groups within a larger group the chance to explore marketing efforts to two distinct market segments. If you would like to add additional comparison criteria, feel free to do so. Be sure to ask students what they have learned about consumer behavior from the Nike Web site. This exercise will also give groups a chance to learn to work with each other and will pave the way for future group participation projects.

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CHAPTER 2 Market Segmentation and Real-Time Bidding

LEARNING OBJECTIVES After reading, studying and analyzing this chapter, students should be able: 2.1 To understand how to segment markets along demographics, lifestyles, product benefits and usage, and media exposure.

2.2 To understand how to identify, select, and reach target markets.

2.3 To understand real-time bidding as compared with market segmentation.

CHAPTER SUMMARY Learning Objective 2.1: To understand how to segment markets along demographics, lifestyles, product benefits and usage, and media exposure.

Market segmentation is dividing a market into subsets of consumers with common needs or characteristics. Each subset represents a consumer group with shared needs that are different from those shared by other groups. After dividing the market into distinct groups, the company must select segments that are profitable and reachable, and feasibly targetable within its objectives and resources.

Demographic segmentation divides consumers according to age, gender, ethnicity, income and wealth, occupation, marital status, household type and size, and geographical location. Two other segmentation factors are based on demographics. Family life cycle details the phases that most families go through, each stage representing a viable target segment to marketers of many products.

Social class is the division of members of a society into a hierarchy of distinct status classes— most often based on income, education, and occupation—so that members of each class have relatively the same status and members of all other classes have either higher or lower status.

Because they are so versatile, psychographics are widely used, mostly together with demographics, providing marketers with richly descriptive profiles of target markets.

Geodemographics are based on the premise that people who live close to one another are likely to have similar financial means, tastes, preferences, lifestyles, and consumption habits—as the adage states, “Birds of a feather flock together.” The most popular combination of demographics and geographic locations is called PRIZM—grouping American households into 66 segments based on socioeconomic ranking, consumer behavior, and media exposure Benefit segmentation is based on the benefits that consumers seek from products and services.

These benefits represent unfilled needs, whereas buyers’ perceptions that a given brand delivers a unique and prominent benefit result in loyalty to that brand. .

Media exposure patterns can be used to segment markets. As more and more forms of media emerge, marketers must study the benefits that specific consumer segments seek from adopting these communication tools, so that they can advertise in these media effectively.

Usage-rate segmentation reflects the differences among heavy, medium, and light users, and nonusers of a specific product, service, or brand. Rate of usage is strongly related to product awareness status, which is the degree of a consumer’s awareness of the product and its features, and whether or not he or she intends to buy it reasonably soon. A related factor is product involvement, which reflects the degree of personal relevance that the product holds for the consumer. Usage-occasion segmentation recognizes that consumers purchase some products for specific occasions. Marketing studies have shown that consumers are increasingly skeptical about assigning foods to specific times of the day or places. Marketers have been responding by, for example, trying to convince consumers to snack on Greek-style yogurt and candy while watching the Super Bowl.

Learning Objective 2.2: To understand how to identify, select, and reach target markets.

All consumers are not alike. They have different needs, wants, and desires, and different backgrounds, education levels, and experiences. Therefore, marketers must offer alternatives that correspond to the needs of different consumer groups or segments. Not every company is interested in or has the means to reach every market segment. In addition to being identifiable, the segment(s) chosen must be profitable and accessible.

To be a viable market, a segment must consist of enough consumers to target it profitably, as well as be stable and growing. Additionally, the number of segments targeted and their profiles must be congruent with the company’s objectives and resources. Marketers target consumer segments that are relatively stable in terms of lifestyles and consumption patterns (and are also likely to grow larger and more viable in the future) and avoid “fickle” segments that are unpredictable.

To be targeted, a segment must be accessible, which means that marketers must be able to communicate with its consumers effectively and economically. With the diversification of magazines (and their online versions), the emergence of TV channels that target narrowly defined interests, and the growth of new media (e.g., sending ads to cell phones), marketers have significantly more avenues for reaching unique segments and can also do so with customized products and promotional messages.

Marketers can also target customers on their mobile devices. For example, customers frequently engage in showrooming, which occurs when consumers use smartphones to scan the bar codes of products displayed in physical stores and then check the items’ prices online in order to purchase them at the lowest prices. In order to combat showrooming, some physical stores started geofencing, which consists of sending promotional alerts to the smartphones of customers who opted into this service, when the customers are near or enter the store.

Learning Objective 2.3: To understand real-time bidding as compared with market segmentation.

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Real-time bidding (RTB) takes place when advertisers buy inventories of customers—termed impressions or eyeballs—on a per-impression basis, via programed instantaneous auction. An impression is a term for a customer that becomes available for realtime bidding online. Detailed profiles for the impressions are compiled from online navigation, demographics, geographic locations, and possessions and purchases.

Predictive analytics are measures that foresee consumers’ future purchases on the bases of past buying information and other data, and also evaluate the impact of personalized promotions created from these predictions. These measures are also designed to notice significant changes in consumers’ buying behavior because such variations provide marketers with targeting prospects.

The inventories become available for bidding in ad exchanges such as eXelate, BlueKai, Google, and DoubleClick. An ad exchange is a big pool of ad impressions. Publishers—that is, websites—paste their ad impressions into the pool, hoping someone will buy them. Buyers then bid on the impressions they wish to purchase and the outcomes are determined in milliseconds.

In traditional media buying, advertisers prepay for the space and do not get money back regardless of whether any consumer who had seen their ads ends up buying the product or at least became more interested and aware of their brands. With RTB, an advertiser competes in an auction with a multitude of other advertisers, all bidding at different rates for each impression, in real time.

Real-time bidding enables advertisers to optimize their expenditures by increasing the level of certainty that an ad campaign will reach a reasonable volume of the type of customers that marketers wish to reach. In contrast, many consumers reached via direct buys are unlikely to become customers because the groups reached by TV, magazines, and newspapers are broadly defined. With RTB, rather than buying a large inventory, marketers pay premium prices to secure inventories of the right customers, reach them where they are, and advertise their products to the most promising prospects.

CHAPTER OUTLINE INTRODUCTION 1. Market segmentation is the process of dividing a market into subsets of consumers with

common needs or characteristics.

2. Companies select the segments that are profitable, reachable, and feasibly targeted given the firm’s objectives and resources.

3. Product positioning is the process by which a company creates a distinct image and identity for its products, services and brands in consumers’ minds.

4 Product repositioning means changing and “refreshing” a brand’s portrayal. . Usage-occasion segmentation is a segmentation strategy based on the fact that many 5 products are purchased and used in the context of specific occasions. .

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*****Use Discussion Questions #2.1 and #2.2 Here;Use Key Termsmarket segmentation, positioning, repositioning, and usage-occasion segmentation Here; Use Figure #2.1 Here***** Market Segmentation 1. Segmentation divides the market for a product into relatively homogeneous groups that share

characteristics different from those of other groups.

2. Marketers segment consumers along quantitative and cognitive factors. a) Quantitative factors include consumer-intrinsic attributes (like demographics) and b) consumption-based factors (determined numerically).

Cognitive factors are psychological abstracts that include consumer-intrinsic factors (like personality traits and values) and consumption-specific attitudes and preferences. *****Use Learning Objective #2.1 Here***** 3. Demographics determine consumers’ needs for products and the ability to buy them;

psychographics explain buyers’ purchase decisions and choices. ***** Use Key Terms demographic segmentation and family life cycleHere***** 4. Demographic segmentation divides consumers according to age, gender, ethnicity, income

and wealth, occupation, marital status, household type and size, and geographic location. a) The core of almost all segmentations is demographics because: i. Demographics are the easiest and most logical way to classify people and can be measured more precisely than other segmentation bases. ii. Demographics offer the most cost-effective way to locate and reach specific segments because most of the secondary data compiled about any population stems from demographics. iii. Demographics enable marketers to identify business opportunities in the form of shifts in age, income distribution, and populations of various regions. iv. Many consumption behaviors, attitudes, and media exposure patterns are directly related to demographics. *****Use Review and Discussion Question #2.4 Here***** b. Age: product needs often vary with consumers’ age, and marketers commonly target age groups. Gender is a factual distinguishing segmentation variable, and c. many products and services are inherently designed for either males or females.

However, sex roles have become blurred. Households: segmentation is based on the premise that many families pass through similar phases in their formation, d. growth, and final dissolution. At each phase in the family life cycle, the family unit needs different products and services. .

*****Use Key Termfamily life cycle Here***** e. Social class can indicate an ability or inability to pay for a product model or brand, and consumers of different social classes vary in terms of values, product preferences and buying habits. i. Income is combined with other demographic variables to define target markets. ii. Income, education, and occupation tend to be closely correlated. iii. Social class can be measured as a weighted index of education, occupation and income f. Ethnicity: Marketers segment some populations on the basis of cultural heritage and ethnicity due to shared values, beliefs, and customs. African Americans, Hispanic Americans and Asian Americans are important subcultural market segments in the U.S. ***** Use Key Termssocial class and psychographics Here***** 5. Lifestyles, also known as

psychographics , consist of activities, interests, and opinions

(A IOs. ) a) The interests and opinions portions are cognitive constructs, which can be measured via surveys but are not evidence-based. A psychographic study includes a battery of b) statements selected from a psychographic inventory and usually accompanied by Likert scales on which respondents are asked to indicate their level of agreement or disagreement with each statement (Table 2.6) Because of their versatility, c) psychographics are widely used in segmentation and are part of almost any hybrid segmentation framework. VALS (an acronym for “values and lifestyles”) is the most d) popular segmentation system combining lifestyles and values. VALSTM focuses explicitly on explaining consumer purchasing behavior. e)

VALSTM includes three primary motivations: ideals motivated, achievement motivated and self-expression motivated. ii) VALSTM also reflects a continuum in terms of resources and innovativeness (Figure 2.2) i)

*****Use Review and Discussion Questions #2.8 and #2.9 Here; Use Tables #2.1 and #2.2 Here; Use Figure #2.2 Here; Use Key Terms psychographics and VALSTM Here ***** 6. Geodemographics: Where a person lives determines some aspects of consumption behavior,

so marketers frequently use geodemographics, a hybrid segmentation scheme based on the premise that people who live close to one another are likely to have similar financial means, tastes, preferences, lifestyles, and consumption habits, in strategic targeting. a) The primary commercial application of this technique is PRIZM, offered by Nielsen’s MyBestSegments. This system uses the ZIP + 4 postal system to classify all of the nation’s households into 66 segments. .

b)

Nielsen also uses P$YCLE (based on household wealth) and ConneXions (based on household receptivity to new technologies.

***** Use Hands-on Assignment #2.16 Here; Use Key Term geodemographics Here***** 7. Benefit segmentation is based on the benefits consumers seek from products and services. a) Many believe benefits sought are the core of all segmentation strategies. b) Sought benefits represent unfilled consumer needs whereas buyers’ perceptions that a

given brand delivers a unique and prominent benefit result in loyalty to the brand. *****Use Hands-on Assignment #2.13 Here; UseFigure 2.3 Here; Use Key Term benefit segmentation Here ***** 8. Media exposure considers the benefits consumers seek from adopting communication tools.

***** Use Table #2.4 and Figure 2.4 Here***** 9. Usage rate segmentation stems from differences among heavy, medium and light users, and

nonusers of a specific product, service, or brand. a) Marketers have found that within some product categories that a relatively small group of heavy users account for a disproportionately large percentage of total product usage. b) Targeting heavy users is a common marketing strategy, and it can be more profitable c) than targeting other user categories. d) However, since all competitors are likely to target the same heavy users, trying to attract e) these buyers requires a lot of expensive advertising. f) Some marketers prefer to target light and medium users with products that are distinct g) from those preferred by heavy users.

A sophisticated approach to usage rate involves identifying the factors that directly impact the usage behavior.

Understanding nonusers is essential.

Consumers can also be segmented in terms of their awareness status and also level of involvement. h) Product involvement is also a segmentation factor.

10. The occasion or situation often determines what consumers will purchase or consume, so marketers sometimes use usage-occasion segmentation. Many products are promoted for special usage occasions. product involvement, *****Use Review and Discussion Question #2.5 Here; Use Key Terms usage-occasion segmentation Here *****

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Selecting Target Markets 1. Real-time bidding (RTB) takes place when advertisers buy inventories of customers – termed impressions or eyeballs – on a per-impression basis, via programmed instantaneous auction. RTB facilitates optimization of advertising expenditures by 2. considering inventory per impression or placing premium bids on access to consumers that are particularly valuable to them. The profile of impressions is determined by data brokers.

3 . Web crawlers capture content across the internet and transmit it to the data broker’s servers.

4 . *****Use Learning Objective 2.3 Here; Use Key Termsreal time bidding and web crawlers Here ***** 5. Predictive analytics measures are designed to predict consumers’ future purchases.

Marketers base predictions on past buying information and other data and evaluate the impact of personalized promotions stemming from the predictions.

***** Use Key Term predictive analyticsHere; Use Figure 2.6 Here***** 6. Behavioral biometrics - originally called identity verification - chart unique patterns in the way people perform activities like swiping a screen 7. The application programming interface is the pie that announces each impression individually as it becomes available online.

8. A cookie is a software code sent from a website and stored on the user’s computer we browser while the user is online.

9. An ad exchange is a big pool of ad impressions.

10.

RTB also enablescross-channel campaigns .

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REVIEW AND DISCUSSION QUESTIONS 2.1 For each of the following products, identify the segmentation base that you consider the best for targeting consumers: (a) biscuits, (b) shampoo, (c) wireless broadband, and (d) holidays. Explain your choices.

A summary of possible answers or options is listed below (subject to changes): a) Biscuitsdemographics (size and composition of family); geographic factors (regional taste differences); benefit segmentation (health concerns, tastes); user behavior (usage situation, time pressure and rate of usage) b) Shampoodemographics (size and composition of family, gender); usage situation (e.g., dry hair or fine hair formulations, shampoo and conditioner); brand loyalty; rate of usage (e.g., daily washes, alternate-day washes); benefit segmentation (root strengthening, antidandruff) c) Wireless broadbanda combination of geographic factors (network availability, reception quality); usage situation (movie streaming, which requires fast download speeds), user behavior (heavy, medium, or light users) d) Holidaysa combination of demographics, psychographics, geodemographics, personality traits, and benefit segmentation (lifetime experiences, social benefits) Individual, Moderate, 10-15 minutes Objective 2.2: Understand the bases used to segment consumers, including demographics, psychographics, product benefits sought and product usage-related factors AACSB: Application of knowledge 2.2 Mobile service providers segment their customers based on several variables. What are some of these variables? Identify five benefits that mobile users might seek that could be used for targeting this group.

1) Age: Mobile service providers need to consider the usage of services amongst all age groups.

2) Income: This variable determines the affordability of services offered and how consumers from different income brackets respond to different services.

3) Handset preference: The kind of phone that the consumers own determines their network choices (2G/3G/4G).

4) Payment plan preference: This is closely related to income and handset preference. This variable determines the types of plans offered by mobile service providers.

Individual or Group, Moderate, 7-10 minutes Objective 2.2: Understand the bases used to segment consumers, including demographics, psychographics, product benefits sought, and product usage-related factors AACSB: Application of knowledge 2.3 Discuss the advantages and disadvantages of using demographics as a basis for segmentation. Can demographics and psychographics be used together to segment markets? Illustrate your answer with a specific example. .

Demographic information is the most accessible and cost effective way to identify a target market. Demographics are easier to measure than other segmentation variables. Most secondary data (e.g., census data) are expressed in demographic terms and most media develop demographic profiles of their audiences. Also, demographic trends reveal shifts in age and income that signal business opportunities for marketers. Demographics, however, tend to be one-dimensional because it provides information on the potential for usage but not on why a particular brand is used or exactly who uses it. Thus, demographics help locate a target market, although psychological and sociocultural characteristics help describe who its members are, how they think, feel, and behave.

Individual, Moderate, 7-10 minutes Objective 2.2: To understand how to identify, select, and reach target markets.

AACSB: Reflective thinking; Analytical thinking; Application of knowledge 2.4 Does your lifestyle differ significantly from your parents’ lifestyle? If so, how are the two lifestyles different? What factors cause these differences?

This is an interesting way to illustrate similarities and differences between the activities, interests, and opinions of two distinct groups, as the factors that determine one’s lifestyle.

With respect to presenting or discussing the results (if time is a problem), select the individuals that seem to have performed the exercise the best and have the students present results to class as a whole. Be sure to probe students as to mechanisms used to determine their parents (and their own) lifestyles. How could marketers use this information?

Individual, Moderate, 20-25 minutes Objective 2.2: To understand how to identify, select, and reach target markets. AACSB: Analytical thinking; Application of knowledge

2.5 Combine at least two segmentation bases for targeting each of the following products.

Explain your choices: (a) men’s sneakers; (b) women’s cocktail dresses; (c) hybrid cars; (d) e-readers.

The bases Student responses of segmentation will vary.may include demographics, geodemographics, “green”-ness, personality traits, psychographics/lifestyles, benefits, media usage, usage rate, and usage occasion.

Individual, Moderate, 10-15 minutes Objective 2.2: To understand how to identify, select, and reach target markets.

AACSB: Application of knowledge

2.6 Some marketers consider benefit segmentation as the segmentation approach most consistent with the marketing concept. Do you agree or disagree with this view? Why? Benefit segmentation is built upon the premise that consumers are basically purchasing needs, wants, and satisfactions. Thus, it is entirely consistent with the marketing concept.

Benefit .

segmentation allows marketers to position various brands within the same product category by stressing those benefits/desired satisfactions appropriate to each segment served. For example, in the toothpaste market, Close-up is marketed by using a social appeal that stresses bright teeth and is targeted to young people; Aim is targeted to parents as a good tasting toothpaste that will encourage children to brush longer; Viadent is targeted to adults as a means to remove tartar (cosmetic benefit) and plaque (health benefit). Individual, Easy, 3-5 minutes Objective 2.2: To understand how to identify, select, and reach target markets. AACSB: Reflective thinking

2.7 Which VALSTM segment(s) should a company producing environmentally friendly clothes from recycled fabric target? Explain your reasons for choosing the target group(s) you selected. How can these target markets be reached by marketers?

Several segments come into play in this situation (e.g., segments that focus on ideals, social issues, environment-friendly behavior). The best prospects (note that opinions on the following may vary) for a company producing environment-friendly clothes from recycled fabric appear to be consumers with abundant resources, education, and selfconfidence; they are consumers who are knowledge-seeking and principle-driven. Of the eight VALS segments, they are Thinkers or individuals with an Ideals motivation.

Thinkers plan, research, and consider before acting, have “ought” and “should” benchmarks for social conduct, and follow intellectual pursuits. Self-expression or achievement is not usually their driving force. Innovators could be targeted as well, as they are often future-oriented and confident enough to experiment. For this question, make sure students clearly explain their reasons for choosing the target groups they did.

Point out the need for a clear positioning of the product in the segment. When it comes to reaching the target markets chosen, let students discuss the (creative) ways they would try to reach their selected customers. Individual or Group, Moderate, 7-10 minutes Objective 2.2: Understand how to identify, select, and reach target markets. AACSB: Application of knowledge

2.8Regent Seven Seas Cruises and Royal Caribbean International are two companies in the vacation and travel industry. After looking at their websites, describe the kind of consumers that each company is seeking to attract. Also, describe how either company can use demographics and psychographics to identify TV shows and magazines in which to place its advertisements.

Regent Seven Seas Cruises is owned by Prestige Cruise Holdings. According to their web site, Prestige is the market leader in the Upper Premium and Luxury segments of the cruise industry. The company is trying to attract wealthy, upscale consumers who can afford luxury and personalized cruise itineraries. Royal Caribbean makes it clear that their cruises are for everyone, from families, couples, family reunions to corporate events. Royal Caribbean .

offers activities that range from “mild to wild.” Obviously, both companies rely on demographics in segmenting their markets. Within each of the demographic groups listed above, the companies should identify additional socioeconomic factors (i.e., income, education, occupation) of consumers to whom their cruises may appeal. Both companies should identify the psychographics of consumers in the different segments, combine demographics and psychographics, and create several profiles of its likely customers.

Then, both Regent Seven Seas Cruises and Royal Caribbean International should identify TV shows and magazines that have “audience profiles” matching its customers’ profiles and place its advertisements in such media. Individual, Moderate, 7-10 minutes Objective 2.2: To understand how to identify, select, and reach target markets. AACSB: Application of knowledge

2.9 Using the VALSTM segment descriptions, list one product for each of the segments that you think is primarily aimed at that segment. Explain your reasons for allocating these products to those segments.

Marketers can use psychographic segmentation to target consumers with different lifestyles, which comprises consumers’ activities, interests, and options. VALSTM is a widely used segmentation method for this purpose and uses primary motivations and resources to define eight distinctive subgroups. Student responses will vary. When students describe the products and the segments they have chosen as a primary target market for them, they should relate them to psychographics. Check whether the reasons provided by the students are consistent with the characteristics of the relevant VALSTM segment. Individual, Moderate, 10-15 minutes, Out of class Objective 2.2: Understand how to identify, select, and reach target markets. AACSB: Application of knowledge

2.10

Explain the differences between segmentation and real-time bidding.

Behavioral targeting consists of sending consumers personalized and prompt offers and promotional messages based on marketers’ tracking of one or more of the following factors: online navigation, current geographic location, and purchase behavior. The idea is to reach the right customers at the right time. Predictive analytics are methods for predicting consumers’ future purchases on the bases of past buying information and other data and evaluating the impact of personalized promotions stemming from the predictions. Collecting the right data and analyzing it strategically are essential to effective behavioral targeting.

Individual, Moderate, 5-7 minutes Objective 2.3: To understand real-time bidding as compared with market segmentation.

AACSB: Information technology; Analytical thinking .

2.11Explain how marketers can employ each of the following data in predictive analytics: (a) the website’s consumers visit; (b) consumers’ levels of engagement with visited websites (i.e. the pages viewed, lengths of visits, return to site frequency); (c) Consumers’ interests, lifestyles and personalities (e.g., from the contents of their blogs, tweets, and Facebook profiles); (d) consumers’ purchases, almost purchases, abandoned carts, and product returns and exchanges.

Predictive analytics are measures that predict consumers’ future purchases on the bases of past buying information and other data, and also evaluate the impact of personalized promotions stemming from the predictions. Recording the websites that consumers visit, measuring consumers’ levels of engagement with the sites (i.e., which pages they look at, the length of their visits, and how often they return), recording the visitors’ lifestyles and personalities (derived from the contents of consumers’ blogs, tweets, and Facebook profiles), and keeping track of consumer’ purchases, almost purchases (i.e., abandoned shopping carts), and returns or exchanges can be used in models and turned into measures that predict future behavior that are useful for segmenting and developing strategies. Individual, Easy, 5-7 minutes Objective 2.3: To understand real-time bidding as compared with market segmentation. AACSB: Information technology

2.12 How would you segment the market of consumers who would like to order Oakley sunglasses online? Explain your answer.

Responses will vary, but students should consider the bases for segmentation (demographics, geodemographics, “green”-ness, personality traits, psychographics/lifestyles, benefits, media usage, usage rate, and usage occasion) and the information referenced in 2.10 that is used to gain insights online ((1) the websites consumers visit; (2) consumers’ levels of engagement with visited websites (i.e. the pages viewed, lengths of visits, return to site frequency); (3) visitors’ interests, lifestyles and personalities e.g. from the contents of their blogs, tweets and Facebook profiles; (4) visitors’ purchases, almost purchases and abandoned carts, and product returns and exchanges). Individual, Moderate, 5-7 minutes Objective 2.2: To understand how to identify, select, and reach target markets. Objective 2.3: To understand real-time bidding as compared with market segmentation. AACSB: Information technology; Application of knowledge

HANDS-ON ASSIGNMENTS 2.13 Thinking of your family and friends who own cars, list the reasons why they do. What needs have they got? Which benefits are they seeking? Try to build up several different “car owner” profiles this way. Then visit the website of a car brand of your choice and check whether all the needs you discovered are offered as benefits in a model among the product range. .

Instructor’s Discussion The benefit segmentation approach is based on the fulfilment of consumer needs. This exercise is designed to illustrate the variability of benefits that consumers seek in the same product and to show that knowledge of desired benefits can be used to develop product variations. Students may come up with different profiles, from a family seeking space for three children to senior citizens looking for a car that is easy to get into and park. By juxtaposing these with the car models on offer, students may find a great match, but they might also find market opportunities (e.g., eco-friendly, affordable cars). Group, Moderate, 20-25 minutes Objective 2.2: Understand how to segment markets along demographics, lifestyles, product benefits and usage, and media exposure.

AACSB: Application of knowledge

2.14 Analyse one of your social media accounts or a randomly chosen (public) one with respect to the data it holds for marketers regarding segmentation. Look through the entries that have been shared via the account. Which segmentation criteria could you deduce from this data on the chosen social media account?

Instructor’s Discussion This exercise should encourage greater student awareness about consumer targeting in the online world and the power of the data they, as consumers, can generate. Student findings may vary depending on the social media channel chosen. In the case of Facebook, for example, students might find criteria like gender, relationship status, age, location, interests, and more. Conclude the discussion with a debate about the ethics of sharing of personal data. Individual, Easy, 5-7 minutes Objective 2.2: Understand how to identify, select, and reach target markets. AACSB: Information technology

2.15 The owners of a local health-food restaurant have asked you to prepare a psychographic profile of families living in the community surrounding the restaurant's location. Construct a 10-question psychographic inventory appropriate for segmenting families on the basis of their dining-out preferences.

Instructor’s Discussion The psychographic items developed by the students can fall into any of a large number of dining-out and meal-related categories (price consciousness, food venturesomeness, social dimensions of eating, home-orientation, etc.). The instructor should maintain an inventory of student responses to this question and use them to demonstrate good and bad psychographic statements when this exercise is discussed. .

Individual, Moderate, 20-25 minutes Objective 2.2: To understand how to identify, select, and reach target markets.

AACSB: Application of knowledge 2.16 Find three print advertisements directed at three different clusters, each one belonging to one of the three frameworks: PRIZM, P$YCLE and ConneXions. Explain your choices.

Instructor’s Discussion As students consider the effectiveness of each ad, the discussion should focus on the following issues: When discussing the ad based on a PRIZM cluster, students should make sure they are discussing issues related to both demographics and behaviors. PRIZM classifies the nation’s households into one of 66 segments. ACXIOM consists of seventy segments that are classified into twenty-one life stage groups.

Individual, Moderate, 20-25 minutes Objective 2.2: To understand how to identify, select, and reach target markets. AACSB: Application of knowledge

S.T.A.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 One of the best and easiest ways to segment a market is on the basis of age. As marketers have discovered, however, this is a form of segmentation that can become a very sticky proposition. Consider the number of marketing efforts directed toward the elderly. In this case, marketers must be aware that, even though they are dealing with experienced consumers, this segment is considered to be susceptible to deceptive marketing practices. A dilemma exists—how to aggressively market to a segment that often has substantial income without taking advantage of the segment’s vulnerability? Visit the American Association of Retired Persons (AARP) Web site at www.aarp.org for information and guidance in accomplishing the following assignment: a. Construct a list of five (5) ethical taboos that a marketer when marketing to this should market avoid segment.

Explain the taboos. b. Find an illustration of a company that you believe markets to the elderly in an ethical manner. Discuss why you picked the company and why you consider its practices to be ethical.

Instructor’s Discussion Students will be able to observe a variety of issues that impact and affect the elderly market segment via the AARP Web site. To begin a discussion of taboos, consider the following propositions—thou shall not steal, thou shall not harm, thou shall inform, thou shall not deceive, and thou shall not pressure. From this simple list, students should be able to create and construct a list of ethical don’ts. Be sure the students consider the Internet when constructing their list. .

Students are free to select any company they wish for excellent elderly business practices. A good illustration to begin with would be McDonald’s. This company often designates special discounts and coffee times for seniors.

S.T.A.R. Project #2 Few subjects are as controversial in the United States today as gun control. Given the violence in our society, the number of incidents in which guns are weapons of destruction, and the growing void between those that demand the right to own guns and those that want all guns destroyed, the National Rifle Association is at the center of a whirlwind of controversy. The NRA (see www.nra.org) has been singled out as an organization that is either a defender of the Constitution or evil (depending on one’s point of view). Ethical situation—assuming that you have been given the task of evaluating a request from the NRA to sponsor a local civic event in your area (for example, a 10K run benefiting cancer patients), conduct the following activities: a. What evidence do you find on the NRA Web site that it is concerned about public welfare? b. What evidence do you find on the Web site that the NRA is an effective marketer? c. What ethical issues might be present should the NRA request to sponsor your civic event be granted? How would you deal with these issues? d. What market segments would be impacted by your evaluation of the NRA request? e. What would you personally do in this illustration? Explain why?

Instructor’s Discussion This is a controversial assignment that is designed to get students to think about an issue from several perspectives. Certainly the amount of violence (and the use of guns with respect to this violence) will temper decisions and comments in this area. If students learn to deal with difficult issues now, however, they will be better prepared to address difficult issues in the future. No one can disagree that this organization is an effective marketer to a select group of people. Students can learn about this particular market segment by examining the opening page of the Web site and the various folders present. The ethical dilemma is more difficult to deal with. The NRA has deep pockets and many civic projects might need this support. Some will feel uncomfortable accepting the support. Is acceptance any different, however, then accepting support from cigarette, alcohol, or other controversial product manufacturers? That is the real issue to be discussed. Please feel free to change this assignment to fit circumstances and preferences. Please be forewarned that this assignment may not be for everyone.

Small Group Projects S.T.A.R. Project #3 One of the hardest assignments for a marketing manager is how to reinvigorate a brand that has been around for a long time. Time-tested brands have met the needs of their consumers but often forget to keep pace with changes in the marketplace and new market segments that are constantly forming. One such time-tested brand is Rit Dye (see www.ritdye.com). Your group’s assignment is to learn about Rit Dye and propose a new segmentation strategy for the organization that would boost sales. Consider existing segments and look for new ones. Be sure to justify your ideas. Visit the company’s Web site to learn tips about of dyeing, view project suggestions, learn about color formulas and watch video tutorials in the Rit Studio. Write a short report about your experience and your segmentation strategy for the company. .

Instructor’s Discussion Rit Dye has been an excellent marketer through the years and has provided products that have met a real need. When, however, is the last time you dyed something? That is the crux of Rit Dye’s problem. Have students examine how the brand is used today and how its use might be expanded in the future. Notice the segments on the Web page devoted to tie-dyeing (yes, the same tie-dyeing that was done in the Flower Power ’60s). This might give students a clue as to potential segments for the future.

S.T.A.R. Project #4 Given the business challenges of the last few years, companies must always look for new ways to retain customers and enhance the value experience brought to them. One company that has specialized in this art is Carnival Cruise Lines. Carnival has learned how to target potential customers, provide fun and excitement for current customers, and bring loyal customers back again and again. Personal attention, e-mail reminders, and an interactive Web site have aided the company in building and maintaining relationships with customers. Your group’s assignment is to construct a segmentation profile of Carnival’s first time customers, current customers, and past customers. Though information specifics will be beyond your grasp, general information about these groups can be obtained via the company’s Web site (see www.carnival.com). Your profiles should consider age, income, lifestyle, and other variables found in the chapter. Be creative (or contact a travel agent). Present your profiles to the class. How did your group’s profiles match those of other groups? Based on your profiles, comment on any new perceived opportunities for Carnival based on your segmentation work.

Instructor’s Discussion The Carnival Web site provides a wealth of information about itself and its customers. Some of the information is straightforward and some must be presumed. Students are encouraged to create with this exercise. The experience will aid them in understanding how to use different bases of segmentation and construct segmentation profiles. This exercise can also be a springboard to the lifestyle information presented in the chapter.

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CHAPTER 3 Consumer Motivation and Personality LEARNING OBJECTIVES After reading, studying and analyzing this chapter, students should be able: 3.1 To understand how motives, needs, and goals shape consumer behavior.

3.2 To understand the systems of classifying needs.

3.3 To understand the impact of hidden motives on consumer behavior.

3.4 To understand why and how consumers use technology.

3.5 To understand personality development.

3.6 To understand how personality traits shape consumer behavior.

3.7 To understand brand personification.

3.8 To understand the impact of self-image on consumer behavior.

CHAPTER SUMMARY Learning Objective 3.1: To understand how motives, needs, and goals shape consumer behavior.

Motivation is the driving force that impels people to act. It represents the reasons one has for acting or behaving in a particular way. Needs are circumstances or things that that are wanted or required, and they direct the motivational forces. Motivation drives consumers to take action by producing a psychological tension caused by unfulfilled needs. Individuals strive to reduce this tension through selecting goals and subsequent behavior that they anticipate will fulfill their needs and thus relieve them of the tension they feel.

There are two types of human needs. Biogenic needs (also termed physiological and innate needs) sustain physical existence. They include the need for food, water, air, protection of the body from the outside environment (i.e., clothing and shelter), and sex. Psychogenic needs are learned from our parents, social environment, and interactions with others. Among many others, they include the needs for self-esteem, prestige, affection, power, and achievement.

Goals are the sought-after results of motivated behavior, and all human behavior is goal oriented.

Most of an individual’s needs are dormant much of the time. The arousal of any need at a specific moment may be caused by biological stimuli, emotional or cognitive processes, or stimuli in the outside environment. Needs and goals are interdependent; neither exists without the other. However, people are often not as aware of their needs as they are of their goals.

Need-driven human activity never ceases because: (1) needs are never fully satisfied—they continually cause actions designed to attain or maintain satisfaction; (2) as needs are satisfied,

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new and higher-order needs emerge, cause tension, and induce activity; and (3) people who achieve their goals set new and higher goals for themselves.

The motivation to select goals can be either positive or negative. We may feel a driving force toward some object or condition or a driving force away from some object or condition. Positive outcomes that we seek are called approach objects, and negative outcomes that we want to prevent are called avoidance objects.

Frustration is the feeling that results from failure to achieve a goal, and defense mechanisms are cognitive and behavioral ways to handle frustration.

Learning Objective 3.2: To understand the systems of classifying needs.

Human beings share the same biogenic and similar psychogenic needs. However, different people assign different priorities to psychogenic needs.

Henry Murray prepared an extensive list of psychogenic needs that represented the first systematic approach to the understanding of nonbiological human needs. Murray believed that although each need is important in and of itself, needs can be interrelated, can support other needs, and can conflict with other needs.

Maslow’s hierarchy-of-needs theory proposes five levels of human needs: physiological needs, safety needs, social needs, egoistic needs, and self-actualization needs. The need hierarchy has received wide acceptance in many social disciplines because it appears to reflect the assumed or inferred motivations of many people in U.S. society. The five levels of needs are sufficiently generic to encompass most individual needs.

Learning Objective 3.3: To understand the impact of hidden motives on consumer behavior.

Motivational research—a “term of art” for a consumer behavior research approach conceived by Ernest Dichter—uses mostly projective techniques. This method is commonly used in qualitative research to delve below the consumer’s level of conscious awareness to identify underlying needs and motives.

Learning Objective 3.4: To understand why and how consumers use technology.

Marketers are interested in how technology influences motivations. For example, marketers are learning about consumer motivation to post product and service reviews online in order to influence these decisions. In addition, wearable technology, such as fitness bracelets, motivate consumers to increase their exercise.

Learning Objective 3.5: To understand personality development.

Personality consists of the psychological characteristics that both determine and reflect how a person responds to his or her environment. Although personality tends to be consistent and

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enduring, it may change abruptly in response to major life events, as well as gradually over time.

Three theories of personality are prominent in the study of consumer behavior: psychoanalytic theory, neo-Freudian theory, and trait theory. Freud’s psychoanalytic theory provides the foundation for the study of motivational research, which operates on the premise that human drives are largely unconscious in nature and motivate many consumer actions. Neo-Freudian theory tends to emphasize the fundamental role of social relationships in the formation and development of personality. Trait theory focuses on empirical measures of personality in terms of specific psychological characteristics, called traits, that set one person apart from another.

Learning Objective 3.6: To understand how personality traits shape consumer behavior.

The premise researching the impact of personality traits on consumer behavior is that people have varying degrees that can be measured. Several personality traits are strongly correlated with innovativeness: dogmatism, inner- versus other-directedness, and the need for uniqueness. These personality traits, as well as others—optimum stimulation level, sensation seeking, variety or novelty seeking, need for cognition, visualizer or verbalizer status, consumer materialism, fixated consumption, compulsive consumption, and consumer ethnocentrism—greatly impact consumption behavior and marketers must understand and use them to develop effective persuasive strategies.

Learning Objective 3.7: To understand brand personification.

Brand personification takes place when consumers assign humanlike qualities to products and brands. Marketers who study and understand the meaning of such product and brand personalities can use them to shape consumers’ responses to promotional messages and enhance their emotional connections to products and brands. A product’s personality frequently endows products and brands with gender. Consumers associate some brands with geographic locations, and such associations often enhance their memory and likeability of brands. Many consumers who are heavy internet users become emotionally attached to certain websites, and several researchers have studied the ascribing of personality traits to websites.

Learning Objective 3.8: To understand the impact of self-image on consumer behavior.

People have several forms of perceived self-image expressing their traits, habits, possessions, and relationships. Consumers frequently attempt to preserve, enhance, alter, or extend their selfimages by purchasing brands that appeal to their self-image(s), and also by shopping at stores that they perceive as consistent with their relevant self-image(s). Consumer behavior researchers identified four components of self-image: (1) actual self-image, (2) ideal self-image, (3) social self-image, and (4) ideal social self-image. Understanding the dimensions of self-image enables marketers to design effective promotional messages targeting various segments.

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CHAPTER OUTLINE INTRODUCTION 1. Motivation is the driving force that impels people to act/represents the reasons one has for acting or behaving in a particular way.

2. Needs are circumstances or things that are wanted or required, and they direct motivational forces. *****Use Key Termsmotivation and needs Here ***** 3. Personality consists of the inner psychological characteristics that both determine and reflect

how we think and act.

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Brand personification occurs when consumers attribute human traits or characteristics to a

5. brand.

refers to attributing human characteristics to something that is not

Anthropomorphism human. ***** Use Key Termspersonality, brand personification and anthropomorphism Here; Use Figure 3.2 Here*****

The Dynamics of Motivation ***** Use Learning Objective #3.1 Here ***** 1. The foundation of marketing is identifying and satisfying needs.

a) Marketers do not create needs but strive to make consumers more keenly aware of unfelt or dormant needs. b) A corporate focus on developing products that will satisfy consumers’ needs ensures that the company stays in the forefront of the search for new and effective solutions. c) Companies that define themselves in terms of products they make may go out of business when products are replaced by competitive offerings that better satisfy consumers’ needs. ***** Use Figure #3.3 Here***** 2. There are two types of human needs: physiological needs and psychological needs.

a) Physiological needs are innate (biogenic, primary) and include the need for food, water, air, protection from the outside environment, and sex; they sustain biological existence. b) Psychogenic needs are learned from our parents, social environment and interactions with others (e.g. self-esteem, prestige, affection, power, learning and achievement). .

3. Need arousal may be caused by internal stimuli, emotional or cognitive processes, or stimuli

in the outside environment. a) Physiological arousal is often involuntary but arouses needs that cause uncomfortable tensions. b) Cognitive arousal leads to cognitive awareness of a need and action that would fulfill it.

4. Goals are the sought-after results of motivated behavior, and all human behavior is goal oriented. There are two types of goals: a) Generic goals are outcomes that consumers seek in order to satisfy physiological and psychological needs. (e.g. I want a pair of pants.) b) Product-specific goals are outcomes that consumers seek by using a given product or service. (e.g. I want a pair of Calvin Klein jeans.)

***** Use Review and Discussion Questions #3.2, #3.3 and #3.4 Here;Use Key Terms goals, generic goals, product-specific goals Here; Use Figure 3.3 Here***** 5. Consumers set purchase-related goals that satisfy more than one need; people with different

needs may select the same goal; and people with the same needs may seek fulfillment via different goals. a) The motivation to select goals can be positive or negative. b) We may feel a driving force toward or away from an object or condition. i) Positive outcomes are called approach objects ii) Negative outcomes are call avoidance objects 6. Needs and goals are interdependent. a) Neither exists without the other b) People are less aware of their needs than they are of their goals. c) Several factors motivate people to go shopping: i) Seeking specific goods ii) Recreational shopping iii) Activity-specific shopping iv) Demand-specific shopping ***** Use Key Termsapproach objects and avoidance objects Here ***** 7. Human needs are never fully satisfied

a) Needs and goals are constantly growing and changing. b) As individuals attain their goals, they develop new, higher ones. c) If they do not attain their goals, they continue to strive for old goals or they develop substitute goals. d) People who achieve their goals set new and higher goals for themselves.

8. Frustration is the feeling that results from failure to achieve a goal, and defense mechanisms are cognitive and behavioral ways to handle frustration. Defense mechanisms include: a) Aggression b) Rationalization .

c) Regression d) Withdrawal e) Projection f) Daydreamin g) g Identification ***** Use Review and Discussion Questions 3.4 and 3.5 Here; Use Hands-On Assignment 3.1 Here; Use Key Terms frustration and defense mechanisms Here; Use Figure 3.4 Here ***** Systems of Needs ***** Use Learning Objective #3.2 Here ***** 1. Although there is little disagreement about specific physiological needs, there is

disagreement about defining and categorizing psychological (i.e., psychogenic) needs. a) In 1938, the psychologist Henry Murray prepared a detailed list of psychogenic needs that have served as the basic constructs for a number of widely used personality tests. b) Table 3.1 lists some of the needs that Murray pointed out and examples of promotional messages built around psychogenic needs. ***** Use Table #3.1 Here; Use Figure 3.5 Here***** c) Dr. Abraham Maslow formulated a widely accepted theory of human motivation.

Maslow's theory identifies five basic levels of human needs, which rank in order of importance from low-level (biogenic) needs to higher-level (psychogenic) needs. Maslow’s hierarchy of needs theory suggests that individuals seek to satisfy lower- level needs before higher-level needs emerge. i) Physiological needs are the first and most basic level of human needs. a) Physiological needs are those things that are required to sustain biological b) life: food, water, air, shelter, clothing, and sex (biogenic needs).

Physiological needs are dominant when chronically unsatisfied. ii) Safety and security needs become the driving force behind consumer behavior after physiological needs have been satisfied. a) Safety needs include order, stability, routine, familiarity, control over one’s b) life and environment.

Health and the availability of health care are important safety concerns. iii) Social needs relate to such things as love, affection, belonging, and acceptance. iv) Egoistic needs can take an inward or outward orientation, or both. a) Inwardly-directed ego needs reflect an individual’s need for selfacceptance, for self-esteem, for success, for independence, and for personal satisfaction with a job well done.

Outwardly-directed ego needs include the needs for prestige, for reputation, b) for status, and for recognition from others.

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v) Self-actualization need refers to an individual’s desire to fulfill his or her potential to become everything he or she is capable of becoming. *****Use Review and Discussion Questions 3.6 and 3.7 Here; Use Key Terms Maslow’s hierarchy of needs, social needs, egoistic needs and self-actualization need Here; Use Figures #3.6 and 3.7 Here***** d) The major problem with Maslow’s theory is that it cannot be tested empirically; there is

e)

no easy way to measure precisely how satisfied one need is before the next higher need becomes operative.

Maslow’s hierarchy offers a useful, comprehensive framework for marketers trying to develop appropriate advertising appeals for their products. i) The hierarchy enables marketers to focus their advertising appeals on a need ii) level that is likely to be shared by a large segment of the prospective audience.

The hierarchy facilitates product positioning or repositioning because different appeals for the same product can be based on different needs included in this framework.

Hidden Motives 1.Motivational research , which should logically include all types of research into human motives, has become a “term of art.” a. It was first used by Dr. Ernest Dichter.to uncover consumers’ subconscious or hidden motives. b. Based on the premise that consumers are not always aware of the reasons for their actions, motivational research attempts to discover underlying feelings, attitudes, and emotions concerning product, service, or brand use.

2. Building on the contributions of Dr. Dichter and other earlier motivational researchers, qualitative consumer research expanded from its focus on Freudian and neo-Freudian concepts to a broader perspective that embraced not only other schools of psychology, but included methodologies and concepts borrowed from sociology and anthropology.

3. Motives are hypothetical constructs — they cannot be seen or touched, handled, smelled, or otherwise tangibly observed — so no single measurement method can be considered a reliable index. a. Because respondents are often unaware of their motives or are unwilling to reveal them when asked directly, researchers use qualitative research to delve into consumer’s unconscious or hidden motivations. b. Many qualitative methods also are termed projective techniques because they require respondents to interpret stimuli that do not have clear meanings, with the assumption that the subjects will reveal or “project” their subconscious, hidden motives into the ambiguous stimuli.

Examples include storytelling, role-playing, word association, sentence completion, c.

Thematic Apperception Tests, and photo sorts.

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*****Use Learning Objective 3.3 Here; Use Review and Discussion Question #3.8 Here; Use Key Terms motivational research, qualitative research, and projective techniques Here ***** Motives and Technology 1. Bloggers and individuals who post comments online influence other consumers, who feel information from other consumers is more credible than information from advertisements.

2. Understanding the motivations of writers enables marketers to influence what is being written.

3. Reasons consumers write product reviews: a. To be helpful to other consumers (Murray’s Sharing Information Need) b. To gain prestige (Murray’s Achievement Need) c. To create content for their channels (Murray’s Creation Need) d. To obtain swag or incentives (Murray’s Acquiring Need) 4. Reasons consumers interact with brands on the internet: a. Interest in buying and comparing products’ features online b. Find personalizing products fun c. Receiving good customer service d. Winning prizes and receiving free product samples 5. Technology can be a motivating factor for things like exercise.

*****Use Learning Objective 3.4 Here***** Personality Development 1. Personality is defined as those inner psychological characteristics that both determine and reflect how a person responds to his or her environment. a) The emphasis in this definition is on inner characteristics—those specific qualities, attributes, traits, factors, and mannerisms that distinguish one individual from other individuals. b) The identification of specific personality characteristics associated with consumer behavior has proven to be highly useful in the development of a firm’s market segmentation strategies. ***** Use Learning Objective #3.5 Here; Use Key Term personality Here***** 2. The facets of personality: heredity, early childhood experiences, and broader social and

environment influences are thought to influence personality development.

3. In the study of personality, three distinct properties are of central importance:

a) Personality reflects individual differences. b) Personality is consistent and enduring. c) Personality can change. .

4. Personality reflects individual differences

a) An individual’s personality is a unique combination of factors; no two individuals are exactly alike. b) Personality is a useful concept because it enables marketers to categorize consumers into different groups on the basis of a single trait or a few traits.

5. Personality is consistent and enduring. a) Marketers learn which personality characteristics influence specific consumer responses and attempt to appeal to relevant traits inherent in their target group of consumers. b) Even though an individual’s personality may be consistent, consumption behavior often varies considerably because of psychological, sociocultural, situational and environmental factors that affect behavior.

6. Personality Can Change a) An individual’s personality may be altered by major life events, such as the birth of a child, the death of a loved one, a divorce, or a major career change. b) An individual’s personality also changes as part of a gradual maturing process. i) Personality stereotypes may also change over time. ii) There is a prediction, for example, that a personality convergence is occurring between men and women. iii) The reason for this shift is that women have been moving into occupations that have been dominated by men and have increasingly been associated with masculine personality attributes.

7. There are three major theories of personality: Freudian theory, neo-Freudian theory, and trait theory. a) Freudian theory: Sigmund Freud’s psychoanalytic theory of personality is one of the cornerstones of modern psychology. i) This theory was built on the premise that unconscious needs or drives, especially biological and sexual drives, are at the heart of human motivation and personality. ii) Freud proposed that the human personality consists of three interacting systems: the id, the superego and the ego. a) The id is the “warehouse” of primitive and impulsive drives, such as: thirst, hunger, and sex, for which the individual seeks immediate satisfaction without concern for the specific means of that satisfaction.

The superego is the individual’s internal expression of society’s moral and b) ethical codes of conduct.

(1) The superego’s role is to see that the individual satisfies needs in a (2) socially acceptable fashion.

The superego is a kind of “brake” that restrains or inhibits the impulsive forces of the id. c) The ego is the individual’s conscious control, which functions as an internal monitor that attempts to balance the impulsive demands of the id and the sociocultural constraints of the superego. *****Use Key TermsFreudian theory, id, superego, ego Here***** .

iii) Freud emphasized that an individual’s personality is formed as he or she passes through a number of distinct stages of infant and childhood development: oral, anal, phallic, latent, and genital stages. *****Use Hands-on Assignment #3.20 Here***** b) Neo-Freudian personality theories come from Freud’s colleagues, who felt social relationships play a crucial role in the development of personality and may have disagreed with his contention that personality is primarily instinctual and sexual in nature. i) Alfred Adler viewed human beings as seeking to attain various rational goals, which he called style of life, placing emphasis on the individual’s efforts to overcome feelings of inferiority. ii) Harry Stack Sullivan stressed that people continuously attempt to establish significant and rewarding relationships with others, placing emphasis on efforts to reduce tensions. iii) Karen Horney focused on the impact of child-parent relationships, especially the individual’s desire to conquer feelings of anxiety. She proposed three personality groups: compliant, aggressive, and detached. a) Compliant individuals are those who move toward others—they desire to b) be loved, wanted, and appreciated. c) Aggressive individuals move against others—they desire to excel and win d) admiration. e) Detached individuals move away from others—they desire independence, self-sufficiency, and freedom from obligations.

A personality test based on Horney’s theory (the CAD) has been developed and tested.

It reveals a number of tentative relationships between scores and product and brand usage patterns. iv) It is likely that many marketers have used some of these neo-Freudian theories intuitively. *****Use Key TermsNeo-Freudian theory and CAD scaleHere***** Personality Traits 1. Personality traits are characteristics that set people apart from one another. a. Selected single-trait personality tests increasingly are being developed specifically for use in consumer behavior studies. b. Types of traits measured include: i. Innovativeness—how receptive a person is to new experiences ii. Materialism—the degree of the consumer’s attachment to “worldly possessions”

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iii. Ethnocentrism—the consumer’s likelihood to accept or reject foreign-made products c. Researchers have learned to expect personality to be linked to how consumers make their choices, and to the purchase or consumption of a broad product category rather than a specific brand. ***** Use Learning Objective #3.6 Here; Use Review and Discussion Questions #3.10 and #3.11 Here; Use Key Terms innovators, laggards, innovativeness, materialism, and ethnocentrism Here ***** 2. Innovativeness is the degree of a consumer’s willingness to adopt new products and services shortly after the products are introduced. a. Motivational factors that inspire consumer innovativeness include: i. Functional factors – interest in the performance of an innovation ii. Hedonic factors – feeling gratified by using the innovation iii. Social factors – desire to be recognized by others because of one’s pursuit of innovations iv. Cognitive factors – mental stimulation experience by using an innovation b. A study identified three levels of innovativeness: i. Global innovativeness – a personal trait that exists independent of any context; one that represents the “very nature” of consumers’ innovativeness. ii. Domain-specific innovativeness – a more narrowly defined activity within a specific domain or product category. iii. Innovative behavior – a pattern of actions or responses that indicate early acceptance of change and adoption of innovations. *****Use Key Terminnovativeness Here; Use Table 3.2 Here***** 3. Dogmatism is a personality trait that measures the degree of rigidity an individual displays toward the unfamiliar and toward information that is contrary to their established beliefs. a. A person who is highly dogmatic approaches the unfamiliar defensively and with considerable discomfort and uncertainty. b. A person who is low dogmatic will readily consider the unfamiliar or opposing beliefs. c. Consumers low in dogmatism (open-minded) are more likely to prefer innovative products to established ones and tend to be more receptive to messages that stress factual differences, product benefits, and other forms of product-usage information. d. Consumers high in dogmatism (closed-minded) are more likely to choose established product innovations and tend to be more receptive to ads for new products or services that contain an appeal from an authoritative figure. *****Use Key Termdogmatism Here*****

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4. Social character is a personality trait that ranges on a continuum from inner-directed to otherdirected. a. Inner-directed consumers tend to rely on their own “inner” values or standards in evaluating new products and are likely to be consumer innovators. They also prefer ads stressing product features and personal benefits. b. Other-directed consumers tend to look to others for direction and are not innovators.

They prefer ads that feature social environment and social acceptance. inner-directed and *****Use Review and Discussion Question #3.12 Here; Use Key Terms other-directed Here; Use Figure 3.10 Here ***** 5. Need for uniqueness is defined as an individual’s pursuit of differentness relative to others that is achieved through the acquisition of consumer goods in order to enhance one’s personal and social identity. a. Consumers with high need for uniqueness adopt new products and brands quicker than others. b. Consumers with high need for uniqueness prefer creative products that counter conformity and are outside group norms, and avoid similarity reflected in buying mainstream products. ; Table #3.3 Here ***** *****Use Key Termneed for uniqueness HereUse 6. Persons with high optimum stimulation levels (OSLs) are willing to take risks, to try new products, to be innovative, to seek purchase-related information, and to accept new retail facilities. a. High OSL people prefer an environment crammed with novel, complex, and unusual experiences b. OSL scores also reflect a person’s desired level of lifestyle stimulation. i. Consumers whose actual lifestyles are equivalent to their OSL scores appear to be quite satisfied. ii. Those whose lifestyles are understimulated are likely to be bored. iii. Those whose lifestyles are overstimulated are likely to seek rest or relief. *****Use Key Termoptimum stimulation level (OSL) Here***** 7. Sensation seeking (SS) is closely related to OSL and defined as “a trait characterized by the need for varied, novel, and complex sensations and experience, and the willingness to take physical and social risks for the sake of such experience.” *****Use Key Termsensation seeking Here***** 8. Varietyand novelty seeking is also related to OSL. a. Different types of variety seeking include: .

i. Exploratory purchase behavior (e.g., switching brands to experience new and possibly better alternatives) ii. Vicarious exploration (e.g., where the consumer secures information about a new or different alternative and then contemplates or even daydreams about the option) iii. Use innovativeness (e.g., where the consumer uses an already adopted product in a new or novel way). b. High variety-seeking consumers are likely to purchase the latest smartphones/ technological products with functions. *****Use Key Termnovelty seeking Here ***** 9. Need for cognition (NFC) is the measurement of a person’s craving for or enjoyment of thinking. a. Consumers who are high in NFC are more likely to be responsive to the part of an advertisement that is rich in product-related information of description. b. They are also more responsive to cool colors. c. Consumers who are relatively low in NFC are more likely to be attracted to the background or peripheral aspects of an ad. d. They spend more time on print content and have much stronger brand recall. e. Need for cognition seems to play a role in an individual’s use of the Internet. i. High-NFC people concentrate on planned online activities, seek product information, current events and educational resources ii. Low-NFC people are distracted by options and unable to focus on intended online activities need for cognition *****Use Review and Discussion Question #3.12 Here; Use Key Term Here***** 10. Some people prefer written information, while others are influenced by images. a. Visualizers are consumers who prefer visual information and products that stress the visual. There are two distinctly different types of visualizers. i. Object visualizers encode and process images as a single perceptual unit. ii. Spatial visualizers process images piece by piece. b. Verbalizers are consumers who prefer written or verbal information and products that stress the verbal. c. This distinction helps marketers know whether to stress visual or written elements in their ads. *****Use Review and Discussion Question #3.13 Here; Use Key Terms verbalizers, visualizers Here; Use Figure 3.7 Here***** 11. Materialism is a trait of people who feel their possessions are essential to their identity. a. They value acquiring and showing off possessions .

b. They are self-centered and selfish c. They seek lifestyles full of possessions d. Their possessions do not give them greater happiness. *****Use Key Termmaterialism Here; Use Table 3.4 Here***** 12.Compulsive consumption is in the realm of abnormal behavior and describes addictive and out-of-control buying that may have damaging consequences to the shopper and those around them.

13.Fixated consumption behavior is in the realm of normal and socially acceptable behavior and refers to collectors’ and hobbyists’ tendency to accumulate items that are related to their interest and show them off to friends and others with similar interests. Fixated consumers’ characteristics: a. A passion for and interest in the category of what they collect b. A willingness to invest a lot of effort in adding to their collections c. A willingness to spend a lot of time and discretionary (or other) income searching and buying more items for their collections d. An aggressive competitiveness at auctions *****Use Key Terms compulsive consumers and fixated consumersHere; Use Table #3.5 Here***** 14. Ethnocentrism is the consumer’s willingness to buy (or not buy) foreign-made products a. Nonethnocentric consumers evaluate foreign products for extrinsic characteristics b. Ethnocentric consumers feel it is inappropriate or wrong to purchase foreign-made products c. Marketers can appeal to ethnocentric consumers by stressing nationalistic themes in their promotional efforts. *****Use Review and Discussion Question #3.14 Here; Use Key Term ethnocentrism Here ***** 15. Consumers also tend to associate personality factors with specific colors.

Anthropomorphism 1. Anthropomorphism is loosely defined as attributing human characteristics to something that is not human. a) A study found that the ease with which consumers could anthropomorphize an offering was a function of how the product was presented to the public and the inclusion or absence of human-like product features. b) Products presented as human but which lack human features tend to be evaluated less favorably by consumers than products that are presented as human and have human-like attributes. .

2. Brand personification occurs when consumers attribute human traits or characteristics—

the ingredients of brand personalities—to different brands in a wide variety of product categories. a) A brand personality provides an emotional identity for a brand and encourages consumers to respond with feelings and emotions toward the brand. b) A brand’s personality can either be functional (“dependable and rugged”) or symbolic (“the athlete in all of us”). c) Research studies have found that a strong, positive brand personality leads to more favorable attitudes toward the brand, brand preference, higher purchase intentions, and brand loyalty, and is a way for consumers to differentiate among competing brands. *****Use Learning Objective #3.7 Here; Use Key Terms brand personification and anthropomorphism Here ***** 3. Individuals who are preoccupied with their self-worth and have a negative view of others

prefer exciting brand personalities, while people who have high anxiety and a favorable view of others prefer sincere brand personalities.

4.A study of dimensions of brand personality for product marketed by 64 American multinational corporations identified five underlying dimensions of brand personality: a) Excitement b) Sophistication c) Affection d) Popularity e) Competence 5. Consumers sometimes develop a relationship with a brand that is similar to the relationships they have with other humans.

6 A product personality, or persona, frequently means that the product or brand has a “gender.” . Consumers associate some brands with geographic locations.

7 .Self-Perception

1. Self-image represents the way a person views him or herself. a) Consumers select products that are consistent with their self-images and enhance them b) One’s self-image originates in a person’s background and experience c) Four aspects of self-image are: i) Actual self-image—how consumers see themselves ii) Ideal self-image—how consumers would like to see themselves iii) Social self-image—how consumers feel others see them iv) Ideal social self-image—how consumers would like others to see them ***** Use Learning Objective #3.8 Here; Use Key Term self-image Here*****

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2. Consumers’ possessions can be seen to “confirm” or “extend” their self-images using

possessions in a number of ways: i) Actually: by allowing the person to do things that otherwise would be very difficult or impossible to accomplish (e.g., problem-solving by using a computer) ii) Symbolically: by making the person feel better or “bigger” (e.g., receiving an employee award for excellence) iii) By conferring status or rank: (e.g., status among collectors of rare works of art because of the ownership of a particular masterpiece) iv) By bestowing feelings of immortality: by leaving valued possessions to young family members (this also has the potential of extending the recipients’ “selves”) 3. Consumers often wish to change themselves—to become a different or improved self. a) In using self-altering products, consumers are frequently attempting to express their individualism or uniqueness by creating a new self or take on the appearance of another type of person. b) Clothing, cosmetics, jewelry, grooming aids, and all kinds of accessories offer consumers the opportunity to modify their appearance and thereby to alter their selves c) Personal vanity and self-image and alteration of the self are closely related. i) Physical vanity is excessive concern with or inflated view of one’s physical appearance ii) Achievement vanity is excessive concern with or inflated view of one’s personal achievements *****Use Figure 3.9 Here***** REVIEW AND DISCUSSION QUESTIONS 3.1 Discuss the statement “marketers don’t create needs; needs pre-exist marketers.” Can marketing efforts change consumers’ needs? Why or why not? Can they arouse consumer needs? If yes, how? a. Marketers do not create needs, though in some instances they may make consumers more

keenly aware of unfelt needs. The tactics used to promote many new products illustrates that marketers often do not recognize or understand consumer needs and that they cannot create a need for products. On the other hand, there are countless examples of products that have succeeded in the marketplace because they fulfill consumer needs. b.

Marketing efforts are generally not designed to change consumer needs but to create or trigger of “wants” for products/services that consumers would then purchasearousal to

c.

satisfy needs that already exist. Market-oriented companies use consumer research to uncover products relevant needs, translate them into “wants” by designing appropriate and services, and position their offerings as satisfying needs and wants better than competitors’ products/services. . needs, and, in many instances, they strive to Marketing efforts can arouse consumer make consumers more keenly aware of unfelt or dormant needs. Corporations focus on

developing and marketing products that promote satisfaction of consumer’s needs through new and effective solutions.

Individual, Easy, 7-10 minutes Learning Objective 3.1: To understand how motives, needs, and goals shape consumer behavior.

AACSB: Reflective thinking 3.2 Consumers have both innate and acquired needs. Give examples of each kind of need and show how the same purchase can serve to fulfill either or both kinds of needs.

Innate needs are calledphysiological needs in the chapter, and they are physiological in nature (e.g., food, water, air, clothing, shelter, sex). Acquired needs are called psychological needs in the chapter, and they are generally psychological in nature (e.g., esteem, prestige, affection, power, and the like). The purchase of a house satisfies the individual’s innate need for shelter, but the type of house he or she buys, its interior and exterior design, and location are likely to reflect acquired needs. For example, an individual may seek a place where large groups of people can be entertained (fulfilling social needs) and want to live in an exclusive community to impress friends (fulfilling ego needs). Individual, Easy, 5-7 minutes Learning Objective 3.1: To understand how motives, needs, and goals shape consumer behavior. AACSB: Reflective thinking

3.3 Think of any product or service. Now enumerate the ways in which it could be marketed to target consumers as both an approach object and an avoidance object. Cite appropriate examples.

Consumers feel a driving force toward approach objects, which are positive outcomes that are sought after. A pair of running shoes is an approach object to a consumer who feels motivated to buy it because it is being marketed as extremely comfortable to wear or the latest in style. Conversely, avoidance objects are negative outcomes that consumers wish to prevent. Therefore, the same pair of running shoes is an avoidance object to the consumer when it is marketed as a product that can aid in weight loss or prevention of arthritis. Individual, Moderate, 7-10 minutes Learning Objective 3.1: To understand the dynamics of motives, needs and goals and how they shape consumer behavior. Learning Objective 3.2: To understand motivation theories and their applications to consumer behavior. AACSB: Application of knowledge

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3.4 Maslow’s hierarchy of needs begins with the primacy of physiological needs and puts self-actualization at the top of the pyramid. Some academics have claimed that this theory is flawed. Discuss why this might be true.

The major problem with Maslow’s theory is that it cannot be tested empirically; there is no way to measure precisely how satisfied one level of need must be before the next higher need becomes operative. Additionally, the need hierarchy closely resembles Western culture, and in other societies the needs specified by Maslow are ranked differently. Individual, Moderate, 10-15 minutes Learning Objective 3.1: To understand the dynamics of motives, needs and goals and how they shape consumer behavior.

AACSB: Reflective thinking; application of knowledge

3.5 How can marketers use consumers’ failures to achieve goals in developing promotional appeals for specific products and services? Give examples.

Failure to achieve a goal often results in feelings of frustration and individuals react differently to frustrating situations. Some people are adaptive and cope with frustrating situations by finding their way around the obstacle or, if this fails, by selecting a substitute goal. People who cannot cope with frustration adopt defense mechanisms to protect their egos from feelings of failure when they do not attain their goals. The eight defense mechanisms are: aggression, rationalization, regression, withdrawal, projection, autism, identification, and repression. Individual, Moderate, 5-7 minutes Learning Objective 3.1: To understand how motives, needs, and goals shape consumer behavior. AACSB: Application of knowledge

3.6 For each of the following products, select one level from Maslow’s hierarchy of human needs. Describe how you would use the need you selected in promoting the product to a market segment of your choice. The products are: e-readers, expensive shoes, and vacation homes.

Maslow identifies five basic levels of human needs, which rank in order of importance from lower-level biogenic needs to higher-level psychogenic needs. The theory postulates that individuals seek to satisfy lower-level needs before higher-level needs emerge. The lowest level of needs are the physiological needs such as the need for food, air and shelter, then come the safety and security needs; the need for protection, order and stability. Social needs act as motivators when safety and security needs are met – the need for affection, friendship and belonging. The needs that emerge after that are the egoistic needs – the need for power, prestige and self-esteem. The highest need that, according to Maslow, most people never seem to fulfill, is the self-actualization need – the need for selffulfillment. Students will have .

different ideas about how the needs could be used to promote the individual products to the segment of their choices.

Individual or Group, Moderate, 15-20 minutes Learning Objective 3.2: To understand the systems of classifying needs.

AACSB: Application of knowledge

3.7 What are the advantages and disadvantages of using Maslow’s need hierarchy in segmentation and positioning?

Maslow’s needs hierarchy received wide acceptance in many social disciplines because it appears to reflect the assumed or inferred motivations of many people in our society. The five levels of need postulated by the hierarchy are sufficiently generic to encompass most lists of individual needs. Some critics, however, maintain that Maslow’s concepts are too general. To say that hunger and self-esteem are similar, in that both are needs, is to obscure the urgent, involuntary nature of the former and the largely conscious, voluntary nature of the latter. The major problem with the theory is that it cannot be tested empirically; there is no way to measure precisely how satisfied one need must be before the next higher need becomes operative. The need hierarchy also appears to be very closely bound to our contemporary American culture. Despite these criticisms, Maslow’s hierarchy is a useful tool for understanding consumer motivations and is readily adaptable to marketing strategy. Offer the students several current examples, one for each level of the hierarchy. Individual, Easy, 5-7 minutes Learning Objective 3.2: To understand the systems of classifying needs. AACSB: Reflective thinking

3.8 a. What are some of the techniques researchers can use to measure motives?

This is a difficult question to answer because motives are hypothetical constructs—that is, they cannot be seen or touched, handled, smelled, or otherwise tangibly observed.

For this reason, no single measurement method can be considered a reliable index.

Instead, researchers usually rely on a combination of various qualitative research techniques to try to establish the presence and/or the strength of various motives. b. Is quantitative research applicable to gain insights to storytelling?

Yes, qualitative research or motivational research can be used to delve into consumers’ subconscious or hidden motivations. The findings of qualitative research methods are highly dependent on the training and experience of the analyst using those methods; the findings represent not only the data themselves but also what the analyst thinks they imply. A primary qualitative research tool is the use of projective techniques, which require respondents to interpret stimuli that do not have clear meanings with the assumption that the subjects will “reveal” or “project” their subconscious, hidden motives onto the ambiguous stimuli. Storytelling employs projective techniques. By using this method to study parents’ .

perceptions of diapers, Kimberly-Clark discovered that parents viewed diapers as clothing related to a particular stage in the child’s development. Thus, if their children wore diapers for too long, parents became distressed and embarrassed because it was an overt sign of their failure to toilet-train their children. The company introduced its highly successful Huggies Pull-Ups training pants, a product that established a new category in the U.S. diaper industry. c. List some strengths and weaknesses of qualitative research.

At times, consumers might be unaware of their motives, or they might be unwilling to reveal them when asked directly. In such situations, analysts use qualitative research to understand consumers’ subconscious or hidden motivations. However, the findings of qualitative research methods are highly dependent on the training and experience of the analyst using those methods; the findings represent not only the data themselves but also what the analyst thinks they imply. Though some marketers believe that qualitative studies can be more revealing than quantitative studies, some others might be concerned that qualitative research does not produce hard numbers that objectively prove the point under investigation. Individual, Moderate, 15-20 minutes Learning Objective 3.3: To understand how to identify and measure motives. AACSB: Analytical thinking

3.9 How would you explain the fact that, although no two individuals have identical personalities, personality is sometimes used in consumer research to identify distinct and sizable market segments?

Because the inner characteristics that constitute an individual’s personality are a unique combination of factors, no two individuals are exactly alike. Nevertheless, many individuals tend to be similar in terms of a single personality characteristic. For instance, many people can be described as “high” in sociability (the degree of interest they display in social or group activities), although others can be described as “low” in sociability.

Personality is a useful concept because it enables us to categorize consumers into different groups on the basis of a single trait or a few traits. If each person were different in all respects, it would be impossible to group consumers into segments, and there would be little reason to develop standardized products and promotional campaigns. Marketers seek to identify those particular personality characteristics that are shared by those individuals who constitute a particular market segment. Individual, Moderate, 7-10 minutes Learning Objective 3.5: To understand personality development. AACSB: Reflective thinking

3.10 Contrast the major characteristics of the following personality theories: a) Freudian theory, b) neo-Freudian theory, and c) trait theory. In your answer, illustrate how each theory is applied to the understanding of consumer behavior.

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a) Freudian (or psychoanalytic) theory is based on the premise that subconscious needs, especially biological and sexual needs, are the center of human motivation and personality. Because of its clinical origin, this theory stresses measurement of personality through qualitative or subjective approaches (e.g., projective techniques). The major application of Freudian theory to consumer behavior is Ernest Dichter’s work. b) Neo-Freudian theory contends that social relationships are fundamental to the development of personality. For example, Adler proposed that overcoming feelings of inferiority is the major factor in human motivation, and Sullivan viewed reduction of anxiety as a key factor. The most systematic application of neo-Freudian theory in consumer research is the development of the CAD scale—a personality test based on Karen Horney’s proposition that individuals can be classified into three personality types: compliant, aggressive, and detached. These personality types and the research findings of studies that used the CAD scale are described in the text.

Trait theory, in contrast to Freudian and neo-Freudian theories, is quantitative in its c) orientation. It views personality as a set of enduring traits rather than the result of subconscious drives. These traits are usually expressed in numerical scores obtained on self-administered paper-and-pencil tests. Single trait personality tests have been particularly successful in adding to the understanding of consumer behavior, and such tests are increasingly being developed for use in consumer research. Personality traits have been linked to many consumption behaviors including purchase patterns of various products (but seldom to consumption of specific brands), store choices, purchasing foreign made products, and to differentiating between innovators and non-innovators.

Individual, Moderate, 7-10 minutes Learning Objective 3.3: To understand the impact of hidden motives on consumer behavior.

AACSB: Analytical thinking 3.11 Describe personality trait theory. Give five examples of how personality traits can be used in consumer research.

Trait theory constitutes a major departure from the qualitative measures that typify the Freudian and neo-Freudian movements (e.g., personal observation, self-reported experiences, dream analysis, projective techniques). Trait theory is primarily quantitative or empirical; it focuses on the measurement of personality in terms of specific psychological characteristics, called traits: “any distinguishing, relatively enduring way in which one individual differs from another.” Selected single-trait personality tests (which measure just one trait, such as self-confidence) are increasingly being developed specifically for use in consumer behavior studies. These tailor-made personality tests measure such traits as consumer innovativeness, consumer susceptibility to interpersonal influence, materialism, and consumer ethnocentrism.

Examples: • The Consumer Scale can be used to study how receptive consumers are to new productsInnovativeness or services.

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• Consumer researchers recently developed a scale that measures consumers’ susceptibility to interpersonal influence.

• In testing a new materialism scale, researchers found that materialistic people value acquiring and showing off possessions, are self-centered, etc.

• In an effort to distinguish between consumer segments that are likely to be receptive to foreign-made products and those that are not, researchers have developed and tested the consumer ethnocentrism scale.

• Need for cognition measures the person’s craving for, or enjoyment of, thinking.

Individual, Moderate, 10-15 minutes Learning Objective 3.6: To understand how personality traits shape consumer behavior.

AACSB: Application of knowledge 3.12 “Wearing crazy bright hair colors makes me unique and an inspiration in a crowd.”

How can a hair stylist use this illustrative opinion of a college student with a high need for uniqueness to promote the technicolor hair coloring services of the hair salon?

Hair stylists target people with a high need for uniqueness with marketing stimuli designed to Consumers’ need for uniqueness is defined as an enhance self-perceptions of uniqueness. individual’s pursuit of differentness relative to others that is achieved through the acquisition of consumer goods in order to enhance one’s personal and social identity. Understanding this personality trait is important to the hair stylist in question. Consumers that exhibit this type of personality prefer creative products that counter conformity and are outside group norms, and avoid the similarity reflected in buying mainstream products.

Individual, Moderate, 7-10 minutes Learning Objective 3.5: To understand how innovativeness and other personality traits influence consumer behavior.

AACSB: Application of knowledge

3.13 Describe the type of promotional message that would be most suitable for each of the following personality market segments and give an example of each: (a) highly dogmatic consumers, (b) inner-directed consumers, (c) consumers with high optimum stimulation levels, (d) consumers with a high need for cognition, and (e) consumers who are visualizers versus consumers who are verbalizers. a) Highly dogmatic consumers are likely to respond favorably to a new product when the advertising message is presented in an authoritarian manner (e.g., celebrity endorsement or expert testimonials). b) Inner-directed consumers tend to use their own values and standards in evaluating a new product; therefore, ads aimed at them should depict the attainment of personal achievement and satisfaction. c) Consumers with a high optimum stimulation level are more open to risk-taking, more likely to be innovative, try products with many novel features, and shop in new retail .

outlets. Consumers with high OSL are likely to respond favorably to promotional messages stressing more rather than less risk, novelty, or excitement. d) Consumers with a high need for cognition are ones who often crave or enjoy thinking.

They are likely to be responsive to ads that are rich in product-related information or description and are unresponsive to the auxiliary or contextual aspects of an advertisement. e) Marketers should stress visual dimensions in attracting visualizers (i.e., consumers who prefer visual information, products that stress the visual) and detailed descriptions and explanations in targeting verbalizers (i.e., consumers who prefer written and verbal product information).

Individual, Moderate, 7-10 minutes Learning Objective 3.6: To understand how personality traits shape consumer behavior.

AACSB: Application of knowledge 3.14 Is there likely to be a difference in personality traits between individuals who readily purchase foreign-made products and those who prefer American-made products? How can marketers use the consumer ethnocentrism scale to segment consumers?

Consumers who are highly ethnocentric feel that it is inappropriate or wrong to purchase foreign-made products, and a domestic marketer can attract them by stressing ethnocentric themes in its advertising. Non-ethnocentric consumers tend to evaluate foreign-made products more objectively for their extrinsic characteristics than for where the products were manufactured. The consumer ethnocentrism scale, called CETSCALE, is designed to identify consumers with a predisposition to accept (or reject) foreign-made products. It is not discussed in the chapter, so you would need to ask students to use outside resources to learn about the scale.

Individual, Moderate, 7-10 minutes Learning Objective 3.6: To understand how personality traits shape consumer behavior.

AACSB: Analytical thinking 3.15 A marketer of health foods is attempting to segment a certain market on the basis of self-image. Describe how the marketer can use actual self-image and ideal self-image to do so.

Actual self-image is how the consumers in fact see themselves and ideal self-image is how consumers would like to see themselves. So, one corresponds with “what is” (the actual self- image) and one corresponds to what consumers would like “to be” (the ideal self-image). In targeting consumers of health foods, the marketer can use the actual self-image to attract consumers who would like to enhance the quality of their lifestyles through better nutrition, and ideal social self-image to appeal to consumers who are likely to adopt health foods due to peer influence and pressure.

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Individual, Easy, 5-7 minutes Learning Objective 3.8: To understand the impact of self-image on consumer behavior.

AACSB: Application of knowledge HANDS-ON ASSIGNMENTS 3.16 Find two advertisements that depict two different defense mechanisms (Table 3.1) and discuss their effectiveness.

Instructor’s Discussion Have students clearly identify the defense mechanism first. Then have them explain how the ad taps that defense mechanism and how effective it is. For example, a “slice-of-life” commercial may show a young man faced with the problem of convincing a girl he likes to accept a date with him. A friend advises him to change his toothpaste, his shampoo, or whatever, to the advertised product; when he does, he gets the girl and his problem is solved.

Individual, Moderate, 15-20 minutes Learning Objective 3.1: To understand how motives, needs, and goals shape consumer behavior.

AACSB: Application of knowledge 3.17Find three advertisements that illustrate the needs for order, achievement, and affection and discuss their effectiveness. (Each advertisement should depict one of the three needs.)

Instructor’s Discussion Advertisements promoting order needs might focus on organizing things, putting things in place, setting schedules, or planning, like the Container Store ad in the chapter. Affection or affiliation is about forming attachments, sharing things, helping friends, and enjoying oneself Achievement needs refer to those individuals who regard personal in large groups. accomplishments as an end in itself. They want to succeed and want to be able to do things better than others. Such individuals are often good prospects for do-it-yourself products and for such advertising appeals as “we try harder.”

Individual, Moderate, 15-20 minutes Learning Objective 3.1: To understand how motives, needs, and goals shape consumer behavior.

AACSB: Application of knowledge

3.18 Find two examples of ads that are designed to arouse consumer needs and discuss their effectiveness.

Instructor’s Discussion Latent needs are needs a consumer is not aware of. Advertisements are cues designed to arouse needs. Without these cues, the needs might remain dormant.

For example, an ad .

designed to trigger a latent need might show a surprised reaction as a consumer hadn’t considered a solution to a problem.

Individual, Moderate, 15-20 minutes Learning Objective 3.1: To understand how motives, needs, and goals shape consumer behavior.

AACSB: Application of knowledge

3.19 Interview three friends about their favorite leisure-time activities. Do your leisuretime preferences differ from those of your friends? Which personality traits might explain why your preferences are different from or the same as those of other your friends, and how so?

Instructor’s Discussion This discussion-based exercise should help students reflect on the impact of personality on common consumer choices and the challenges the use of personality-related segmentation criteria presented by marketers. Be sure that students examine the personality traits explored in the Personality and Understanding Consumer Diversity section of the chapter. Consider the following general traits and apply these to the exercise at hand: innovativeness, dogmatism, social character (e.g., inner- and otherdirectedness), the need for uniqueness, optimum stimulation level (OSL), sensation seeking, variety seeking, and novelty seeking. Students can also explore cognitive personality factors, consumer materialism, consumer compulsive behavior, and ethnocentrism. Individual or Group, Moderate, 30-40 minutes Learning Objective 3.6: To understand how personality traits shape consumer behavior. AACSB: Application of knowledge

3.20 Find three print advertisements that illustrate concepts from Freudian personality theory and discuss how they do so.

Instructor’s Discussion This discussion-based exercise should help students apply in concrete terms the elements of Freudian personality theory. Notice which of the ads might appeal to the id, ego, or super ego. Individual, Moderate, 15-20 minutes Learning Objective 3.3: To understand the impact of hidden motives on consumer behavior. AACSB: Application of knowledge

3.21 Discuss how you curate your own social media self-image. What are your rules for posting or viewing on social media?

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Instructor’s Discussion Student responses will vary. They may consider what their social media presence says to They also have concerns about privacy, friends andmay to prospective employers. particularly given recent news attention to data collection by social media firms. The idea of managing other’s perceptions of oneself is relevant in this context – ideas about “Fakebook” and portraying an ideal self-image may surface in discussion.

Individual, Moderate, 15-20 minutes Learning Objective 3.3: To understand the impact of hidden motives on consumer behavior.

AACSB: Reflective thinking

S.T.A.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 The AdForum is a place where advertising agencies can display creative work. This intriguing Web site boasts that the viewer can find 23,500+ domestic and global ads with a click of the mouse. In addition, AdForum has up-to-the-minute news about the advertising world and how viewers, readers, and listeners respond to this world. Go to the AdForum Web site at www.adforum.com and find three (3) domestic or international examples of advertisements that display good ethical behavior with respect to focusing on personality as a creative advertising theme. These ads could show people making good choices, making ethical decisions, or be scenes where personality traits match to correct ethical choices or decisions. a. Describe or download the ads. b. Describe the situations found in the ads and comment on the ethics involved c. How do the situations relate to the personality variable in consumer behavior?

Instructor’s Discussion Typically, the AdForum Web site will have at least one cover story that will spark the student’s interest with respect to ethics. With a little reading and appreciation of the material contained in the chapter, the student should be able to make a connection between the ethical situation involved in the advertisement and the personality variable. For example, in a commercial sponsored by the Partnership for a Drug Free America, a young teen is shown being pressured by peers to inhale cocaine—“a little bit won’t hurt,” say the friends. In a later scene, the teen’s nose begins to bleed in school—“a little bit won’t hurt!” This exercise will practice students on finding and recognizing ads that feature the personality theme and ads that have an ethical message or situation featured.

S.T.A.R. Project #2 The Advertising Council is a nonprofit organization made up of volunteers from the advertising industry whose goal and mission is to provide quality promotion for those needy causes that could not afford such high-powered services on their own. Issues impacting health, the welfare .

of our country, women’s issues, social causes like drug use prevention, and environmental concerns have been the forte of the Ad Council in recent years. For all the good work that the council does, some question whether the Ad Council has become more left-wing than right-wing in their politics (and campaign messages) in recent years. Does a political spin to the promotions created by the Ad Council harm its credibility? a. Review the Ad Council’s Web page at www.adcouncil.org. b. Review the issues, campaigns, organizations, and non-profit resources created and used by the Ad Council. Do you think the Ad Council seems to have a political agenda? If so, is this correct or incorrect ethical behavior for such an organization? c. How does the Ad Council attempt to impact consumer motivation? Find one illustration from the Ad Council Web page to illustrate your thoughts.

Instructor’s Discussion The Ad Council is a great place to see great advertising. In fact, the organization often wins the coveted CLIO award in advertising. The point of this exercise is to not only introduce the student to the Ad Council and its work but to get the student to think about how an organization such as this can impact consumer motivation, behavior, and even purchasing. The Ad Council sponsors many worthy causes, however, because the Council is made up of many talented members, all of the members do not necessarily think alike or approach problems from the same direction. The students should be able to find at least one controversial ad (please preview these before discussion in class as some are just that—controversial (such as planned parenthood)). This is where the ethical discussion can begin with respect to public responsibility, noble intent, and the politics of issues. A very big part of consumer motivation is moving a consumer toward a particular point of view. Ethical behavior is part of that process.

S.T.A.R. Project #3 Few of us would misidentify who said “What’s Up Doc?,” and “Tickle Me Elmo” is not usually mistaken as a directive to a friendly relative. Warner Bros. and Sesame Street Productions have a unique position in our society. They also have a unique responsibility in that their messages are seen and acted upon by thousands of children on a daily basis. To children, the characters from these two creative giants are real and not imaginary. The personalities of the characters are often emulated by youth. Go to the Looney Tunes Web site (http://looneytunes.kidswb.com) and Sesame Street (www.sesamestreet.com) Web sites and observe how cartoon personalities are developed. a. What ethical responsibilities do Warner Bros. and Sesame Street Productions shoulder? b. Examine the personalities of characters on each of the two Web sites. Give two examples of characters that exhibit human personality characteristics or traits. Explain. c. Discuss what you perceive to be correct and incorrect product endorsement by cartoon or puppet characters. Explain your thinking.

Instructor’s Discussion The students will find a wealth of information about cartoon and puppet characters on these two Web sites. Matching these characters to personality types will make an interesting in-class discussion. Discussing ethical ramifications is more difficult. Focus on part “c” to extend this discussion. .

Small Group Projects S.T.A.R. Project #4 Have you ever been to a SlamBall match? Probably not. Warner Bros. and TNN network, however, are betting that you soon will. What is SlamBall? Think about combining basketball, hockey, roller derby, and trampolines. Sound exciting? SlamBall is played four on four on a full court. Hockey-style rules make dribbling the SlamBall (similar to a basketball) somewhat difficult so innovations in ball control are encouraged. There are basket goals that may be approached from the front, side, or rear. The court is enclosed in plexi-walls to keep the ball in play. HotSpot trampolines extend play to heights of up to 17 feet above the game floor. At present there are six professional teams, however, this number is expected to grow as this new extreme sport catches on. For more information visit the SlamBall Web site at www.slamball.net. a. Using the personality traits discussed in the chapter, your group should profile the type of consumer that might be interested in SlamBall. Explain your group’s rationale. b. Take the profile developed above and indicate how SlamBall might reach these consumers. Part of the group might examine the media, endorsements, publicity, or other venues. c. Comment on what your group perceives to be the future of extreme sports like SlamBall.

Explain your group’s forecast and judgment.

Instructor’s Discussion Small teams or groups will enjoy learning about this new extreme sport. The Web site allows for some action downloads. At present the SlamBall league has six teams, however, this may grow.

Students should focus on the personality of the extreme sports enthusiast by first considering what an extreme sport is. Next, the teams should consider how to reach these enthusiasts. What companies would most be interested in this personality group?

S.T.A.R. Project #5 Are you a visualizer or a verbalizer? Crayola is betting that your visual side is the stronger of the two. Crayola has constructed a great Web site for your visual pleasure (see www.crayola.com).

While on the Web site, the visitor can find many activities, ideas, create cards, learn about color, how crayons are made, and get helpful information to make a rainy day pass more quickly. One of the most interesting features is giving the consumer the ability to design his or her own color box of crayons. The color choices are endless. a. What visualizer techniques does Crayola use to enhance the need for visualization in consumers? b. What verbalizer skills are used on the Web site? c. Describe the colors you selected for your box of crayons. Why did you select the colors that you did? What does the color selection say about you and your personality?

Instructor’s Discussion This colorful Web site is a great example of the visualizing aspect of a consumer’s personality.

The students will find many areas of visual stimulation. For a unique discussion, have the class .

name the new Crayola color (a contest). This Web site is a great way to cover the aspect of color mentioned in the text. To extend the project, have students match their color preferences to the tables sited in the chapter.

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CHAPTER 4 Consumer Perception and Positioning

LEARNING OBJECTIVES After reading, studying and analyzing this chapter, students should be able: 4.1 To understand how perception shapes sensory input and subsequent consumer behavior.

4.2 To understand the distinction between the sensory absolute and differential thresholds.

4.3 To understand why consumers notice some stimuli but not others.

4.4 To understand how people organize stimuli.

4.5 To understand how consumers use integral and external factors to evaluate products.

4.6 To understand the elements of consumer imagery.

4.7 To understand consumers’ perceived risks and how to lower them.

4.8 To understand the process of positioning and repositioning.

CHAPTER SUMMARY Learning Objective 4.1: To understand how perception shapes sensory input and subsequent consumer behavior.

Perception is the process by which individuals select, organize, and interpret stimuli into a meaningful and coherent picture of the world. Perception has strategy implications for marketers because consumers make decisions based on what they perceive rather than on the basis of objective reality. The lowest level at which an individual can perceive a specific stimulus is that person’s absolute threshold. The minimal difference that can be perceived between two stimuli is called the differential threshold or just noticeable difference (JND). Consumers perceive most sensory stimuli above the level of their conscious awareness; however, weak stimuli can be perceived below the level of conscious awareness (i.e., subliminally). Research refutes the notion that subliminal stimuli influence consumers’ buying decisions.

Learning Objective 4.2: To understand the distinction between the sensory absolute and differential thresholds.

Consumers’ selections of stimuli from the environment are based on the interaction of their expectations and motives with the stimulus itself. People usually perceive things they need or want, and block the perception of unnecessary, unfavorable, or painful stimuli. The principles of selective perception include the concepts of selective exposure, selective attention, and perceptual defense. Which stimuli get selected depends on two major factors, in addition to the nature of the stimulus itself: (1) consumers’ previous experience as it affects their expectations (what they are prepared, or “set,” to see), and (2) their motives at the time (their needs, desires, interests, and so on). Each of these factors can increase or decrease the probability that a stimulus will be perceived.

Learning Objective 4.3: To understand why consumers notice some stimuli but not others.

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Consumers organize their perceptions into unified wholes according to the principles of Gestalt psychology: figure and ground, grouping, and closure. Each of these concepts has important implications for understanding consumer behavior. The term “figure” refers to the promotional message and “ground” represents the environment or context within which the figure appears.

Because consumers are bombarded with stimuli, they often actively seek to avoid promotional messages. Marketers try to obscure the difference between figure and ground so that their ads do not “stand out” from the contents of entertainment, such as movies and TV shows. They often use product placements, which occur when an advertised product (i.e., the figure) is deliberately integrated into a TV show or film (i.e., the ground). The perception of stimuli as groups or chunks of information, rather than as discrete bits of information, facilitates memory and recall.

People instinctively try to organize pieces of sensory input into a complete image or feeling (i.e., they seek closure). Thus, if they perceive that a stimulus is incomplete, they feel compelled to figure out its complete meaning.

Learning Objective 4.4: To understand how people organize stimuli.

The interpretation of stimuli is highly subjective and is based on what the consumer expects to see in light of previous experience, on motives and interests at the time of perception, and on the clarity of the stimulus itself. Individuals carry biased pictures in their minds of the meanings of various stimuli, which are termed stereotypes. Sometimes, when presented with sensory stimuli, people “add” these biases to what they see or hear and form distorted impressions. Stereotypes that distort objective interpretation stem from physical appearances, descriptive terms, first impressions, and the halo effect.

Learning Objective 4.5: To understand how consumers use integral and external factors to evaluate products.

Consumers perceive images of products and brands. The perceived image of a product or service (how it is positioned) is more important to its ultimate success than are its actual physical characteristics. Products and services that are perceived distinctly and favorably have a much better chance of being purchased than products or services with unclear or unfavorable images.

The main elements of consumer imagery are consumers’ perceptions of brands, packages, services, and prices.

Learning Objective 4.6: To understand the elements of consumer imagery.

Consumers often judge the quality of a product or service on the basis of a variety of informational cues; some are intrinsic to the product (such as color, size, flavor, and aroma), whereas others are extrinsic (e.g., price, store image, brand image, and service environment).

In the absence of direct experience or other information, consumers often rely on price as an indicator of quality. How a consumer perceives a price—as high, low, or fair—has a strong influence on purchase intentions and satisfaction. Consumers rely on both internal and external reference prices when assessing the fairness of a price. Products and services can deliver high quality factually, as determined, say, by experts’ judgments of scientific tests. However, if consumers do not perceive offerings as superior products that satisfy their needs and provide value, they will not purchase them, regardless of objective evidence. Consumers’ perceived

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quality of products and services is based on a variety of informational cues that they associate with the offerings. Some of these cues are intrinsic to the product or service; others are extrinsic.

Either singly or together, such cues provide the basis for perceptions of product and service quality.

Learning Objective 4.7: To understand consumers’ perceived risks and how to lower them.

Consumers often perceive risk in making product selections because of uncertainty as to the consequences of their product decisions. In most situations, consumers’ perceived risk is a function of multiple factors. The elements of perceived risk are functional risk, physical risk, financial risk, social risk, psychological risk, and time risk. Consumer strategies for reducing perceived risk include increased information search, brand loyalty, buying a well-known brand, buying from a reputable retailer, buying the most expensive brand, and seeking reassurance in the form of money-back guarantees, warranties, and pre-purchase trials. The concept of perceived risk has important implications for marketers, who can facilitate the acceptance of new products by incorporating risk-reduction strategies into their new-product promotional campaigns.

Learning Objective 4.8: To understand the process of positioning and repositioning.

After segmenting the market and selecting targeting prospects, marketers must persuade prospective buyers to buy the products that they offer, rather than competing products.

Positioning is the process by which a company creates a distinct image and identity for its products, services, or brands in consumers’ minds. The image and unique identity are called a “position.” The “position” in intangible, exists in the consumer’s mind, and represents how consumers perceive the product. Positioning is more important to the ultimate success of a product than are its actual characteristics, although products that are poorly made will not succeed on the basis of image alone. The result of effective positioning is a unique position that the product occupies in the mind of the consumer. Most new products fail because consumers perceive them as “me too” offers that do not provide any advantages or unique benefits over competitive products. The positioning strategies used most often are: umbrella positioning, premier position, positioning against competition, key attribute, and finding an “un-owned” perceptual position. These strategies are not mutually exclusive, and often overlap. Repositioning is the process by which a company intentionally changes the distinct image and identity that its products, services, and brands occupy in consumers’ minds. There are several reasons that force marketers to reposition products, such as many competitors focusing on the same product attribute in positioning their offerings.

Perceptual mapping is a constructing a map-like diagram representing consumers’ perceptions of competing brands along relevant product attributes. Perceptual maps show marketers: (1) how consumers perceive their brand in relation to competition; (2) determine the direction for altering undesirable consumers’ perception of their brands; and (3) find gaps, in the form of “un-owned” perceptual positions that represent opportunities for developing new brands or products.

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CHAPTER OUTLINE Introduction 1. Perception is the process by which individuals select, organize and interpret stimuli into a

meaningful and coherent picture of the world.

2. Two individuals may be exposed to the same stimuli, but each person recognizes, selects, organizes and interprets the stimuli based on their own needs, values and expectations.

3. Consumers act/react on the basis of their perceptions, not on the basis of objective reality. a) Reality is a totally personal phenomenon, based on that person’s needs, wants, values, b) and personal experiences.

Consumers’ perceptions are more important to a marketer than their knowledge of objective reality because people make decisions based on their perceptions.

4. Sometimes, changing a brand image, or repositioning a brand to create a different distinct image and identity for the product/service, is necessary. *****Use Key Termsperception, repositioning Here; Use Figure #4.1 Here***** Sensory Information 1. Perception is all about consumers’ subjective understandings and not objective realities.

*****Use Learning Objective #4.1 Here ***** 2. Sensory input does not produce or explain the coherent picture of the world that most adults

possess. a) We subconsciously add to or subtract from sensory inputs to produce our own private picture of the world. b) Intensive stimulation bounces off most individuals. c) Physical stimuli from the outside environment are one type of input into perceptions. d) People’s motives, expectations, and what they learned from previous experiences are the other type of input.

3. Sensation is the immediate and direct response of the sensory organs to stimuli. a) A stimulus is any unit of input to any of the senses (e.g. products, packaging, brand names, advertisements, commercials). b) Sensory receptors are human organs that receive sensory inputs. c) Human sensory sensitivity refers to the experience of sensation. d) Sensation itself depends on energy change, or the differentiation of input. e) As sensory input decreases, the ability to detect changes increases. *****Use Key Termssensation, stimulus Here ***** 4. Types of sensory input include:

a) Sight – brand colors, store layouts, website design, packaging, etc.

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b) Scent – people associate memories with smells; ambient smells can enhance the shopping experience Touch – touching a product influences persuasion and can be c) used as a persuasive tool. Interpersonal touch can also affect consumer responses, but how depends on cultural norms. Sound – products and packages have been redesigned to emit the right audio sensory input. d)

*****Use Table 4.1 Here***** e)

Taste – there are five fundamental tastes in the human palate: salty, sweet, sour, bitter, and umami.

The Absolute and Differential Thresholds 1. The lowest level at which an individual can experience a sensation is called the absolute threshold. a. The point at which a person can detect the difference between “something” and “nothing” is that person’s absolute threshold for the stimulus. b. For example, the distance at which a driver can note a specific billboard on a highway is that individual’s absolute threshold. c. Under conditions of constant stimulation, such as driving through a “corridor” of billboards, the absolute threshold increases (that is, the senses tend to become increasingly dulled).

2. Sensory adaptation refers specifically to “getting used to” certain sensations or becoming accustomed to a certain level of stimulation. Sensory adaptation is a problem that causes many advertisers to change their advertising campaigns regularly. absolute threshold and sensory *****Use Learning Objective #4.2 Here; Use Key Terms adaptation Here; Use Review and Discussion Question #4.1 Here ***** 3. The minimal difference that can be detected between two stimuli is called the differential threshold or the JND (just noticeable difference). a. Weber’s law states that the stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different. *****Use Key Termsdifferential threshold, JND (just noticeable difference), and Weber’s law Here; Use Review and Discussion Question #4.2 Here ***** b. Manufacturers and marketers endeavor to determine the relevant JND for their products so that negative changes—reductions or increases in product size, or reduced quality—are not readily discernible to the public, so that product improvements are readily discernible to the consumer without being wastefully extravagant.

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c. Marketers use the JND to determine the amount of change or updating they should make in their products to avoid losing the readily recognized aspects of their products. d. Marketers want to meet or exceed the consumers’ differential threshold so that they readily perceive the improvements made in the original product. i. Less than the JND is wasted effort because the improvement will not be perceived. ii. More than the JND is wasteful because it reduces the level of repeat sales. ***** Use Review and Discussion Question #4.2 Here; Use Figures #4.2, 4.3, and 4.4 Here***** 4. People are also stimulated below their level of conscious awareness—they can perceive stimuli without being consciously aware of it via a process called subliminal perception (because the stimulus is beneath the threshold, or “limen,” of conscious awareness, though obviously not beneath the absolute threshold of the receptors involved). a. Over the years, there have been sporadic reports of marketers using subliminal messages in their efforts to influence consumption behavior. b. There is no evidence that subliminal advertising persuades people to buy goods or services. c. As for sexual embeds, most researchers are of the opinion that “What you see is what you get.” *****Use Key Termsubliminal perception Here; Use Review and Discussion Question #4.4 Here ***** Perceptual Selection 1 Consumers subconsciously exercise selectivity as to the stimuli they perceive. . Which stimuli get selected depends on two major factors in addition to the nature of the 2 stimulus itself: . a) Consumers’ previous experience as it affects their expectations.

b) Their motives at the time (their needs, desires, interests, and so on).

3. Marketing stimuli that affect perceptions include: a) Nature of the product Its physical b) attributes The package design The c) brand name The advertisements and d) commercials The position of a print ad e) commercial The editorial f) or g) environment 2. Contrast is one of the most attention-compelling attributes of a stimulus. a) Advertisers use extreme attention-getting devices to get maximum contrast and

penetrate the consumer’s perceptual screen.

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Advertisers use color contrasts, size, unexpected and unrealistic images to create stopping power and gain attention.

*****Use Learning Objective 4.3 Here; Use Figure #4.5 Here; Use Review and Discussion Question #4.5 Here ***** 3. People see what they expect to see based on familiarity, previous experience, or

preconditioned set expectations. a) Stimuli that conflict sharply with expectations often receive more attention than b) those that conform to expectations. For years, certain advertisers have used blatant sexuality in advertisements for products to which sex was not relevant in the belief that such advertisements would attract a high degree of attention. Ads with irrelevant sexuality often defeat the marketer’s objectives, because readers tend to remember the c) sexual aspects of the ad, not the product or brand advertised.

*****Use Key Termexpectations Here***** 4. People tend to perceive things they need or want; the stronger the need, the greater the

tendency to ignore unrelated stimuli in the environment. a) An individual’s perceptual process attunes itself more closely to those elements of the environment that are important to that person. b) Marketing managers recognize the efficiency of targeting their products to the perceived needs of consumers.

5. The consumer’s “selection” of stimuli from the environment is based on the interaction

of expectations and motives with the stimulus itself. These factors give rise to four important concepts concerning perception. a) Selective exposure—consumers actively seek out messages they find pleasant or with which they are sympathetic and actively avoid painful or threatening messages. b) Selective attention—consumers have a heightened awareness of the stimuli that meet their needs or interests and minimal interest in stimuli irrelevant to their needs. c) Perceptual defense—threatening or otherwise damaging stimuli are less likely to be perceived than are neutral stimuli. Individuals unconsciously may distort information that is not consistent with their needs, values, and beliefs.

Consumers screen out enormous amounts of advertising by simply “tuning out” or d) blocking stimuli from conscious awareness. *****Use Key Termsselective exposure, selective attention, and perceptual defense Here; Use Hands-on Assignment #4.11 Here ***** Perceptual Organization

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1. People do not experience the numerous stimuli they select from the environment as separate

and discrete sensations; they tend to organize stimuli into groups and perceive them as unified wholes.

2.Gestalt psychology (Gestalt, in German, means pattern or configuration) is the name of the school of psychology that first developed the basic principles of perceptual organization.

3.Three of the most basic principles of perceptual organization are figure and ground, grouping, and closure. a) Stimuli that contrast with their environment are more likely to be noticed; an example is the contrast between a figure and the ground on which it is placed. i) The figure is usually perceived clearly. ii) The ground is usually perceived as indefinite, hazy, and continuous. iii) The figure is more clearly perceived because it appears to be dominant—the ground appears to be subordinate and less important. iv) Advertisers have to plan their advertisements carefully to make sure that the stimulus they want noted is seen as figure and not as ground. v) A marketing technique experience growth and stems from the figure-and-ground concepts is product placement (or “branded entertainment”). b) Grouping, or a tendency to group stimuli into chunks, can be used advantageously by marketers to imply certain desired meanings in connection with their products. i) Consumers naturally chunk social security numbers, phone numbers and zip codes ii) Grouping has implications for product placement within retailers c) Closure is people’s instinct to organize pieces of sensory input into a complete image or feeling. i) Promotional messages that require consumers to fill in information gain higher involvement from consumers. ii) Consumers who hear the soundtrack from a television commercial on the radio play back the visual content from memory to “complete” the ad.

Key Terms Gestalt psychology, figure and *****Use Learning Objective 4.4 HereUse ; ground, product placement, closure, and grouping Here; Use Figure 4.6 Here***** Interpretation: Cues 1. The interpretation of stimuli is also uniquely individual because it is based on what

individuals expect to see in light of their previous experiences, the number of plausible explanations they can envision, and their motives and interests at the time of purchase. a) Intrinsic cues are concerned with physical characteristics of the product itself: size, color, flavor or aroma. i) Consumers like to think they base quality evaluations on intrinsic cues because that enables them to justify their product decisions as being “rational” or “objective.” ii) More often than not, however, they use extrinsic characteristics to judge quality. iii) In the absence of actual experience with a product, consumers often evaluate quality on the basis of extrinsic cues, price, brand image, store image, etc. b) Extrinsic cues are characteristics that are not inherent to the product.

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***** Use Learning Objective 4.4 Here; Use Review and Discussion Exercise 4.9 Here; Use Key Terms perceived quality, intrinsic cues, and extrinsic cues Here ***** When stimuli are highly ambiguous, individuals usually interpret them in such a way that they serve to fulfill personal needs, wishes, and interests. d) How close a person’s interpretations are to reality depends on the clarity of the stimulus, the past experiences of the perceiver, and his or her motives and interests at the time of perception. c)

***** ***** 2. Stereotypes are the biased “pictures” consumers carry in their minds of the meaning of

various kinds of stimuli. a) Sometimes, when presented with sensory stimuli, people “add” these biases to what they see or hear and form distorted impressions. b) Marketers must be aware of possible stereotypes because these images reflect people’s expectations and influence how stimuli are subsequently perceived. c) The main factors that can trigger stereotypes are: i) Physical Appearance—people tend to attribute the qualities they associate with certain people to others who may resemble them. Culturally attractive models are likely to be more persuasive and have a more positive influence on consumer attitudes and behavior than do average-looking models. ii) Descriptive Terms—stereotypes are often reflected in verbal messages. Distinct brand names are important to all products or services, associations that consumers make with certain names are particularly crucial in marketing services due to the abstract and intangible nature of many services. iii) First Impressions—these tend to be lasting. iv) Halo Effect—describes situations where the evaluation of a single object or person on a multitude of dimensions is based on the evaluation of just one or a few dimensions. Consumers often evaluate an entire product line on the basis of the one product within the product line. Licensing also is based on the halo effect— associating products with a well-known celebrity or designer name. *****Use Key Termshalo effect and licensing here; Use Figure #4.8 Here***** Consumer Imagery 1. Consumer imagery

is consumers’ perceptions of all the components of products, services and brands and how consumers evaluate the quality of marketers’ offerings. a) Products and brands have symbolic value for individuals who evaluate them on the basis of their consistency with their personal pictures of themselves. b) Imagery affects perceptions of products, brands, services, prices, product quality, retail stores, and manufacturers.

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*****Use Learning Objective 4.6 Here; Use Key Termconsumer imagery Here; Use Learning Objective #4.5 Here***** 2. Perceived value is the customer’s view of the value that the customer receives from the

purchase. a) How a consumer perceives a price —as high, as low, as fair—has a strong influence on both purchase intentions and purchase satisfaction. b) Perception of price unfairness—customers pay attention to the prices paid by other customers (e.g., senior citizens, frequent fliers, affinity club members) – affect customer satisfaction, perceptions of product value and willingness to patronize a store or service. c. A reference price is any price that a consumer uses as a basis for comparison in judging another price. a. An advertiser generally uses a higher external reference price (“sold elsewhere at...”) in an ad in which a lower sales price is being offered to persuade the consumer that the product advertised is a really good buy. b. Internal reference prices are those prices (or price ranges) retrieved by the consumer from memory. c. Internal reference prices are thought to play a major role in consumers’ evaluations and perceptions of value of an advertised (i.e., external) price deal, as well as in the believability of any advertised reference price. d. Consumers’ internal reference prices change. e. When an advertised reference price is within a given consumer’s acceptable price range, it is considered plausible and credible. If the advertised reference point is f. outside the range of acceptable prices (i.e., implausible), it will be contrasted and thus will not be perceived as a valid reference point.

*****Use Key Termreference price Here ***** 3. A price/quality relationship forms when consumers rely on price as an indicator of product

quality. a) Because price is so often considered to be an indicator of quality, some products deliberately emphasize a high price to underscore their claims of quality. b) Consumers also use cues such as the brand and the store in which the product is bought to evaluate quality. c) Consumers rely on the price and brand name when evaluating the product’s prestige and symbolic value and use more concrete attributes of a product, such as performance and durability, to judge its overall performance. d) Marketers must understand all the attributes that customers use to evaluate a given product and include all applicable information in order to counter any perceptions of negative quality associated with a lower price. e) Consumers use price as a surrogate indicator of quality if they have little information or little confidence in their ability to make a choice.

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price-quality relationship *****Use Hands-on Assignment 4.13 Here; Use Key Term Here*****

4. Positioning is the distinct image that a product has in the mind of the consumer.

a) How a product is positioned in the mind of the consumer is more important to the product’s success than are the product’s actual characteristics. b) Marketers try to differentiate their products by stressing benefits that their brand provides rather than their products’ physical features. c) Brand images may be updated to create emotional bonds between brands and consumers or to help differentiate the product in an increasingly competitive market. *****Use Key Termpositioning Here; Use Figure #4.9 Here***** 5. Packaging must convey the image that the brand communicates to buyers.

*****Use Figure #4.10 Here***** 6. Compared with manufacturing firms, service marketers face several unique problems in

positioning and promoting their offerings. a) Services are intangible, so image becomes a key factor in differentiating a service from its competition. b) Services are also variable, perishable, and simultaneously produced and consumed. c) The marketing objective is to enable the consumer to link a specific image with a specific brand name (using painted delivery vehicles, restaurant matchbooks, packaged hotel soaps and shampoos, and a variety of other specialty items). d) Sometimes companies market several versions of their service to different market segments by using a differentiated positioning strategy. e) The design of the service environment is an important aspect of service positioning strategy and sharply influences consumer impressions. f) The arousal level within the store environment must match the expectations of the shoppers in order to avoid perceived over- or understimulation. g) The SERVQUAL scale measures the gaps between customers’ expectations of the services that they had purchased and their perceptions of the services that they received.

Gaps include outcomes and processes. ***** Use Key TermSERVQUAL scale Here; Use Review and Discussion Question #4.8 Here ***** 7. Retail stores have images of their own that serve to influence the perceived quality of

products they carry and the decisions of consumers as to where to shop. a) These images stem from the merchandise they carry, the brands sold and their prices, the level of service, the store’s physical environment and ambiance, and its typical clientele. .

b) The width and type of product assortment affects retail store image. c) The unique benefit that a store provides is more important than the number of items it carries in forming a favorable store image in consumers’ minds. d) Customers often use brand, store image, and price together as a product’s quality indicators. e) When brand and retailer images become associated, the less favorable image becomes enhanced at the expense of the more favorable image. Pricing discounts impact retail f) store image. Stores that offer frequent, small discounts on large numbers of items are more likely to be perceived as “discount stores” and less prestigious than stores offering larger discounts on a smaller number of products.

8. Manufacturers who enjoy a favorable image generally find that their new products are

accepted more readily than those of manufacturers who have a less favorable or even a “neutral” image. a) Consumers generally have favorable perceptions of brands that are the first in a product category and are more likely to purchase. b) Today, companies are using institutional advertising, exhibits, and sponsorship of community events to enhance their images.

*****Use Key Terminstitutional advertising Here***** Risk Perception 1. Perceived risk is the uncertainty that consumers face when they cannot foresee the consequences of their purchase decision. a) The degree of risk that consumers perceive and their own tolerance for risk taking are factors that influence their purchase strategies. b) Consumers are influenced by risks that they perceive, whether or not such risks actually exist. Risk that is not perceived will not influence consumer behavior. c) Types of risk include: functional risk, physical risk, financial risk, social risk, psychological risk, and time risk. *****Use Learning Objective 4.7 Here; Use Key Termperceived risk Here; Use Table 4.2 Here***** 2. The amount of risk perceived depends on the specific consumer, the product, the situation,

and the culture. a) High-risk perceivers are narrow categorizers because they limit their choices. b) Low-risk perceivers are broad categorizers because they make their choice from a wide range of alternatives. *****Use Key Termsnarrow categorizers and broad categorizers Here***** 3. Consumers characteristically develop their own strategies for reducing perceived risk.

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a) These risk-reduction strategies enable them to act with increased confidence when making product decisions, even though the consequences of such decisions remain somewhat uncertain. i) Seek information ii) Remain brand loyal iii) Rely on brand image iv) Rely on store image v) Buy the most expensive model or brand b) Marketers need to provide consumers with persuasive risk-reduction strategies such as: i) A well-known brand name ii) Distribution through reputable retail outlets iii) Informative advertising iv) Publicity v) Impartial test results vi) Free samples vii) Money-back guarantees Positioning and Repositioning 1. Positioning is the process by which a company creates a distinct image for its products, services or brands in consumers’ minds.

2. Marketers have to persuade their target audiences to choose their products vs. competitive products. *****Use Learning Objective 4.8 Here***** 3. The positioning process includes the following steps: a. Defining the market in which the product or brand competes, who the relevant buyers are, and the offering’s competition. b. Identifying the product’s key attributes and researching consumers’ perception regarding each of the relevant attributes. c. Researching how consumers perceive the competing offerings on the relevant attributes. d. Determining the target market’s preferred combination of attributes. e. Developing a distinctive, differentiating, and value-based positioning concept that communicates the applicable attributes as benefits. f. Creating a positioning statement focused on the benefits and value that the product provides and using it to communicate with the target audiences.

4. Positioning is especially difficult among commodities, where the physical characteristics of all the brands are identical, such as water. Nevertheless, marketers offer many brands of mineral water that range in price and are positioned differently.

5. Umbrella positioning is a statement or slogan that describes the universal benefit of the company’s offering. At times, this statement does not refer to specific products. (Figure 4.11)

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*****Use Key Termumbrella positioning Here; Use Figure #4.11 Here*****

6. Premier positioning focuses on the brand’s exclusivity.

7. Positioning against the competition acknowledges competing brands. (Figure 4.12) 8. Key attribute positioning is based on a brand’s superiority on relevant attributes.

9. Un-owned positioning is when a position is not associated with a product from the category.

(Figure 4.13) ***** Use Figures 4.12 and 4.13 Here ***** 10. Repositioning is the process by which a company strategically changes the distinct image and identity that its product or brand occupies in consumers’ minds. a. Companies do so when consumers get used to the original positioning and it no longer stands out in their minds. b. Similarly, when consumers begin to view the old positioning as dull, marketers must freshen up their brands’ identities. ***** Use Key Term repositioning Here ***** 11. Perceptual mapping is constructing a map-like diagram representing consumers’ perceptions of competing brands along relevant product attributes. Perceptual maps show marketers: a. How consumers perceive their brand in relation to competition b. How to determine the direction for altering undesirable consumer perceptions of their brands c. Gaps in the form or un-owned perceptual positions that offer opportunities for developing new brands or products ***** Use Key Termperceptual mapping Here *****

REVIEW AND DISCUSSION QUESTIONS 4.1 How does sensory adaptation affect advertising effectiveness? How can marketers overcome sensory adaptation?

Adaptation refers specifically to “getting used to” certain sensations or becoming accustomed to a certain level of stimulation. Marketers try to increase sensory input in order to cut through the daily clutter consumers experience in the consumption of advertising by using media different from what is expected. Some marketers seek unusual media, shopping carts, movies, fragrance samples in magazines, etc.

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Individual, Easy, 5-7 minutes Learning Objective 4.1: To understand how perception shapes sensory input and subsequent consumer behavior.

AACSB: Reflective thinking 4.2 Discuss the differences between the absolute threshold and the differential threshold.

Which one is more important to marketers? Explain your answer.

The lowest level at which an individual can experience sensation a (e.g., the immediate and direct response of the sensory organs to stimuli) is called the absolute threshold . To illustrate, the distance at which a driver can note a specific billboard on a highway is that individual’s absolute threshold. Other people riding in the car (because of vision or position in the car) could have different absolute thresholds for this event. The minimal difference that can be detected between two similar stimuli is called the differential threshold, or the just noticeable difference (the JND). This matches to Weber’s Law. According to Weber’s Law, an additional level of stimulus equivalent to the JND must be added for the majority of people to perceive a difference between the resulting stimulus and the initial stimulus. The differential threshold seems to have more importance for marketers. For example, when it comes to product improvements, marketers very much want to meet or exceed the customer’s differential threshold. Individual, Easy, 5-7 minutes Learning Objective 4.2: To understand the distinction between the sensory absolute and differential thresholds.

AACSB: Analytical thinking

4.3 Sensory adaptation is a concern for many advertisers, which is the reason they change their advertising campaigns regularly. Describe how ambush and experiential marketing can be used by marketers to increase sensory input.

Sensory adaptation implies getting used to certain sensations; that is, becoming accommodated to a certain level of stimulation and becoming less able to notice a particular stimulus. Ambush marketing consists of placing ads in places where consumers do not expect to see them and cannot readily avoid them. For example, A Symphony of Lights, a multimedia show at the Hong Kong harbor, is projected every night on the facades of the high rise buildings on Hong Kong Island and Kowloon is one of the city’s best known tourist attractions. The entire skyline becomes a single advertising installation.

Experiential Marketing allows customers to engage and interact with brands, products, and services sensorially, creating emotional bonds between consumers and marketing offerings. An example of this method would be the print-enabled marketing campaign for the ready-to- drink coffee brand Wonda Premium Coffee, which targeted the five senses of New Straits Times’ readers on different days with pop-up ads, a pair of 3D glasses for sight, Wonda’s signature tune, the aroma of its coffee, and finally a call-to-action cut-out coupon one-pager.

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Individual or Group, Moderate, 15-20 minutes Learning Objective 4.1: To understand the elements of perception and their role in consumer behavior.

AACSB: Application of knowledge 4.4 Does subliminal advertising work? Support your view.

Students may argue both sides of the issue. They should note the following key information. The purpose of the concept is to stimulate people below their level of conscious awareness— they can perceive stimuli without being consciously aware of it. It can be briefly presented visual stimuli, accelerated speech in low-volume auditory messages, or embedded or hidden imagery or words. Embeds are disguised stimuli not readily recognized by readers. A series of highly imaginative laboratory experiments gave some support to the notion of subliminal awareness, but no evidence was found that consumers could be persuaded to act in response to such messages. Auditory subliminal stimuli seem to have even less effect than visual. Nevertheless, a whole industry based on audio-perception has grown up, using subliminal sound to try to teach while you sleep and using music to influence you while shopping. There is no evidence that subliminal advertising works. Because no evidence exists as to its real effects, there are currently no federal or state laws addressing its use. The FCC has issued a statement against its use, however. Individual, Easy, 5-7 minutes Learning Objective 4.2: To understand the distinction between the sensory absolute and differential thresholds. AACSB: Reflective thinking

4.5 How do advertisers use contrast to make sure that their ads are noticed? Would the lack of contrast between the advertisement and the medium in which it appears help or hinder the effectiveness of the ad? Why or why not?

Stimuli that contrast with their environment are more likely to be noticed. The simplest example is the contrast between afigure and the ground on which it is placed. The figure is usually perceived clearly. The ground is usually perceived as indefinite, hazy, and continuous. Perceptual organization is affected by consumer expectations. The lack of contrast can be effective because individuals have a need for closure. As a result, people organize a perception, so they see a complete picture. If the pattern of stimuli to which they are exposed is incomplete, they tend to perceive it as complete (i.e., they fill in the missing pieces). Tension is created by incomplete messages resulting in better consumer retention. Incomplete advertising messages “beg” for completion by consumer. The very act of completion serves to involve the consumer more deeply in the message. Individual or Group, Moderate, 5-7 minutes Learning Objective 4.4: To understand how people organize stimuli. AACSB: Application of knowledge

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4.6. One of the basic principles of perceptual organization is closure. What are some of the roles and implications for marketers using this principle in print and online ads?

Closure is people’s instinct to organize pieces of sensory input into a complete image or feeling. The need for closure has interesting implications for marketers.

Promotional messages in which viewers are required to “fill in” information beg for completion by consumers, and the very act of completion serves to involve consumers more deeply in the message. In a related vein, missing pictures or information can influence consumers. Consumers will try to infer the value of a missing picture and or information. When consumers’ involvement increases, they will pay attention to that advertisement as well as any relevant information. Individual, Moderate, 10-15 minutes Learning Objective 4.3: To understand how consumers organize consumption-related information. AACSB: Reflective thinking

4.7. Why do marketers sometimes reposition their products or services? Illustrate your answers with examples.

The image that a product or service has in the mind of the consumer—that is, how it is positioned—is probably more important to its ultimate success than are its actual characteristics. Marketers try to position their brands so that they are perceived by the consumer to fit a distinctive niche in the marketplace—a niche occupied by no other product. They try to differentiate their products by stressing attributes they claim will fulfill the consumer’s needs better than competing brands.

They strive to create a product image consistent with the relevant self-image and needs of the targeted consumer segment. The result of a successful positioning strategy is a distinctive brand image of which consumers rely in making product choices. In today’s highly competitive environment, a distinctive product image is most important. As products become more complex and the marketplace more crowded, consumers rely more on the product’s image than on its actual attributes in making purchase decisions. The technique of perceptual mapping helps marketers to determine just how their products and services appear to consumers in relation to competitive brands on one or more relevant characteristics. It enables them to see gaps in the positioning of all brands in the product or service class, and to identify areas in which consumers’ needs are not adequately met. Thus, marketers may either create new brands to satisfy unmet needs, or, reposition existing brands through promotional messages by stressing those product attributes that are likely to satisfy unfilled consumer needs. Individual, Moderate, 10-15 minutes Learning Objective 4.8: To understand the process of positioning and repositioning. AACSB: Application of knowledge 4.8. Why is it more difficult for consumers to evaluate the effective quality of services than the quality of products?

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Because of certain distinctive characteristics of services—their intangibility, their variability, the fact that services are simultaneously produced and consumed, and their perishability— services are difficult to evaluate with respect to quality. To overcome the fact that consumers are unable to compare services side-by-side as they do with products, consumers rely on surrogate cues (i.e., extrinsic cues) to evaluate service quality.

Individual, Easy, 3-5 minutes Learning Objective 4.6: To understand the elements of consumer imagery. AACSB: Reflective thinking

4.9. Intrinsic and extrinsic cues are used by consumers to perceive the quality of products.

Discuss these cues for products such as smartphones and services.

Intrinsic and extrinsic cues provide the basis for the consumer’s perception of products and services. Intrinsic cues are the physical characteristics of a product. Extrinsic cues are characteristics that are not inherent in the product or service.

For a smartphone, intrinsic cues include its size, design, and color. For services like hair salons, intrinsic cues include the image and brand of the hair salon, the range of hair care services and products sold; extrinsic cues include price, brand image, manufacturer’s image, retail store image, and even the perceived country of origin.

Individual, Moderate, 20-25 minutes 4.10Learning Describe the stages theunderstand positioninghow process and apply them tothe positioning Objective 4.6:inTo consumers determine quality ofa products and product of your choice. services.

AACSB: Application of knowledge The positioning process includes the following steps: 1. Defining the market in which the product or brand competes, who the relevant buyers are, and the offering’s competition.

2. Identifying the product’s key attributes and researching consumers’ perception regarding each of the relevant attributes.

3. Researching how consumers perceive the competing offerings on the relevant attributes.

4. Determining the target market’s preferred combination of attributes.

5. Developing a distinctive, differentiating, and value-based positioning concept that communicates the applicable attributes as benefits.

6. Creating a positioning statement focused on the benefits and value that the product provides and using it to communicate with the target audiences.

Students may select from a tremendous number of products. Look for each of the six steps in the process to be covered in the description.

Individual, Moderate, 10-15 minutes Objective 4.8: To understand the process of positioning and repositioning.

AACSB: Application of knowledge

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4.11 How is the understanding of consumers’ perceptions of a product’s attributes used to position a brand within that product category?

Key attribute positioning is based on a brand’s superiority on relevant attributes. Believing that consumers use brands to express their identities, some marketers have repositioned their products from focusing on functional attributes to focusing on how the products fit into a consumer’s lifestyle.

Individual, Easy, 3-5 minutes Objective 4.8: To understand the process of positioning and repositioning.

AACSB: Reflective thinking

4.12

Why do marketers have to reposition their brands? Illustrate with examples.

Repositioning is the process by which a company strategically changes the distinct image and identity that its product or brand occupies in consumers’ minds. Companies do so when consumers get used to the original positioning and it no longer stands out in their minds.

Similarly, when consumers begin to view the old positioning as dull, marketers must freshen up their brands’ identities.

Individual, Moderate, 7-10 minutes Objective 4.8: To understand the process of positioning and repositioning.

AACSB: Reflective thinking; Application of knowledge

4.13 What are perceptual maps, and how are they used in positioning brands within the same product category? Illustrate your answer with the chapter’s discussion of eye drops and toothpaste.

Perceptual mapping is constructing a map-like diagram representing consumers’ perceptions of competing brands along relevant product attributes. Perceptual maps show marketers: 1. How consumers perceive their brand in relation to competition.

2. How to determine the direction for altering undesirable consumer perception of their brands.

3. Gaps, in the form of un-owned perceptual positions that represent opportunities for developing new brands or products.

The aim of perceptual mapping is to develop repositioning strategies and fine-tune the images (i.e., consumers’ perceptions) of products and services. The marketers of Crest and Visine studied customers and discovered which attributes (or their combinations) represent benefits that consumers seek from such products. By offering product versions that provide distinct benefits and filling as many positions as possible, the makers of Visine and Crest made it virtually impossible for other companies to penetrate their respective markets.

Individual, Moderate, 10-15 minutes Objective 4.8: To understand the process of positioning and repositioning.

AACSB: Reflective thinking; Application of knowledge .

HANDS-ON EXERCISES 4.14 Find three print examples of the kind of promotional methods that constitute ambush or experiential marketing. Evaluate each example in terms of the effectiveness of the sensory input provided.

Instructor’s Discussion Factors which students are likely to bring up include size of ads, the position of the ad, the color and shelf position of the package, and the contrast between the stimulus and its physical environment. The professor should ask students to identify the utilization of the principles of perceptual organization, that is, figure and ground grouping and closure, in the ads or packages selected. Individual, Moderate, 10-15 minutes Learning Objective 4.1: To understand how perception shapes sensory input and subsequent consumer behavior. AACSB: Application of knowledge; Analytical thinking

4.15 Define selective perception and relate one or two elements of this concept to your own attention patterns in viewing print advertisements and online commercials.

Instructor’s Discussion Consumers select stimuli from the environment based on the interaction of expectations and motives with the stimulus itself. This selection process gives rise to four important concepts concerning perception: • Selective exposure—consumers actively seek out messages that they find pleasant or with which they are sympathetic, and they actively avoid painful or threatening ones.

• Selective attention—consumers exercise a great deal of selectivity in terms of the attention they give to commercial stimuli.

• Perceptual defense—consumers subconsciously screen out stimuli that they find psychologically threatening, even though exposure has already taken place.

• Perceptual blocking—consumers protect themselves from being bombarded with stimuli by simply “tuning out”—blocking such stimuli from conscious awareness.

Individual, Moderate, 10-15 minutes Learning Objective 4.2: To understand the distinction between the sensory absolute and differential thresholds.

AACSB: Analytical thinking 4.16 Select a company that produces several versions of the same product under the same brand name. (Do not use one of the examples discussed in this chapter). Visit the firm’s Web site and prepare a list of the product items and the benefits that each item offers to consumers. Are all of these benefits believable and will they persuade consumers to buy the different versions of the product? Explain your answers.

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Instructor’s Discussion A good place for students to begin this exercise might be the computer, automobile, cereal, or gasoline industries. The Web sites for these industries are usually very clear as to product mix and positions, as well as benefits.

Individual, Moderate, 15-20 minutes Learning Objective 4.6: To understand the elements of consumer imagery.

AACSB: Application of knowledge 4.17 Apply the concepts that address consumers’ perceptions of service quality to your evaluate this course at this point.

Instructor’s Discussion Students need to consider that services are intangible, variable, perishable and simultaneously produced and consumed. Adding to this complexity, the actual quality of services can vary from day to day, from student to instructor, and from student to student.

Students need to consider each of these factors and evaluate both their inputs as well as the instructors. In addition, they might consider their expectation of instruction and their assessment.

Individual, Moderate, 10-15 minutes Learning Objective 4.6: To understand the elements of consumer imagery.

AACSB: Application of knowledge

S.TA.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 The conclusion on the part of most scholars and researchers is that subliminal perception (advertising) does not work. The field continues to intrigue and interest communicators, however. The history of the subject stretches back some fifty years. Your task is to evaluate the ethics of subliminal persuasion. During your evaluation consider the positive and negative effects of the phenomenon. For example, on the one hand, persuading below the conscious thinking level might induce purchases that normally would not be made—poor ethics. On the other hand, teaching a smoker or alcoholic to give up his or her bad habit with subliminal auditory tapes might give the person a new lease on life—good ethics. Write a short paper that takes a position on the subject from an ethical standpoint. Be sure to support your conclusions. Remember, every position has two points of view.

Instructor’s Discussion Students should be encouraged to read the material in the chapter before beginning this assignment. Students should also be encouraged to do an Internet search on the subject.

Obviously, extremely two points of view can be supported. Making judgments in this area is

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difficult. Once students have completed the assignment, put the papers into two groups (pro and con) and have a mini-debate. The results are often informative and thought provoking.

S.T.A.R. Project #2 As indicated in the chapter, “the consumer’s selection of stimuli from the environment is based on the interaction of expectations and motives with the stimulus itself.” Assume that you are the marketing manager for a large suburban toy and game store. In an effort to stimulate sales, your marketing team has employed an outside consultant. After a careful study of the store’s marketing and merchandising practices, the consultant has observed that although children still demand toys, their parents are becoming increasingly resistant to marketing efforts and are increasing their perceptual defenses against such efforts. The consult has recommended that your store move the marketing efforts toward the child segment (e.g., skipping the parent) by placing merchandise lower to the floor, using larger price signs, associating more products with animated characters from television and the movies, and introducing “kiddie” shopping carts so children can have their own carts with which to shop. Although the ideas seem new and fresh, you wonder about the ethics of bypassing the parent and going directly toward the child with your marketing supports or effort. Consider your feelings and write a one-page position paper that rejects the consultant’s advice.

Instructor’s Discussion In this case, the marketing manager is confronted with an interesting situation. When does making a sale out-shadow ethical behavior? Does the consultant’s report over step good ethics?

Students differencesshould be able to generate good responses. It will be interesting to see the between the two points of view. A mini-debate can be held if time permits.

Small Group Project S.T.A.R. Project #3 Every child has had the experience of taking a lunch to school. For older generations, this meant peanut butter and jelly or bologna sandwiches. For today’s youth, it is more likely to be Lunchables or some similar product. Kraft Foods has aggressively promoted Lunchables as a healthy alternative to the “old time” sandwiches. Many mothers do not agree, however, and continue to prepare lunches in the older fashion. Your group’s assignment is to examine Lunchables (see www.lunchables.com) with respect to possible perceptual barriers that might be erected by non-users. For example, a mother might not use a Lunchable because she wants to give her child a lunch made with her own loving hands, or nutrition may be a concern. Consider the influences (see chapter) that might enhance perceptual distortion and devise a plan for Kraft to overcome such a mother’s objections.

How might your plan be implemented through communication channels? .

Instructor’s Discussion The plan.group will find ample information on the Lunchables Web site on which to build their Product variety, nutrition facts, and information can be used to overcome acceptance barriers.

The main intent of the exercise, however, is to have students carefully examine the perceptual distortion influences (physical appearances, stereotypes, first impressions, jumping to

CHAPTER 5 Consumer Learning

LEARNING OBJECTIVES After reading, studying and analyzing this chapter, students should be able: 5.1 To understand the elements of learning.

5.2 To understand behavioral learning, classical conditioning, and the roles of stimulus generalization and discrimination in marketing.

5.3 To understand instrumental conditioning and the objectives and methods of reinforcement.

5.4 To understand observational learning.

5.5 To understand how consumers process information.

5.6 To understand cognitive learning as a form of consumer decision-making.

5.7 To understand the impact of involvement and passive learning on purchase decisions.

5.8 To understand how to measure the outcomes of consumer learning.

CHAPTER SUMMARY Learning Objective 5.1: To understand the elements of learning.

Learning is the process by which individuals acquire the purchase and consumption knowledge and experience they apply to future, related behavior. Consumer learning is a process that evolves and changes as consumers acquire knowledge from experience, observation, and interactions with others and newly acquired knowledge affects future behavior. It ranges from simple and often reflexive responses to marketing stimuli (such as packaging, product colors, and promotional messages), to learning abstract concepts and making decisions about purchasing complex and expensive products. The elements of learning are motives (drives), cues, responses, and reinforcement.

Learning Objective 5.2: To understand behavioral learning, classical conditioning, and the roles of stimulus generalization and discrimination in marketing.

Behavioral learning (also referred to as stimulus-response learning) maintains that observable responses to external stimuli signal that learning has taken place. Behavioral learning focuses on the inputs and outcomes of learning; that is, on the stimuli that consumers select from the environment and the behaviors that result. There are three forms of behavioral learning: classical conditioning, instrumental (or operant) conditioning, and observational (or modeling) learning.

Classical conditioning (also known as Pavlovian conditioning) is learning where repetition causes the conditioned stimulus to signal the occurrence of the unconditioned stimulus. The strategic applications of classical conditioning to consumer behavior are associative learning, repetition, stimulus generalization, and stimulus discrimination.

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Learning Objective 5.3: To understand instrumental conditioning and the objectives and methods of reinforcement.

Instrumental learning theorists believe that learning occurs through a trial-and-error process in which positive outcomes (i.e., rewards) result in repeat behavior. Both positive and negative reinforcement can be used to encourage the desired behavior. Reinforcement schedules can be total (consistent) or partial (fixed ratio or random). The timing of repetitions influences how long the learned material is retained. Massed repetitions produce more initial learning than distributed repetitions; however, learning usually persists longer with distributed (i.e., spread out) reinforcement schedules.

Learning Objective 5.4: To understand observational learning.

Observational learning (or modeling) is the process through which individuals learn behavior by observing the behavior of others and the consequences of such behavior. Advertisers recognize the importance of observational learning in their selection of models, whether celebrities or unknowns. Many ads feature likeable models achieving positive outcomes to common problem situations through use of the advertised product.

Learning Objective 5.5: To understand how consumers process information.

The human mind processes the information it receives. Consumers process product information by attributes, brands, comparisons between brands, or a combination of these factors. The number and complexity of the relevant attributes and available alternatives influence the intensity or degree of information processing. Consumers with higher cognitive abilities acquire more product information and consider more product attributes and alternatives than consumers with lesser ability. The elements of memory are the sensory store, the short-term store (or working memory), and the long-term store. The processes of memory include rehearsal, encoding, storage, and retrieval.

Learning Objective 5.6: To understand cognitive learning as a form of consumer decisionmaking.

Cognitive learning is the systematic evaluation of information and alternatives needed to meet a recognized unfilled need or solve a problem. Unlike behavioral learning, which focuses on largely instinctive responses to stimuli, cognitive learning consists of deliberate mental processing of information. Instead of focusing on repetition or the association of a reward with a specific response, cognitive theorists emphasize the role of motivation and mental processes in producing a desired response. Several models of cognitive learning are discussed throughout this book.

Learning Objective 5.7: To understand the impact of involvement and passive learning on purchase decisions.

The consumer involvement model proposes that people engage in limited information processing in situations of low importance or relevance to them, and in extensive information processing in .

situations of high relevance. Hemispheric lateralization (split-brain) theory gave rise to the notion that television is a low-involvement medium that results in passive learning and that print and interactive media encourage more cognitive information processing.

Learning Objective 5.8: To understand how to measure the outcomes of consumer learning.

Measures of consumer learning include recall and recognition tests, and attitudinal and behavioral measures of brand loyalty. Brand loyalty consists of both attitudes and actual behaviors toward a brand, and both must be measured. For marketers, the major reasons for understanding how consumers learn are to teach consumers that the marketers’ brand is best and to develop brand loyalty. Brand equity represents the intrinsic value of a brand name. This value stems from the foundations of brand loyalty: the consumer’s perception of the brand’s superiority, the social esteem that using it provides, and the customer’s trust and identification with the brand.

CHAPTER OUTLINE INTRODUCTION 1. Learning is applying one’s past knowledge and experience to present circumstances and behavior.

2. Repeating advertising messages about brands and their benefits, rewarding people for purchase behavior be selling products that provide superior benefits, getting consumers to make associations among different offerings under the same brand name, and developing brand loyalty are all elements of consumer learning.

3. Marketers are concerned with how individuals learn because they want to teach them, in their roles as consumers, about products, product attributes, and potential consumer benefits; about where to buy their products, how to use them, how to maintain them, even how to dispose of them. *****Use Key Term learningHere; Use Figure #5.1 Here***** The Elements of Consumer Learning 1.Consumer learning is a process; that continually evolves and changes as a result of newly acquired knowledge or from actual experience. a) Both newly acquired knowledge and personal experience serve as feedback to the individual and provide the basis for future behavior in similar situations. b) The role of experience in learning does not mean that all learning is deliberately sought.

A great deal of learning is also incidental, acquired by accident or without much effort. c) Despite their different viewpoints, learning theorists in general agree that in order for learning to occur, certain basic elements must be present—motivation, cues, response, and reinforcement. ***** Use Learning Objective #5.1 Here ***** .

2. Unfulfilled needs lead to motivation, which spurs learning. The degree of relevance of the goal is critical to how motivated the consumer is to search for knowledge or information about a product or service. *****Use Key Term motivation Here***** 3. If motives serve to stimulate learning, cues (price, styling, packaging, advertising, and store displays) are the stimuli that give direction to the motives. *****Use Key Term cues Here***** 4. How individuals react to a cue—how they behave—constitutes their response. a) A response is not tied to a need in a one-to-one fashion. b) A need or motive may evoke a whole variety of responses. c) The response a consumer makes depends heavily on previous learning that, in turn, depends on how related responses were reinforced previously. *****Use Key Termresponse Here***** 5. Reinforcement, the reward (pleasure, enjoyment and benefits) that the consumer receives after buying and using a product or service, increases the likelihood that a specific response (e.g. loyal repurchase behavior) will occur in the future as the result of particular cues or stimuli. *****Use Key Termreinforcement Here; Use Figure #5.2 Here***** Classical Conditioning 1. Behavioral learning is sometimes called stimulus-response learning because it is based on the premise that observable responses to specific external stimuli signal that learning has taken place. a) Behavioral theories are most concerned with the inputs and outcomes of learning, not b) the process.

Three forms of behavioral learning are classical conditioning , instrumental (or operant) conditioning, and behavioral learning (or modeling). ***** Use Learning Objective #5.2 Here; Use Key Terms behavioral learning (stimulusresponse learning), classical conditioning, and instrumental (or operant) conditioning Here***** 2. Classical conditioning is viewed as an automatic response that builds up through repeated

exposure and reinforcement. a) Early classical conditioning theorists regarded all organisms as passive recipients that could be taught certain behaviors through repetition (i.e., conditioning). .

Conditioning involved building automatic responses to stimuli. (Ivan Pavlov was the first to describe conditioning and to propose it as a general model of how learning occurs.) Conditioned learning results when a stimulus that is paired with c) another stimulus elicits a known response and serves to produce the same response when used alone. In a consumer behavior context, an unconditioned d) stimulus might consist of a well- known brand symbol and previously acquired consumer perception of a brand is the unconditioned response. Conditioned stimuli might consist of new products under an existing brand name. The e) conditioned response would be consumers trying these products because of the f) belief that they embody the same attributes with which the brand name is associated. b)

*****Use Key Termsconditioned learning, unconditioned stimulus, and conditioned stimuli Here; Use Figure #5.4, and #5.5 Here***** 3. Cognitive associative learning suggests learning is not a reflexive action, but rather

the acquisition of new knowledge due to learning associations among events that allow the organism to anticipate and “represent” its environment. *****Use Key Termcognitive associative learning Here *****

4. Repetition works by increasing the strength of the association between a conditioned

stimulus and an unconditioned stimulus and slows the process of forgetting. a) After a certain number of repetitions, attention and retention declines. b) This effect is known as advertising wear-out and can be decreased by varying the advertising messages. c) Wear-out may be avoided by varying the message through cosmetic variation or substantive variation. d) The three-hit theory states that the optimum number of exposures to an ad is three. i) One to make the consumer aware of the product. ii) A second to show consumers the relevance of the product. iii) A third to remind them of its benefits. e) Others think it may take 11 to 12 repetitions to achieve the three objectives *****Use Key Termsrepetition, advertising wear-out Here ***** 5. Making the same response to slightly different stimuli is calledstimulus generalization. a) Stimulus generalization explains why imitative “me too” products succeed in the

marketplace: consumers confuse them with the original product they have seen advertised. It also explains why manufacturers of private label brands try to make b) their packaging closely resemble the national brand leaders.

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In product line extensions, the marketer adds related products to an already established brand, knowing that the new product is more likely to be adopted when it is associated with a known and trusted brand name. Marketers offer product form d) extensions that include different sizes, different colors, and even different flavors.

Family branding—the practice of marketing a whole line of company products under e) the same brand name—is another strategy that capitalizes on the consumer’s ability to generalize favorable brand associations from one product to the next. Licensing— allowing a well-known brand name to be affixed to products of another f) manufacturer—is another marketing strategy that operates on the principle of stimulus generalization. c)

Key Terms stimulus *****Use Review and Discussion Question #5.3 HereUse ; generalization, product line extensions, family branding, licensing Here; Use Hands-on Assignment #5.12 Here***** 6. Stimulus discrimination is the opposite of stimulus generalization and results in the

selection of specific stimulus from among similar stimuli. a) The consumer’s ability to discriminate among similar stimuli is the basis of b) positioning strategy, which seeks to establish a unique image for a brand in the consumer’s mind. Unlike the imitator who hopes consumers will generalize their perceptions and attribute special characteristics of the market leader’s products to their own products, market leaders want the consumer to discriminate among similar stimuli. c) Most product differentiation strategies are designed to distinguish a product or brand from that of competitors on the basis of an attribute that is relevant, meaningful, and valuable to consumers.

It often is quite difficult to unseat a brand leader once stimulus discrimination has d) occurred. e) In general, the longer the period of learning—of associating a brand name with a specific product—the more likely the consumer is to discriminate, and the less likely to generalize the stimulus. *****Use Key Termstimulus discrimination Here*****

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Instrumental Conditioning 1. Instrumental conditioning is based on the notion that learning occurs through trial-anderror, and the stimulus that results in the most satisfactory response is the one that is learned. a) According to American psychologist B. F. Skinner, most individual learning occurs in a controlled environment in which individuals are “rewarded” for choosing an appropriate behavior. A favorable experience is instrumental in teaching the b) individual to repeat a specific behavior.

*****Use Learning Objective 5.3 Here; Use Key Term instrumental conditioning Here; Use Review and Discussion Question #5.1 and #5.3 Here; Use Figure #5.6 Here***** 2. Skinner distinguished two types of reinforcement (or reward) influence, which provided that

the likelihood for a response would be repeated. a) The first type, positive reinforcement, consists of events that strengthen the likelihood of a specific response. b) Negative reinforcement is an unpleasant or negative outcome that also serves to encourage a specific behavior. c) Either positive or negative reinforcement can be used to elicit a desired response. d) Negative reinforcement should not be confused with punishment, which is designed to discourage behavior. *****Use Key Termspositive reinforcement and negative reinforcement Here; Use Handson Assignment #5.11 Here ***** 3. Incentivized advertising is a new application of positive reinforcement.

It provides

consumers with rewards for watching ads.

4. Marketers have identified three types of reinforcement schedules: continuous

reinforcement, fixed ratio reinforcement, and variable ratio reinforcement. a) Continuous reinforcement offers a reward after each transaction. b) Fixed ratio reinforcement provides a reward every nth time the product or service is c) purchased.

Variable ratios reward consumers on a random basis and tend to engender high rates of desired behavior and are somewhat resistant to extinction. *****Use Key Termscontinuous reinforcement, variable ratio reinforcement, fixed ratio reinforcement Here***** 5. When a learned response is no longer reinforced, it diminishes to the point of extinction; that

is, to the point at which the link between the stimulus and the expected reward is eliminated. a) Forgetting is often related to the passage of time; this is known as the process of decay. b) Marketers can overcome forgetting through repetition and can combat extinction through the deliberate enhancement of consumer satisfaction.

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*****Use Key Termsextinction and forgetting Here***** 6. Marketers have found that product quality must be consistently high and provide customer

satisfaction with each use for desired consumer behavior to continue. The reinforcement 7. of behaviors that must be performed by consumers before the desired behavior can be

performed is called shaping, which increases the probability that desired consumer behavior will occur. *****Use Key Termshaping Here***** 8. Timinghas an important influence on consumer learning. a) Question—should a learning schedule be spread out over a period of time (distributed

learning), or should it be “bunched up” all at once (massed learning)? i) Massed advertising produces more initial learning ii) A distributed schedule usually results in learning that persists longer When b) advertisers want an immediate impact (e.g., to introduce a new product or to counter a competitors blitz campaign), they generally use a massed schedule to hasten consumer learning. A distributed scheduler with ads repeated on a regular basis c) usually results in more long-term learning and is relatively immune to extinction.

*****Use Key Termsdistributed learning, massed learning Here*****

Observational Learning 1. Observational learning (also called modeling) is the process through which individuals

learn behavior by observing the behavior of others and the consequences of such behavior.

2. Their role models are usually people they admire because of such traits as appearance,

accomplishment, skill, and even social class.

3. Children learn much of their social behavior and consumer behavior by observing their older

siblings or their parents. *****Use Learning Objective 5.4 Here; Use Key Termobservational learning Here; Use Review and Discussion Question #5.4 Here ***** Information Processing 1. Cognitive learning is based on mental activity; it consists of mental processing of data rather than instinctive responses to stimuli. a) Cognitive learning theory holds that the kind of learning most characteristic of human b) beings is problem solving, and it gives some control over their environment. c) The human mind processes the information it receives.

Consumers process product information by attributes, brands, comparisons between brands, or a combination of these factors. .

d) e)

Consumers with higher cognitive ability generally acquire more product information and consider more product attributes and alternatives that consumer with lesser abilities.

The more experience a consumer has with a product category, the greater his or her ability to make use of product information.

*****Use Key Termcognitive learning Here; Use Learning Objective #5.5 Here; Use Figure 5.8 Here*****

2. The components of information processing are storing, retaining and retrieving information;

this takes place in process that uses a sensory store, a short-term store, and a long-term store. a) Sensory store—all data comes to us through our senses, however, our senses do not transmit information as whole images. i) The separate pieces of information are synchronized as a single image. ii) This sensory store holds the image of a sensory input for just a second or two. iii) This suggests that it’s easy for marketers to get information into the consumer’s sensory store, but hard to make a lasting impression. b) Short-term store—if the data survives the sensory store, it is moved to the short-term store. i) This is our working memory. ii) If rehearsal—the silent, mental repetition of material—takes place, then the data is transferred to the long-term store. iii) If data is not rehearsed and transferred, it is lost in a few seconds. c) Long-term store—once data is transferred to the long-term store it can last for days, weeks, or even years. *****Use Key Termssensory store and data rehearsal Here; Use Review and Discussion Question #5.5 Here ***** d) e)

Encoding is the process by which we select and assign a word or visual image to represent a perceived object.

Information overload takes place when the consumer is presented with too much information and leads to frustration, confusion, and poor purchase decisions. *****Use Key Termsencoding and information overload Here*****

3. Retention—information is constantly organized and reorganized as new links between

chunks of information are forged. a) Studies show that a brand’s sound symbolism and the brand’s linguistic characteristics b) impacted the encoding and retention of the brand name. c) Consumers recode what they have already encoded to include larger amounts of d) information (chunking).

The degree of prior knowledge is an important consideration.

Knowledgeable consumers can take in more complex chunks of information than those who are less knowledgeable in the product category. .

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5 .6.

Data retrieval is the process by which we recover information from long-term storage.

Environmental triggers are cues in the environment that remind a person of something, and then she or he talks about it.

Figure 5.10 indicates the top six reasons that consumers recall branded content on the internet. a) Tells them something new b) Entertains them c) Inspires them d) Teaches them something e) f) Shocks them Makes them act

*****Use Key Termsretention, data retrieval, chunking, environmental triggers Here; Use Figure #5.10 Here***** Cognitive Learning 1. Cognitive learning is the systematic evaluation of information and alternatives needed to solve a recognized but unfulfilled need or unsolved problem. a. It occurs when a person has a goal and must search for and process data in order to make a decision or solve a problem. b. The tricomponent attitude model consists of three stages: i. The cognitive stage – the person’s knowledge and beliefs about a product ii. The affective stage – the person’s feeling toward and evaluations of a product as “favorable” or “unfavorable”; and iii. The conative stage – the person’s level of intention to buy the product. c. For a long time, consumer researchers believed that the complex processing of information by consumers depicted in the cognitive learning model was applicable to all purchase decisions. d. Some theorists began to realize that there were some purchase situations that simply did not call for extensive information processing and evaluation. e. Purchases of minimal personal importance were called low-involvement purchases, and complex, search-oriented purchases were considered high-involvement purchases.

*****Use Learning Objective 5.6 Here; Use Key Termscognitive stage, affective stage and conative stage Here; Use Figure 5.11 Here*****

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Consumer Involvement and Hemispheric Lateralization 1.Consumer involvement is focused on the degree of personal relevance that the product or purchase hold for that consumer. a) High-involvement purchases are those that are very important to the consumer and b) thus provoke extensive problem solving and information processing.

Low-involvement purchases are purchases that are not very important to the consumer, hold little relevance, and have little perceived risk, and thus, provoke very limited information processing. c) Involvement has been conceptualized and measured in a variety of ways, including product involvement, brand involvement, and advertising involvement. d) The most sensible approach to measuring involvement is using self-administered surveys that assess the consumer’s cognitions or behaviors regarding a particular product or product category, and where involvement is measured on a continuum rather than as a dichotomy consisting of two mutually exclusive categories of “high” and “low” involvement. ***** Use Learning Objective 5.7 Here; Use Key Termconsumer involvement Here; Use Review and Discussion Question #5.10 Here***** 2. A marketer aspires to have consumers who are involved with the purchase also view its

brand as unique. Many studies showed that high purchase involvement coupled with 3. perceived brand differences lead to a high favorable attitude toward the brand, which in

turn leads to less variety seeking and brand switching and to strong brand loyalty.

Hemispheric lateralization or split-brain theory, originated in the 1960’s.

4.

a) The premise is that the right and left hemispheres of the brain specialize in the kinds of information they process. i) The left hemisphere is the center of human language; it is the linear side of the brain and primarily responsible for reading, speaking, and attributional information processing. ii) The right hemisphere of the brain is the home of spatial perception and nonverbal concepts; it is nonlinear and the source of imagination and pleasure. b) The left side of the brain is rational, active, and realistic. c) The right side is emotional, metaphoric, impulsive, and intuitive. *****Use Key Terms hemispheric lateralization Here; Use Figure #5.13 Here***** 5. Passive learning is thought to occur through repeated exposures to low-involvement

information processing. a) Right-brain theory is consistent with classical conditioning and stresses the importance of the visual component of advertising, so it affects processing of TV commercials b) Printed information is verbal information and is processed on the brain’s left side. c) Recent research suggests that pictorial cues help recall and familiarity, although verbal cues trigger cognitive functions, encouraging evaluation. .

*****Use Key Termspassive learning Here; Use Review and Discussion Question #5.6 Here; Use Hands-on Assignment #5.13 Here ***** Outcomes and Measures of Consumer Learning 1. Market share and the number of brand-loyal consumers are the interdependent goals of

consumer learning, so it is important for marketers to measure how effectively consumers have learned its message. *****Use Learning Objective #5.8 Here ***** 2. Recognition and recall tests

are conducted to determine whether consumers remember seeing an ad, the extent to which they have read it or seen it and can recall its content, their resulting attitudes toward the product and the brand, and their purchase intentions. a) Recognition tests are based on aided recall and recall tests use unaided recall. In b) recognition tests, the consumer is shown an ad and asked whether he or she c) remembers seeing it and can remember any of its salient points. In recall tests, the consumer is asked whether he or she has read a specific magazine or watched a specific television show, and if so, can recall any ads or commercials seen, the product advertised, the brand, and any salient points about the product. Starch Readership d) Ad Studies evaluate the effectiveness of magazine advertisements based on three criteria: i) Noticing the ad ii) Associating the ad with advertised brand iii) Involvement with the ad (reading most ad text)

*****Use Key Terms recognition test, aided recall, unaided recall, Starch Readership Ad Study, and recall tests Here; Use Review and Discussion Question #5.10 Here***** 3. Brand loyalty is the ultimate desired outcome of consumer learning, and measures purchase

frequency, brand switching, and commitment to buy the brand. a) Attitudinal measures are concerned with consumers’ overall feelings (i.e., evaluation) b) about the product and the brand, and their purchase intentions.

Behavioral measures are based on observable responses to promotional stimuli— purchase behavior, rather than attitude toward the product or brand.

4. A basic issue among researchers is whether to define brand loyalty in terms of consumer behavior or consumer attitudes. a) Behavioral scientists who favor the theory of instrumental conditioning believe that brand loyalty results from an initial product trial that is reinforced through satisfaction, leading to repeat purchase. Cognitive researchers, on the other hand, b) emphasize the role of mental processes in building brand loyalty. They believe that consumers engage in extensive problem- solving behavior involving brand and attribute comparisons, leading to a strong brand preference and repeat purchase behavior.

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c)

To cognitive learning theorists, behavioral definitions (e.g., frequency of purchase or proportion of total purchases) lack precision, because they do not distinguish the “real” brand-loyal buyer.

5. An integrated conceptual framework views consumer loyalty as the function of three groups of influences: (1) personal degree of risk aversion or variety seeing; (2) the brand’s reputation and availability of substitute brands; and (3) social group influences and peers’ recommendations. Their influences produce three types of loyalty: (1) 6. covetous loyalty, (2) inertia loyalty , and (3) premium loyalty . *****Use Key Terms brand loyalty, covetous loyalty, inertia loyalty, premium loyaltyHere; Use Table 5.2 Here; Review and Discussion Question #5.10 Here***** 7. Brand equity refers to the value inherent in a well-known brand name. a) This value stems from the consumer’s perception of the brand’s superiority, the social b) c)

esteem that using it provides, and the customer’s trust and identification with the brand.

For many companies, their most valuable assets are their brand names.

Brand equity enables companies to charge a price premium—an additional amount over and above the price of an identical store brand.

*****Use Key Termbrand equity Here; Use Review and Discussion Question #5.9 Here*****

REVIEW AND DISCUSSION QUESTIONS 5.1 How can the principles of (a) classical conditioning theory and (b) instrumental conditioning theory be applied to the development of marketing strategies?

Classical conditioning is now seen as cognitive associative learning; not the acquisition of new reflexes, but the acquisition of new knowledge about the world. Marketers can use product line extensions, family branding, and licensing to capitalize on the principles of classical conditioning. The consumer may be viewed as an information seeker who uses logical and perceptual relations among events, along with his or her own preconceptions, to form a sophisticated representation of the world. Instrumental conditioning is the learning that results from exposure to relationships among events in the environment; such exposure creates expectations as to the structure of the environment. Therefore, marketers should portray logical relationships among events in their ads, thus creating realistic consumer expectations, which in turn will influence consumer behavior.

Individual, Moderate, 7-10 minutes Learning Objective 5.2: To understand behavioral learning, classical conditioning, and the roles of stimulus generalization and discrimination in developing and branding new products.

Learning Objective 5.3: To understand instrumental conditioning and the objectives and methods of reinforcement. .

AACSB: Application of knowledge

5.2 Describe in learning terms the conditions under which family branding is a good policy and those under which it is not.

The main advantage of family branding is that marketers can build on the good reputation of their existing products through stimulus generalization. This makes the introduction of new products under the old brand name that much easier. As illustrations of family branding and the different approaches to it, consider the following: the main reason that Kraft and P&G have different family branding policies is that Kraft’s products are homogeneous (they are all food products) and P&G’s products are not. Thus, it would not make sense for P&G to attempt to apply the same name to the whole variety of products it markets. Another reason for P&G’s branding strategy is the company’s penchant for bringing out different brands in a particular product category, such as detergents, in order to satisfy different market segments and broaden its market share. Individual, Moderate, 10-15 minutes Learning Objective 5.2: To understand behavioral learning, classical conditioning, and the roles of stimulus generalization and discrimination in developing and branding new products. AACSB: Analytical thinking

5.3 Most advertisers use repetition to teach consumers. How much repetition is sufficient for Nestlé’s MAGGI to consider in introducing its new range of instant rice porridge?

Suggest some ways.

Repetition is key to forming associations between brands and consumers’ fulfillment of needs. Repetition increases the strength of these associations and lowers the possibility of forgetting these connections. Although all advertisers use repetition in trying to teach consumers, not everyone agrees on how much repetition is enough. Some marketing scholars believe that just three exposures to an advertisement are needed: one to make consumers aware of the product, a second to show consumers the relevance of the product, and a third to remind them of its benefits. This exposure pattern is called the three-hit theory. Other researchers suggest that as many as 11 to 12 repetitions are needed to achieve the three objectives. One study indicated that email advertisements that consumers found relevant influenced their learning and attitudes much more than the number of exposures. Recent research has concluded that up to 10 exposures will maximize advertising effects on attitudes, whereas more exposures are needed to maximize effects on brand recall. Individual, Moderate, 30 minutes Learning Objective 5.2: To understand behavioral learning, classical conditioning and the roles of stimulus generalization and discrimination in marketing. AACSB: Application of knowledge

5.4 Which form of learning—classical conditioning, instrumental conditioning, observational learning, or cognitive learning—best explains the following consumption behaviors: (a) buying a four-pack Lucozade, (b) preferring to buy lipstick at a Sephora store, (c) buying a superbike for the first time, (d) buying a new house, and (e) switching from one telephone company provider to another? Explain your choices. .

Students’ responses may vary based on their perceptions of these products. Classical conditioning is a form of behavioral learning where repetition causes the conditioned stimulus to signal the occurrence of the unconditioned response. Instrumental conditioning is a form of behavioral learning that occurs through a trial-and-error process, with habits formed as a result of rewards received for certain responses or behaviors.

Observational learning is learning that occurs when individuals observe and later imitate observed behaviors. Cognitive learning involves deliberate mental processing of information when people face problems that they wish to resolve. (a) Buying a four-pack Lucozade—observational learning (b) Preferring to purchase lipsticks at a Sephora Store —instrumental conditioning, classical conditioning (c) Buying a superbike for the first time—cognitive learning, observational learning (d) Buying a new house—cognitive learning, instrumental conditioning (e) Switching from one telephone company provider to another—instrumental conditioning, cognitive learning Individual, Moderate, 20-25 minutes Learning Objective 5.2: To understand behavioral learning, classical conditioning and the roles of stimulus generalization and discrimination in marketing.

Learning Objective 5.3: To understand instrumental conditioning and the objectives and methods of reinforcement.

Learning Objective 5.4: To understand observational learning.

Learning Objective 5.6: To understand cognitive learning as a form of consumer decisionmaking.

AACSB: Application of knowledge 5.5 Define the following memory structures: sensory store, short-term store (working memory), and long-term store. Discuss how each of these concepts can be used in the development of an advertising strategy.

Sensory store —receives what the senses deliver but retains information for only a fraction of a second. For marketing, this means that although it is easy to expose consumers to information, it is difficult to make a lasting impression. Therefore, messages must be brief and attract attention.

Short-term store—the stage of memory where information which is rehearsed is transferred to real memory, and data which is not rehearsed is lost within less than one minute.

Because the amount of time available for memorization is very limited, the message must encourage immediate rehearsal of materials to stimulate retention. Chucking information also stimulates rehearsal of information and its transfer to long-term memory.

Long-term store—a data bank which lasts up to many years with almost unlimited . capacity.

The data is organized through linking and clustering of information according to its meaningfulness. The marketers must provide a message that can be readily linked to

information stored here. Also, the advertiser should remember that the consumer interprets new information in a manner consistent with data stored in the long-term memory.

Individual, Easy, 5-10 minutes Learning Objective 5.5: To understand how consumers process information.

AACSB: Reflective thinking

5.6 How does information overload affect the consumer’s ability to comprehend an ad and store it in his or her memory?

When consumers are presented with too much information (called information overload), they may encounter difficulty in encoding and storing it all. It has been argued that consumers can become cognitively overloaded if they are given a lot of information in a limited time. The result of this overload is confusion, resulting in poor purchase decisions.

One study found that consumers make less effective choices when presented with too much information. Other studies have found that consumers can handle large amounts of information without experiencing overload. The apparent contradiction between these findings may be due to the absence of a precise definition as to how much information constitutes overload. Is it five items or fifteen items? One experiment, which concluded that consumers are confused and make poor choices as the result of information overload, provided consumers with 10 to 25 choice alternatives, and with information concerning 15 to 25 product attributes. Research is needed to determine at what point information overload sets in for various subsets of consumers. Individual, Easy, 5-10 minutes Learning Objective 5.5: To understand how consumers process information. AACSB: Reflective thinking

5.7 Discuss the differences between low- and high-involvement media. How would you apply the knowledge of hemispheric lateralization to the development of TV commercials and print advertisements?

The research calledhemispheric lateralization , or split-brain theory , suggests that the left brain is responsible for cognitive activities, such as reading, speaking and processing verbal information, and that the right brain processes nonverbal and pictorial information and forms holistic images. Because TV is primarily a pictorial medium, TV viewing is considered to be a right brain function—passive and holistic processing of images viewed on the screen—and TV is regarded as a low-involvement medium. On the other hand, print media (i.e., newspapers and magazines) are high-involvement because exposure to them results in the left-brain’s active processing of verbal data and, ultimately, in cognitive learning. Thus, TV commercials should be short, rich in visual symbolism and repeated frequently. Consumers process and learn TV advertising passively, and the major objective of TV ads should be to form consumer familiarity with the brand and package which will result in the object’s recognition and purchase by consumers. The objective of print ads is to present detailed, rather than “overall image,” information to generate cognitive evaluations of the advantages and disadvantages of the product. .

Individual, Moderate, 10-15 minutes Learning Objective 5.7: To understand the impact of involvement and passive learning on purchase decisions.

AACSB: Reflective thinking 5.8 Why are both attitudinal and behavioral measures important in measuring brand loyalty?

Brand loyalty is the ultimate desired outcome of consumer learning. There is, however, no single definition of this concept. Marketers agree that brand loyalty consists of both Attitudinal attitudinal and actual behaviors toward a brand and that both must be measured. measures are concerned with consumers’ overall feelings (i.e., evaluations) about the product and the brand and their purchase intentions. Behavioral measures are based on observable responses to promotional stimuli—repeat purchase behavior rather than attitude toward the product or brand. Individual, Easy, 5-10 minutes Learning Objective 5.8: To understand how to measure the outcomes of consumer learning. AACSB: Reflective thinking

5.9What is the relationship between brand loyalty and brand equity? What roles do both concepts play in the development of marketing strategies?

As mentioned in Question 5.8,brand loyalty is the ultimate desired outcome of consumer learning. The termbrand equity refers to the value inherent in a well-known brand name.

The value stems from the consumer’s perception of the brand’s superiority and the social esteem that using it provides and the trust and identification with the brand.

For many companies, their most valuable assets are their brand names. With respect to strategies, because of the escalation of new-product costs and the high rate of newproduct failures, many companies prefer to leverage their brand equity through brand extensions rather than risk launching a new brand. Individual, Easy, 5-10 minutes Learning Objective 5.8: To understand how to measure the outcomes of consumer learning. AACSB: Reflective thinking

5.10 How can marketers use measures of recognition and recall to study the extent of consumer learning?

Recognition and recall tests are conducted to determine whether consumers remember seeing an ad, the extent to which they have read it or seen it and can recall its contents, their resulting attitudes toward the product and the brand, and their purchase intentions.

Recognition tests are based on aided recall, whereas recall tests used unaided recall.

Individual, Easy, 5-10 minutes .

Learning Objective 5.8: To understand how to measure the outcomes of consumer learning.

AACSB: Reflective thinking HANDS-ON ASSIGNMENTS 5.11 Imagine you are the instructor of this course and that you are trying to increase student participation in class discussions. How would you use reinforcement to achieve your objective?

Instructor’s Discussion From an instrumental (operant) conditioning viewpoint, a professor should use positive reinforcement and reward students for participation through praises, keeping count of the number of times students participate, and giving a grade for class participation. If these means are used, however, students will learn to expect external motivations/rewards and, if these reinforcers are discontinued, will stop participating. A better approach may be to require students to prepare answers to questions and exercises given to them in advance of the class and to present their responses in class. Thus, students will be intellectually challenged, will clearly know what is expected of them, and will prepare for class discussions in order to avoid embarrassment in front of the class when they present their answers (i.e., due to internal motivation rather than due to external reinforcement). Individual, Moderate, 10-15 minutes Learning Objective 5.3: To understand instrumental conditioning and the objectives and methods of reinforcement.

AACSB: Application of knowledge

5.12 Visit a supermarket. Can you identify any packages where the marketer’s knowledge of stimulus generalization and stimulus discrimination was incorporated into the package design? Note these examples and present them in class.

Instructor’s Discussion Because the average package on the supermarket shelf has about one-tenth of a second to make an impression, astute marketers usually try to differentiate their packages sufficiently to ensure rapid consumer recognition. Thus, national manufacturers create packages that provide unique sensory input, are heavily advertised, create instant recognition, and are distinctly different from other packages in the same product category (i.e., stimulus discrimination). On the other hand, a trip to the supermarket reveals that manufacturers of private and store brands often design packages that resemble those of national brands; they hope that consumers will generalize from the national brands that they are likely to instantly recognize to the lesser-known store and private brands. Individual, Moderate, 10-15 minutes Learning Objective 5.2: To understand behavioral learning, classical conditioning, and the roles of stimulus generalization and discrimination in developing and branding new products. AACSB: Application of knowledge

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5.13 Find two ads: one targeting the left side of the brain and another targeting the right side. Explain your choices.

Instructor’s Discussion The American Airlines ad in the text provides one example. The left hemisphere is the center of human language; it is the linear side of the brain and primarily responsible for reading, speaking, and reasoning. The right hemisphere of the brain is the home of spatial perception and nonverbal concepts; it is nonlinear and the source of imagination and pleasure. Put another way, the left side of the brain is rational, active, and realistic; the right side is emotional, metaphoric, impulsive, and intuitive.

Individual, Moderate, 15-20 minutes Learning Objective 5.7: To understand the impact of involvement and passive learning on purchase decisions.

AACSB: Application of knowledge

S.T.A.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 As indicated in the chapter, behavioral learning theories are sometimes referred to as stimulusresponse theories because they are based on the premise that observable responses to specific external signals that learning has taken place. Behavioral theories are not so much concerned with the process of learning as they are with the inputs and outcomes of learning, that is, in the stimuli that consumers select from the environment and the observable behaviors that result.

Which of the behavioral learning theories relate most closely conduct of good business ethics? a. Review each of the behavioral learning theories and briefly describe the theories that you perceive to be most closely associated with the ethical transmission of information for the purpose of learning. b. Create an example to illustrate your position in the above question.

Instructor’s Discussion As indicated previously, Classical Conditioning is now seen as cognitive associative learning; not the acquisition of new reflexes, but the acquisition of new knowledge about the world.

Marketers can use product line extensions, family branding, and licensing to capitalize on the principles of classical conditioning. The consumer may be viewed as an information seeker who uses logical and perceptual relations among events, along with his or her own preconceptions, to form a sophisticated representation of the world. Instrumental conditioning (operant) is the learning that results from exposure to relationships among events in the environment; such exposure creates expectations as to the structure of the environment.

With respect to ethical behavior in business, either position can be defended. In the case of classical conditioning, however, good business ethics can be seen as a “knee-jerk” or automatic reaction. Repeated exposure to proper behavior would produce this response through .

conditioning. Symbols would be important in this form of learning. In the case of instrumental conditioning, business ethics is often presented as a system of rewards or punishments learned through trial and error. Experience is the guide.

Small Group Projects S.T.A.R. Project #2 Your group’s assignment is to learn about how Internet brokerage firms attempt to teach you about online trading. Have one part of your group analyze eTrade.com and the other part analyze Charles Schwab (www.charlesschwab.com). Each sub-group should construct a table that indicates how each of the Web sites attempts to enhance consumer learning. What behavioral learning theories does each Web site appear to be using?

Gauge effectiveness of the effort. Share the information with one another.

Instructor’s Discussion As students explore the two Web sites, they will observe two different techniques for transmitting information to consumers. Though both are considered to be excellent online traders, they follow different paths. Both, however, probably use instrumental conditioning rather than classical conditioning to get their points across. Have the student groups debate their findings. Was there consensus among the groups? If not, try to resolve the findings.

S.T.A.R. Project #3 Family same branding is the practice of marketing a whole line of company products under the brand name. This strategy capitalizes on the consumer’s ability to generalize favorable brand associations from one product to others. Your group assignment is to analyze two separate family branding giants—Kellogg’s and C.W. Post cereals. Go to both of the company’s Web sites Afterand make a list of all the products that are under the respective corporate umbrellas. reviewing the material in the chapter on family branding, evaluate which organization appears to be superior. How did your group determine this? What behavioral learning principles does each appear to be using? Provide supportive evidence.

Instructor’s Discussion Students will find the Kellogg’s Web site (www.kelloggs.com) and C.W. Post (www.postcereals.com) to be rich information warehouses of information. Students will be somewhat surprised by the amount of brands housed by either of these two megabrands. If the class is large and more work in this area is needed also try General Foods.

S.T.A.R. Project #4 should Recognition and recalltotests are conducted determine scheme. whether The student group be encouraged be creative with itsto evaluation consumers remember seeing an ad, the extent to which they have read it or seen it and can recall Thereits is content, their resulting ample sure information in the chapter that can be.used in the evaluation method construction. Be to compare the student methods as each group makes its presentation.

Using the Internet to Study Consumer Behavior

attitudes toward the product and the brand, and their purchase intentions. A number of syndicated research services conduct recognition and recall tests. One such organization is the Starch Readership Service (see www.starchresearch.com). This service evaluates the effectiveness of magazine advertisements. See Figure 7-13 for an example of an ad that has been “Starched.” a. Go to the Starch Readership Service Web site and describe other services that Starch provides to marketers and advertisers. b. Which of these services (beyond the Readership Service) seems to most closely match the marketer or advertiser’s desire to learn how consumers learn, recognize, and recall information? c. After reviewing the information about the Starch services found in the chapter and seen on their Web site, pick a magazine ad and devise your own method for measuring recognition and recall. How does your method match that of Starch? How does your method differ? Try administering your test method to five fellow students. Critique your results.

Instructor’s Discussion Students should benefit from the information found on the Starch (Roper) Web site. There are several Starch methods that will be of interest. Be sure that students explain why they believe the Starch tests fit with the queries in “b” above. Students, once they have carefully read the material in the chapter and visited the Web site, will produce some interesting recognition and recall tests.

Present the best of these in class. Ask two to three students to present the results of their magazine ad test. All can learn from this experience.

S.T.A.R. Project #5 As indicated in the chapter, the basis of co-branding (in which two brand names are featured on a single product) is to use another product’s brand equity to enhance the primary brand’s equity.

Notice the synergy that occurs when Nabisco combines its name with Ocean Spray to form Cranberry Newton’s. Your assignment is to go to the Web and find three examples where companies doing business on the Internet have formed co-branding opportunities. List the examples you have found and comment on what you perceive to be the strategies behind these moves. Lastly, suggest a co-branding opportunity among e-commerce companies that has yet to materialize. Comment on why your suggested opportunity would be a good one.

Instructor’s Discussion This assignment asks students to be creative with their search of the Internet. If they become stuck, suggest automotive companies, organizations such as NASCAR, non-profits such as the United Way, computer companies, soft drink companies, and music companies. Remember, Peter Pan peanut butter is great when pre-mixed (co-branded) with Welch’s grape jelly.

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CHAPTER 6 Consumer Attitude Formation and Change LEARNING OBJECTIVES 6.1 To understand how consumers’ attitudes influence their decision-making.

6.2 To understand the tri-component attitude model.

6.3 To understand how to apply multi-attribute models to change consumers’ attitudes.

6.4 To understand how to alter consumers’ attitudes by making particular needs prominent.

6.5 To understand the cognitive elaboration and the two routes to persuasion.

6.6 To understand cognitive dissonance and resolving cognitive conflicts.

6.7 To understand how people assign causality to events.

CHAPTER SUMMARY Learning Objective 6.1: To understand how consumers’ attitudes influence their decisionmaking.

An attitude is a learned predisposition to behave in a consistently favorable or unfavorable way toward a given object. In the context of consumer behavior, the term object is interpreted broadly to include the product, brand, service, price, package, advertisement, promotional medium, retailer selling the product, and many other aspects. Attitudes are learned from direct experience with the product, word-of-mouth, exposure to mass media, and other information sources. Attitudes reflect either favorable or unfavorable evaluations of the attitude object and they motivate consumers either to buy or not to buy particular products or brands. Consumers buy products toward which they have favorable inclinations, so marketers must ensure that consumers maintain positive attitudes following purchases and remain loyal customers.

Attitudes are relatively consistent with the behavior they reflect. However, despite their consistency, attitudes are not necessarily permanent; they do change, and sometimes even frequently. Attitudes occur within and are affected by situations, events, or circumstances that influence the relationship between attitudes and behavior. Personality traits significantly influence attitudes.

Learning Objective 6.2: To understand the tri-component attitude model.

The tri-component attitude model proposes that attitudes consist of three components: cognitive, affective, and conative. The cognitive component represents the knowledge and perceptions of the features of an attitude object. The affective component reflects emotions and feelings, which are considered evaluations, because they capture the person’s global assessment of the attitude object. The conative component is the likelihood that an individual will undertake a specific action or behave in a particular way with regard to the attitude object (i.e., consumer’s intention to buy).

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Learning Objective 6.3: To understand how to apply multi-attribute models to change consumers’ attitudes.

Multiattribute attribute models portray consumers’ attitudes as functions of their assessments of the objects’ prominent features. These multiattribute models include the attitude-toward-object model, the attitude-toward-behavior model, the theory of reasoned action, the theory of trying to consume, and the attitude-toward-the-ad model.

Multiattribute models can be used when adding product attributes, changing consumers’ perceptions of attributes, and developing new products.

Learning Objective 6.4: To understand how to alter consumers’ attitudes by making particular needs prominent.

Altering attitudes according to consumer motivations is termed the functional approach, which classifies attitudes into four functions: the utilitarian, ego-defensive, valueexpressive, and knowledge functions. Associating a brand with a well-liked object can also alter attitudes.

Learning Objective 6.5: To understand cognitive elaboration and the two routes to persuasion.

Attitudes can sometimes be changed by either one of two different routes to persuasion, depending on the degree of cognitive elaboration used when consumers process information. The central route requires extensive thought and cognitive processing and is typically employed in situations where consumers are highly involved and perceive a lot of risk regarding the purchase considered. The peripheral route, which requires relatively little thought and information processing, occurs during less important purchases.

Learning Objective 6.6: To understand cognitive dissonance and resolving cognitive conflicts.

In most cases, attitudes precede and guide behavior. Sometimes, consumers act first and only afterward do they develop attitudes about actions already undertaken, which creates conflicting thoughts about the attitude object known as cognitive dissonance. Because important purchase decisions (i.e., buying a new home) require compromise and choices among similar alternatives, post-purchase conflicts are common. Marketers must ensure that customers resolve cognitive conflicts by changing their customers’ attitudes to conform to their behavior.

Learning Objective 6.7: To understand how people assign causality to events.

People assign causality (i.e., blame or credit) to events, their own behaviors, and the behaviors of others. The way people see themselves is reflected in the causalities they form about prior behaviors and the attitudes they develop thereafter. In trying to change consumption-related attitudes, especially with regard to products that require self-

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participation, marketers must understand how people make attributions, toward others and objects, and also how they analyze their own attributions.

CHAPTER OUTLINE Introduction 1. An attitude is a learned predisposition to behave in a consistently favorable or unfavorable way with respect to a given object. a) Attitudes are learned from direct experience with the product, word-of-mouth, exposure to mass media and other information sources. b) Attitudes reflect favorable or unfavorable evaluations of the attitude object.

2. People are often unreceptive to the unfamiliar.

3. Attitudes can be related to social or cultural events. ***** Use Key Termsattitude and word-of-mouth Here; Use Figure 6.1 Here ***** Attitude Formation 1. By studying consumers’ attitudes, marketers can determine whether consumers will

adopt their new products and can develop promotional strategies and refine their segmentation and targeting tools.

2.Attitudes are directed at objects. a) Object refers to such things as: product, product category, brand, service, possessions, product use, causes or issues, people advertisement price, Internet site, price, medium, or retailer. Attitude “can be conceptualized as a summary b) evaluation of an object.” Attitudes might or might not lead to behavior c) 3 .

4 .

Attitudes are learned. Attitudes are formed as a result of direct experience with the product, information acquired from others, and exposure to mass media, the Internet, and various forms of direct marketing.

***** Use Learning Objective #6.1 Here; Use Review and Discussion Questions #6.1 and 6.2 Here***** 5. Personality factors, like need for cognition, affect how consumers respond 6 .

7 .

promotions.

Similar attitudes consistently lead to the same behaviors.

Consumer attitudes occur within, and are affected by, the situation. ***** Use Table #6.1 Here*****

The Tri-Component Attitude Model

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to

1. Psychologists have sought to construct models that capture the underlying

dimensions of an attitude. The focus has been on specifying the composition of an attitude to better explain or predict behavior.

Learning Objective #6.2 ; *****Use Key Termtri-component attitude model HereUse Here; Use Figure #6.2 Here***** 2. According to the

, attitudes consist of three major tri-component attitude model components: the cognitive component , the affective component and the conative component. a) Cognitions are knowledge and perceptions that are acquired by a combination of direct experience with the attitude object and related information from various sources. i) This previous knowledge and perceptions commonly take the form of beliefs ii) The consumer believes that the attitude object possesses various attributes and that specific behavior will lead to specific outcomes. b) The affective component of an attitude consists of the consumer’s emotions or feelings which are considered evaluations. i) Affect-laden experiences manifest themselves as emotionally charged states (such as happiness or sadness). ii) These states may enhance positive or negative experiences (and recollections of those experiences) for the consumer. iii) A Likert scale measures respondents’ levels of agreement or disagreement with a series of statements about the object. iv) A semantic differential scale, which has bi-polar adjectives as anchors and asks the respondent to rate on a continuum, is often used to measure affect.

*****Use Key Terms cognitive component, affective component, Likert scale, semantic differential scale Here; Use Figures #6.3 and #6.4 Here; Use Table #6.2 Here***** c)

Conation, the final component of the tri-component attitude model, is concerned with the likelihood or tendency that an individual will undertake a specific action or behave in a particular way with regard to the attitude object. i) The conative component may include the actual behavior itself. ii) In marketing and consumer research, the conative component is frequently treated as an expression of the consumer’s intention to buy. iii) Intention to buy scales are used to assess the likelihood of a consumer purchasing a product or behaving in a certain way.

*****Use Key Term conative component Here; Use Figure 6.5 Here; Use Review and Discussion Question #6.3 Here; Use Hands-on Assignment #6.9 Here***** 3. Altering consumer attitudes is an important marketing strategy.

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In these market situations, marketers have an opportunity to persuade consumer’s to “crossover,” or to shift their favorable attitude toward another version of the product. Changing beliefs about products is the most common b) form of advertising appeal. i) Advertisers constantly remind us that their product has “more,” or is “better,” or “best” in terms of some important product attribute. ii) Information suggesting a change in attitude needs to be compelling and repeated enough to overcome the natural resistance to letting go of established attitudes. c) Changing brand image attempts to alter consumers’ overall assessment of the brand. d) Changing consumer beliefs about competitive brands or product categories is another attitude-change strategy. i) One tool iscomparative advertising . ii) Another tool is a two-sided message. a)

*****Use Figure #6.6 Here;Use Key Terms comparative advertising, two-sided message Here; Use Review and Discussion Question #6.5 Here *****

Multi-Attribute Attitude Models portray consumers’ attitudes with regard to an 1.Multi-attribute attitude models attitude object as a function of consumers’ perception and assessment of the key attributes or beliefs held with regard to the particular attitude object.

2. There are many variations of the attitude model, five to consider are: attitude-towardobject model, attitude-toward-behavior model, the theory-of-reasoned-action model, the theory of trying-to-consume, and the attitude-toward-the-ad-model. a) According to the attitude-toward-object model, the consumer’s attitude toward a product or specific brands of a product is a function of i) the presence (or absence) and evaluation of certain product-specific beliefs and/or attributes. ii) The importance of each of these attributes *****Use Learning Objective 6.3 Here; Use Key Terms multi-attribute attitude models, attitude-toward-object model, attitude-toward-behavior model, theory-of-reasonedaction model, theory of trying-to-consume model and attitude-toward-the-ad model Here; Use Figure #6.8 Here***** b) Attitudes can be changed by i) Adding a previously ignored attribute or adding an attribute that reflects an actual product or technological innovation. a) Adding an attribute reflects an actual product change or technological innovation is easier to accomplish than stressing a previously ignored attribute. .

b)

Sometimes eliminating a characteristic or feature has the same enhancing outcome as adding a characteristic or attribute. ii) Changing the perceived importance of attributes iii) Developing new products ***** Use Figures #6.9A, #6.9B, and #6.10Here; Use Tables 6.3A and 6.3B Here ***** c)

The attitude-toward-behavior model is designed to capture the individual’s attitude toward behaving or acting with respect to an object, rather than the attitude toward the object itself (so attitudes correspond somewhat more closely to actual behavior than the attitude-toward-object model). The theory-ofd) reasoned-action incorporates a cognitive component, an affective component, and a conative component arranged in a pattern different from that of the tricomponent model. i) It includes subjective norms that influence an individual’s intention to act before measuring intentions. ii) Subjective norms are based on normative beliefs and motivation to comply with the preferences of relevant others. e) The theory of trying-to-consume is designed to account for the cases where the action or outcome is not certain but reflects the consumer’s efforts to consume. Sometimes personal impediments or environmental impediments prevent the desired outcome. *****Use Figure #6-11 Here; Use Review and Discussion Question #6.4 Here ***** As the attitude-toward-the-ad model depicts, the consumer forms various feelings as the result of exposure to an ad that impact attitudes towards the brands advertised. Similar to the attitude-toward-the-ad model, consumers g) form attitudes-towardsocial-media posts and interactions. f)

*****Use Key Termsattitude-toward-the-ad and attitudes-toward-social-media posts HereUse Hands-on Assignments #6.10 and #6.11 Here***** ;

Attitudes’ Motivational Functions 1. An effective strategy for changing consumer attitudes toward a product or brand

is to make particular needs prominent. One method for doing this is called the 2. functional approach and suggests attitudes can be classified into four functions:

the utilitarian function, the ego-defensive function, the value-expressive function, and the knowledge function. a) The utilitarian function stems from the belief that consumers’ attitudes reflect the utilities that brands provide.

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i) When a product has been useful or helped us n the past, our attitude toward it tends to be favorable. ii) One way of changing attitudes in favor of a product is by showing people that it can serve a utilitarian purpose they may not have considered. b) The ego-defensive function maintains that people want to protect their selfimages from inner feelings of doubt – they want to replace their uncertainty with a sense of security and personal confidence. c) The value-expressive function suggests attitudes are an expression or reflection of the consumer’s values and beliefs. d) The knowledge function holds that individuals generally have a strong need to know and understand the people and things they encounter. *****Use Learning Objective 6.4 Here; Use Key Terms functional approach, utilitarian function, ego-defensive function, value-expressive function, and knowledge function Here; Use Review and Discussion Question #6.5 Here; Use Hands-on Assignment #6.12 Here; Use Figure #6.12 Here***** 3. It is possible to alter attitudes toward products by pointing out their relationships to

worthy objects or causes.

The Elaboration Likelihood Model elaboration likelihood model (ELM) involves a more global view that two different persuasive routes change attitudes. a) The central and peripheral routs to persuasion reflect extensive problem solving and limited problem solving, which correspond with high-involvement and lowinvolvement purchases. The central route to persuasion is particularly relevant b) to attitude change when a consumer’s motivation or ability to assess the attitude object is high; that is, attitude change occurs because the consumer actively seeks out information relevant to the attitude object itself.

1. The

c) When consumers are willing to exert the effort to comprehend, learn, or evaluate the available information about the attitude object, learning and attitude change occur via the central route.

In contrast, when a consumer’s motivation or assessment skills are low (e.g., lowd) involvement), learning and attitude change tend to occur via the peripheral route to persuasion, without the consumer focusing on information relevant to the attitude object itself.

In such cases, attitude change often is an outcome of secondary inducements (e.g., e) cents-off coupons, free samples, beautiful background scenery, great package, or the encouragement of a celebrity endorsement).

2. Research indicates that even in low-involvement conditions (e.g., like exposure to most advertising), where both central and secondary inducements are initially equal in their ability to evoke similar attitudes, it is the central inducement that has the greatest “staying power”—that is, over time it is more persistent. .

*****Use Learning Objective 6.5 Here; Use Key Terms elaboration likelihood model (ELM), central route to persuasion, peripheral route to persuasion, extensive problem solving, and limited problem solving Here ***** Cognitive Dissonance and Conflict Resolution 1. According to cognitive dissonance theory, discomfort or dissonance occurs when a

consumer holds conflicting thoughts about a belief or an attitude object.

2. Post-purchase dissonance occurs after the purchase. a) Purchase decisions often require compromise. Post-purchase dissonance is quite b) normal. Dissonance gives consumers an uneasy feeling about their prior beliefs c) or actions – a feeling that they seek to resolve by changing their attitudes to conform to their behavior. Attitude change is frequently an outcome of an action or behavior. Conflicting thoughts and dissonant information following a d) purchase are prime factors that induce consumers to change their attitudes so e) that they will be consonant with their actual purchase behavior. Dissonance propels consumers to reduce the unpleasant feelings created by the rival thoughts. f) 3. Tactics that consumers can use to reduce dissonance include reduction: a) By rationalizing the decision as being wise b) By seeking out advertisements that support the original reason for choosing the c) product d) By trying to “sell” friends on the positive features of the brand

By looking to known satisfied owners for reassurance 4. Marketers can help reduce postpurchase uncertainty by aiming specific messages at reinforcing consumer decisions by complimenting their wisdom, offering stronger guarantees or warranties, increasing the number and effectiveness of its services, or providing detailed brochures on how to use its products correctly. *****Use Learning Objective 6.6 Here; Use Key Termscognitive dissonance and postpurchase dissonance Here; Use Review and Discussion Question #6.8 Here; Use Hands-on Assignment #6.13 Here ***** 5. Attitude-change strategies are designed to resolve actual or potential cognitive conflicts

between two attitudes.

Causality and Attribution 1. Attribution theory attempts to explain how people assign causality to events on the basis of either their own behavior or the behavior of others.

2. Self-perception attribution addresses individuals’ inferences or judgments as to the cause of their own behavior. a) Attitudes develop as consumers look at and make judgments about their own behavior. .

b) c) d) e)

These judgments can be divided into internal, external, and defensive attributions.

Internal attribution—giving yourself credit for the outcomes—your ability, your skill, or your effort.

External attribution—the purchase was good because of factors beyond your control—luck, etc.

Defensive attribution—consumers are likely to accept credit personally for success, and to credit failure to others or to outside events.

*****Use Learning Objective 6.7 Here; Use Key Terms attribution theory, selfperception attribution, and defensive attribution Here; Use Review and Discussion Question #6.7 Here***** 3. Foot-in-the-door technique—the foot-in-the-door technique is based on the premise

that individuals look at their prior behaviors (e.g., compliance with a minor request) and conclude that they are the kind of person who says “Yes” to such requests (i.e., an internal attribution). a) Such self-attribution serves to increase the likelihood that they will agree to a b) similar, more substantial request. Research into the foot-in-the-door technique has concentrated on understanding how specific incentives (e.g., cents-off coupons of varying amounts) ultimately influence consumer attitudes and subsequent purchase behavior. It appears that different size incentives create c) different degrees of internal attribution that, in turn, lead to different amounts of attitude change. i) It is not the biggest incentive that is most likely to lead to positive attitude change. ii) What seems most effective is a moderate incentive, one that is just big enough to stimulate initial purchase of the brand but still small enough to encourage consumers to internalize their positive usage experience and allow a positive attitude change to occur.

4. In contrast with the foot-in-the-door technique is the door-in-the-face technique, in which a large, costly first request that is probably refused is followed by a second, more realistic, less costly request. *****Use Key Termsfoot-in-the-door technique and door-in-the face technique Here ***** 5. Every time a person asks “Why?” about a statement or action of another or “others”—a

family member, a friend, a salesperson, a direct marketer, a shipping company— attributions toward others is relevant.

6.It is in the area of judging product performance that consumers are most likely to form product attributions toward objects. a) Specifically, they want to find out why a product meets or fails to meet their expectations. In this regard, they could attribute the product’s successful a) performance (or failure) to the product itself, to themselves, to other people or situations, or to some combination of these factors. .

7. Individuals acquire conviction about attributions by collecting additional information

in an attempt to confirm (or disconfirm) prior inferences. ***** Use Table #6.4 Here*****

REVIEW AND DISCUSSION QUESTIONS 6.1 Explain how situational factors are likely to influence the degree of consistency between attitudes and behavior.

Although attitudes may be relatively consistent with behavior, they are influenced by situational factors, such as time, place, and social environment. A person’s attitudes may lead to one kind of behavior in one situation and a different behavior in a different time and place. For example, a person may have a strong preference for one brand but purchase a brand that is on “special” because of having to economize. Individual, Moderate, 7-10 minutes Learning Objective 6.1: To understand how consumers’ attitudes influence their decision-making.

AACSB: Reflective thinking

6.2 Because attitudes are learned predispositions to respond in particular ways, why don’t marketers and consumer researchers measure only purchase behavior and ignore attitudes?

Knowledge of attitudes is valuable because attitudes can be used to predict behavior before it occurs. In addition, attitudes have several components, such as perceptions, evaluations, and intentions. By knowing the strength of these components, we can plan marketing strategies designed to affect these components. Therefore, measurement of behavior does not provide guidance for strategy development in the way that attitude measurement does.

Individual, Easy, 3-5 minutes Learning Objective 6.1: To understand how consumers’ attitudes influence their decision-making.

AACSB: Reflective thinking 6.3 Explain a person’s attitude toward visiting Disney World in terms of the tricomponent attitude model.

The first component of the tri-component attitude model consists of a person’s ; that is, the knowledge and perceptions that are acquired by a combination cognitions of direct experience with the attitude-object and related information. In the case of Disney World, this component reflects the person’s knowledge of the various theme parks, hotels, prices, and activities, as well as his or her beliefs about Disney. A .

consumer’s emotions or feelings about a particular product or brand constitute the affective component of an attitude. A person’s positive feelings about Disney ads might lead him/her to conclude that visiting Disney World will be a positive, pleasant, and good experience. Conation, the final component of the tri-component attitude model, is concerned with the likelihood or tendency that an individual will undertake a specific action or behave in a particular way with regard to the attitudeobject. In the context of visiting Disney World, this component reflects a person’s intention to visit the resort in the foreseeable future. Individual, Moderate, 7-10 minutes Learning Objective 6.2: To understand the tri-component attitude model.

AACSB: Application of knowledge

6.4 By using the theory of reasoned action (TRA), explain what subjective norms are and the two factors underlying the concept. How can researchers measure the subjective norms of a consumer who planned to purchase a royal Terengganu ladies’ shawl songket?

The theory of reasoned action incorporates cognitive, affective, and conative components. It holds that researchers must measure the subjective norms that influence a person’s intention to act before gauging the level of intention. Subjective norms are the person’s feelings about what relevant others think of the action the person contemplates. Two factors underlie subjective norms: normative beliefs that the individual attributes to relevant others and the individual’s motivation to comply with the preferences of relevant others. For instance, the subjective norms of a consumer planning to purchase a royal Terengganu songket ladies’ shawl consist of answers to the following questions: (1) Who are her relevant others? (parents and husband) (2) What are her beliefs about how each relevant other would respond to her shawl? (her mother would consider the shawl a timeless piece of fashion accessory, but her husband would consider it just another object of mass production) (3) To what extent does complying with the preferences of the relevant others play a role in the consumer’s final decision? Individual, Moderate, 5-7 minutes Learning Objective 6.3: To understand the structures of multi-attribute models and using them to alter to consumers’ attitudes. AACSB: Application of knowledge

6.5 Explain how the product manager of a breakfast cereal might change consumer attitudes toward the company’s brand by (a) changing beliefs about the brand, (b) changing beliefs about competing brands, (c) changing the relative evaluation of attributes, and (d) adding an attribute. (a) Changing brand beliefs is the most common advertising appeal. If this approach is used, the cereal ads should tell consumers that the product has more vitamins and fiber comparative advertising, and/or less sugar than competing brands. (b) The use of .

illustrating the brand’s superiority over other brands, along key product attributes, will effectively convey this message to consumers. (c) The marketer may also stress the importance of fiber in one’s diet (i.e., change the relative evaluation of an attribute) and, simultaneously, stress the cereal brand’s high fiber content, thus appealing to consumers whose primary concerns are health and nutrition. (d) Also, the marketer can add an attribute by stressing the previously ignored fiber content and by putting more fiber (or even creating a new “extra fiber” version) in the cereal. Individual, Moderate, 10-15 minutes Learning Objective 6.4: To understand how to alter consumers’ attitudes by making particular needs prominent. Learning Outcome 9 Discuss the techniques marketers use to change consumers' attitudes AACSB: Application of knowledge

6.6 The Department of Transportation of a large city is launching an advertising campaign that encourages people to switch from private cars to mass transit. How can the department can use the following strategies to change commuters’ attitudes: (a) changing the basic motivational function, (b) changing beliefs about public transportation, (c) using self-perception theory, and (d) using cognitive dissonance.

(a) The functional will entail changing approach beliefs regarding mass transit along one or more of the basic motivational functions of attitudes; appealing to the knowledge function by showing how one might get to work faster by using mass transit rather than a private car. (b) According to the assimilation contrast theory, the Department of Transportation must be careful to avoid overkill or overselling their case. The users of private cars will assimilate (accept) only moderate changes between the mode of transportation they presently use and the mode they are encouraged to use (i.e., mass transit). If the change suggested by the mass transit ads is too extreme, the contrast will result in the rejection of mass transit as a transportation alternative. (c) The Department of Transportation can show the positive environmental outcomes of using mass transit and position it as an ecologically sound transportation mode. According to self-perception theory, many people are likely to make inferences from the behavior portrayed in the ads (i.e., using mass transit helps the environment) and begin to like the object advertised.

Also, many consumers may begin to view using mass transit as a chance to personally contribute toward improving the environment (i.e., internal attribution). (d) According to cognitive dissonance theory, the Department of Transportation should first induce behavior because a favorable attitude toward mass transit will follow. Thus, the ads for mass transit should be designed to induce behavior and encourage people to try mass transit by, for example, offering them free rides over a period of time. The department should reinforce this initial experience by providing good, dependable service as well as follow-up contacts (e.g., mail and phone) which include asking first-time riders for comments, thus making them feel important, involved, and comfortable about the experience. Cognitive dissonance theory predicts that an initial, effectively reinforced experience with mass .

transit will result in a favorable attitude toward this service and continued use of mass transit.

Individual, Moderate, 20-25 minutes Learning Objective 6.4: To understand how to alter consumers’ attitudes by making particular needs prominent.

AACSB: Application of knowledge

6.7 Should the marketer of a popular computer graphics program prefer consumers to make internal or external attributions? Explain your answer.

Internal and external attribution indicates whether consumers assign the cause for successful or unsuccessful experiences with a product, to themselves, or to the product.

For example, if consumers useexternal attribution to explain a good experience with a computer program, they “explain” the success as a result of the software package itself. Likewise, a poor experience would be blamed on the product.

Although it seems that marketers would like to see their products given credit for consumers’ satisfaction, it is actually a greater benefit if consumers use internal attributions to explain a successful experience with a product. If consumers see themselves as skillful users of the computer graphics program rather than the users of an idiot-proof product, their self-image improves with respect to that behavior and they are more likely to repeat it. Consider the benefits—greater enjoyment of the product and greater self-esteem leads to greater product usage and greater engagement in positive word-of-mouth.

Individual, Moderate, 10-15 minutes Learning Objective 6.7: To understand how people assign causality to events. AACSB: Application of knowledge

6.8 A college student has just purchased a new Apple iPad. What factors might cause the student to experience post-purchase dissonance? How might the student try to overcome it? How can the retailer who sold the iPad help reduce the student’s dissonance? How can the iPad’s manufacturer help?

Although attitudes may be relatively consistent with behavior, they are influenced by situational factors, such as time, place, and social environment. A person’s attitudes may lead to one kind of behavior in one situation and a different behavior in a different time and place. For example, a person may have a strong preference for one brand but purchase a brand that is on “special” because of having to economize. Post-purchase dissonance is likely to occur here because a tablet is an expensive product where many brands and models are available, and many of the brands that were not selected by the student have some unique features. After the purchase, the student may be exposed to ads depicting other brands with more features than the tablet he or she selected. In order to reduce post-purchase dissonance, the student might seek out advertisements that support his or her choice (i.e., ads for the brand purchased), talk with satisfied brand owners and users and, maybe even join a club or a users group of that tablet brand. The manufacturer should help reduce post-purchase dissonance by using .

advertising which includes messages reassuring purchasers that they made the “right” choice, offering strong, comprehensive warranties, and providing a tollfree user- information hotline. The retailer can help by backing the manufacturer’s warranty with a service contract and by mailing buyer’s information about new software packages for the computer when such products become available.

Individual, Moderate, 10-15 minutes Learning Objective 6.6: To understand cognitive dissonance and resolving cognitive conflicts. AACSB: Application of knowledge

HANDS-ON ASSIGNMENTS 6.9 Find two print ads, one illustrating the use of the affective component and the other illustrating the cognitive component. Discuss each ad in the context of the tri-component model. Why has each marketer taken the approach it did?

Instructor’s Discussion This assignment is designed to demonstrate that sometimes marketers try to form an overall favorable evaluation (i.e., appealing to the affective component) without reference to particular attributes or features, although at other times they provide detailed information that is organized around specific product or service benefits (i.e., appealing to the cognitive component). Individual, Moderate, 20-25 minutes Learning Objective 6.2: To understand the tri-component attitude model. AACSB: Application of knowledge

6.10 What sources influenced your attitudes about this course before it started? Has your initial attitude changed since the course started? If so, how?

Instructor’s Discussion The sources of influence in attitude formation are: (a) personal experience with the product or service; (b) advertisements for various brands; (c) group influences (e.g., family, friends, word-of-mouth); (d) data from objective sources (e.g., Consumer Reports); (e) publicity in the media; and (f) information/advice provided by salespersons.

In the case of a college course, students are likely to cite word-of-mouth and course evaluations by former students (if such scores are available and published) as the primary sources in attitude formation. More interesting discussion will develop when students talk about changes in their initial attitudes toward the course and the reasons for such changes.

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Individual, Moderate, 7-10 minutes Learning Objective 6.1: To understand how consumers’ attitudes influence their decision-making.

AACSB: Reflective thinking 6.11 Describe a situation in which you acquired an attitude toward a new product through exposure to an advertisement. Describe a situation in which you formed an attitude toward a product or brand on the basis of personal influence.

Instructor’s Discussion Students’ answers will vary. Their response regarding advertising influence should include several elements: (a) the advertising medium involved; (b) an indication of whether the attitude was positive or negative; (c) whether the advertisement was noticed as a result of passive (e.g., TV) or active (e.g., magazine) learning; or (d) whether the exposure led to the actual purchase of the item or to further information search. The answer regarding attitude formation through personal influence should include: (a) the degree of personal involvement with the purchase; (b) the type of the personal source and its importance to the receiver; (c) the perceived credibility of the personal source (e.g., a friend) versus that of impersonal sources (e.g., ads in the media); (d) whether the attitude was positive or negative; and (e) whether the exposure led to actual purchase of the item or to search for more information about the new product. Individual, Moderate, 20-25 minutes Learning Objective 6.3: To understand how to apply multiattribute models to change consumers’ attitudes. Learning Outcome 9 Discuss the techniques marketers use to change consumers' attitudes AACSB: Application of knowledge

6.12 Find advertisements that illustrate each of the four motivational functions of attitudes. Describe how each ad either reinforces an existing attitude or is aimed at changing an attitude.

Instructor’s Discussion The ad for the utilitarian function should stress the product’s usage-related benefits (e.g., durable shoes). The ego defensive function should reinforce the consumer’s selfconcept and protect it from feelings of doubt (e.g., personal care products which offer the consumer reassurance and the likelihood of approval by others). The valueexpression function shows how the product is consistent with the person’s values and lifestyles (e.g., advertising a fine, expensive fountain pen as an instrument of self expression). An ad using the knowledge function should indicate the brand’s advantages over competitive brands (e.g., a bar graph showing the comparative levels of saturated fat in several brands of butter).

Individual, Moderate, 20-25 minutes .

Learning Objective 6.4: To understand how to alter consumers’ attitudes by making particular needs prominent.

AACSB: Application of knowledge 6.13 Think back to the time when you were selecting a college. Did you experience dissonance immediately after you made a decision? Why or why not? If you did experience dissonance, how did you resolve it?

Instructor’s Discussion Selecting a college is a personal, extensive, high-involvement decision which often results in post-purchase dissonance. Thus, most students probably experienced dissonance immediately after choosing a college. An interesting class discussion will develop when students compare their dissonance reduction processes. Individual, Moderate, 10-15 minutes Learning Objective 6.6: To understand cognitive dissonance and resolving cognitive conflicts. AACSB: Application of knowledge

S.T.A.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 The Tellus Institute (www.tellus.org) is sponsored by foundations, government agencies, multilateral organizations, non-governmental organizations, and business. The primary mission of this institute is to aid our country in navigating the transition toward ways of producing, consuming, and living that bequeath a sustainable world to future generations. Just exactly what does that noble goal mean? It means that business, industry, and other organizations that have influence in our country should adopt policies of environmental stewardship and provide for equitable development of resources and talents. The Tellus Institute conducts a diverse program of research, consulting, and communication to meet these ends. a. Visit the Tellus Institute Web site. Write a one-page paper that describes how this organization seeks to influence attitudes and opinions. b. What consumer and business ethics issues seem to be most important to this organization? c. Do organizations such as Tellus advance the cause of business ethics? Explain.

Instructor’s Discussion The Tellus Institute is an interesting story. After students acquaint themselves with the historical data, discussion about areas of environmental stewardship and the attitudes necessary to move in this direction should be possible.

Discussion can also focus on how organizations such as this aid the fostering and advancement of consumer and business ethics. Of particular interest will be the Tellus Business and Sustainability Group. Students

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from diverse backgrounds should find this information interesting and pertinent to the study of attitudes.

Small Group Project S.T.A.R. Project #2 Opinions are formed from attitudes and beliefs. Part of the opinion process is the comparison of something. Have your group go to Epinions.com (www.epinions.com) to explore how comparisons are made in a variety of product fields. Divide the group into smaller groups and examine the rankings for the products and services found on the Epinions Web site (your group is free to pick subject evaluation areas). After this is done, relate how attitudes influence such ranking and comparison processes. Which attitude model(s) would be useful in making comparisons and formulating rankings such as those shown on this Web site? How might attitudes (opinions) change once a viewer has examined the rankings and comparisons? What bias might be present in this evaluation system? Have your group prepare a summary report that summarizes your group’s findings.

Instructor’s Discussion Epinions.com has a wealth of information. This group exercise is a good one to see how comparison and evaluation processes work and how these processes might impact attitudes. players. HeFor example, let us say that a student did not know much about DVD or she reads that a particular RCA player is ranked number one by 60 percent of respondents to the Epinions.com site. The student then has a positive attitude toward this player. What might be wrong with this evaluation method? First, how many evaluations were done, under what circumstances, were purchases made, how authentic were the evaluators, etc.? Several of the attitude models can be used.

S.T.A.R. Project #3 Some marketing firms work toward forming attitudes in the minds of their consumers.

Others work toward changing those attitudes. Strategies for attitude change are extremely interesting, especially if you consider how many attitudes might need to be changed to persuade a brand loyal consumer to switch brands. A perfect example of this is the ongoing struggle Progressobetween Campbell’s Soup (www.campbellsoup.com) and industry rival Soup (www.progressosoup.com). Your assignment is to visit both Web sites and make a list of attitude change strategies being employed by both companies. Evaluate the success of each. Which competitor seems to be most adept with respect to change? Comment.

Instructor’s Discussion The rivalry between Campbell’s and Progresso is well known. Progresso has labeled Campbell’s as watery and consisting of small portions. Campbell’s has labeled .

Progresso as too spicy and too expensive. Both claims are built on fact and fiction. Students should review the section in the text on strategies for attitude change before attempting this exercise. The Web sites will provide several examples that match well with these strategies. Who is winning the war? This is not clear, however, Campbell’s has developed a new bigger-portion line that mimics the Progresso products.

CHAPTER 7 Persuading Consumers LEARNING OBJECTIVES 7.1 To understand the components of communications, source credibility, and barriers to effective transmissions.

7.2 To understand the distinctions between broadcasted and addressable messages.

7.3 To understand the elements of message structure.

7.4 To understand the effectiveness and limitations of prominent advertising appeals.

7.5 To understand how to measure the effectiveness of advertising messages.

CHAPTER SUMMARY Learning Objective 7.1: To understand the components of communications, source credibility, and barriers to effective transmissions.

Communication is the transmission of a message (advertising) from a sender (marketer) to a receiver (consumer) via a medium of transmission (also named channel). In addition to these four components—sender, receiver, medium, and message—the fifth essential component of communication is communication feedback, which alerts the sender as to whether the intended message was, in fact, received. Senders encode their messages by using words, pictures, symbols, spokespersons, and persuasive appeals, and then the receivers decode them. If the messages are to be persuasive, the receivers must decode the messages as the senders intended.

Communications can be either impersonal or interpersonal. In marketing, the sources of impersonal communications are messages that companies transmit through their marketing departments, advertising or public relations agencies, and spokespersons. The targets, or receivers, of such messages are usually a specific audience or several audiences that the organization is trying to inform, influence, or persuade. The senders of interpersonal communications may be either formal sources (e.g., a salesperson in a physical or virtual retail location) or informal sources (e.g., peers with whom the consumer communicates face-to-face or via electronic means).

The key factor underlying the persuasive impact of a personal or interpersonal message received from either a formal or informal source is the source’s credibility—the extent to which the receiver trusts and believes the source sending the message. The influence of interpersonal sources can have a great effect on consumers’ shopping patterns, and the perceived honesty and objectivity of the sender of the communication can have an enormous impact on how the communication is accepted by the receivers.

One’s disassociation of the message from its source over time, and remembering only the message content but not its source, is called the sleeper effect. Thus, although a high-credibility

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source is initially more influential than a low-credibility source, studies show that both positive and negative credibility effects tend to disappear after six weeks or so. The two most important barriers that affect the accuracy with which consumers interpret messages are selective exposure and psychological noise. Selective exposure refers to consumers’ selectivity in paying attention to advertising messages. Psychological noise, in the form of competing advertising messages or distracting thoughts, can affect the reception of a promotional message. Learning Objective 7.2: To understand the distinctions between broadcasted and addressable messages. Traditional media and communications models that have been used for decades are undergoing fundamental changes. Advertisers are unhappy with the current broadcast media because they are reaching increasingly smaller and more fragmented audiences and getting fewer eyeballs for the money spent for TV ads. Consumers can avoid commercials with increasing ease, and a large number of broadcasted advertising messages reach many people who are not interested in (and unlikely to purchase) the products advertised. The networks, cable companies, and advertisers agree that the new communications model calls for targeting smaller groups of consumers who are already interested in the products advertised, and to whom they must provide more interactive and enticing ways of viewing promotional messages. In short, driven by technology, communications are going through the greatest changes since the development of spoken and written language, and traditional media are being integrated into or replaced by new media.

Traditional media use broadcasting and transmit one-way messages to large audiences. In contrast, new media are channels of narrowcasting that permit marketers to send addressable messages. Addressable advertising consists of ads sent to specific persons or small audiences rather than groups of consumers. Unlike broadcasted promotional messages, addressable ads are: 1. Customized and based on data gathered from tracing consumers’ surfing and clicks online, in combination with other information, to either small groups or individual consumers. Tailored ads enable marketers to focus on consumers that had already shown an interest in their products. 2. Interactive action by consumers, such as clicks on links and banners, indicate that the message sent has been received, and studies show that consumers favor interactive websites where they feel that they receive personalized messages and can easily contact the seller after the purchase, via, for example, chats with the sellers’ representatives. 3. Unlike traditional broadcasted ads, addressable ads are responsemeasurable because communication feedback from consumers—the messages’ receivers—is accurate and quick. Learning Objective 7.3: To understand the elements of message structure.

A message is the thought, idea, attitude, image, or other information that the sender wishes to convey to the intended audience. The decisions that marketers must make in designing a message

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include selecting images, creating advertising copy, using positive or negative message framing, choosing between one-sided or two-sided messages, and deciding on the order of presentation.

Message framing can either stress the benefits of using the product (positive framing) or the benefits to be lost by not using the product (negative framing).

Should a marketer pretend that its products are the only ones of their kind (that is, use a onesided message) or should the company acknowledge competing products and use a two-sided message? Some marketers stress only positive factors about their products and pretend that competition does not exist. However, when competition does exist and when it is likely to be vocal or obvious, such advertisers tend to lose credibility with the consumer.

Some researchers have found that the material presented first produces a greater effect, that is, a primacy effect. Others have found that the material presented last is more effective, that is, a recency effect.

Native ads (branded content) blend within the content in which they are “planted,” such as articles, entertainment, and news, by resembling the content and disguising advertising—their true identity. They receive equal placement with unsponsored content you want to read and blur the line between editorial content and advertising. The widespread adoption of native promotions turned the internet into a medium where paid and unpaid messages increasingly blend together, with only faintest visual distinctions between content that carries commercial messages and one that doesn’t. They have become immensely popular because they provide new revenues for news organizations struggling to make up for the decline of print advertising.

Learning Objective 7.4: To understand the effectiveness and limitations of prominent advertising appeals.

Marketers have many options to choose from when selecting promotional appeals, but the ones most widely used are comparative advertising, humor, fear or sexual appeals, and well-timed ads. Comparative advertising is a very common marketing strategy in which a marketer claims product superiority for its brand over one or more explicitly named or implicitly identified competitors, either on an overall basis or on selected product attributes. Although some critics of the technique maintain that comparative ads often assist recall of the competitor’s brand at the expense of the advertised brand, the wide use of comparative advertising indicates that marketers are confident that comparative ads exert positive effects on brand attitudes, purchase intentions, and actual purchases.

Fear is an effective appeal often used in marketing communications. Some researchers have found a negative relationship between the intensity of fear appeals and their ability to persuade, in that strong fear appeals tend to be less effective than mild fear appeals.

Humor is the most widely used approach because many marketers believe that humor will increase the persuasiveness of their communications. Humor attracts attention, enhances liking of the product advertised, and also enhances consumer comprehension of the ads. Humor that is relevant to the product is more effective than humor unrelated to the product. Humor is more effective in ads of existing products than in ads of new products, and more effective in targeting

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consumers who already have a positive attitude toward the product. Punning is wordplay, often consisting of a humorous double meaning.

Sexual appeals have attention-getting value, but studies show that they rarely encourage actual consumption behavior. Often, sexual advertising appeals detract from the message content and tend to interfere with message comprehension, particularly when there is substantial information to be processed. When using sex to promote a product, the advertiser must be sure that the product, the ad, the target audience, and the use of sexual themes and elements all work together.

Timely appeals are exemplified by the many ads that appeared during and following the financial crisis of 2008, which contained messages designed specifically for tough economic times.

Learning Objective 7.5: To understand how to measure the effectiveness of advertising messages.

Marketers measure their communications’ persuasion effects (whether the message was received, understood, and interpreted correctly) and their sales effects (whether the messages of a given campaign have generated the sales level defined in the campaign objectives). Advertisers also gauge the exposure and persuasion effects of their messages by buying data from firms that monitor media audiences and conduct audience research to find out which media are read, which television programs are viewed, and which advertisements are remembered by their target audience(s).

Physiological measures track bodily responses to stimuli. Attitudinal measures gauge consumers’ cognitive responses to messages, including their levels of engagement and involvement with the messages tested. Semantic differential and Likert scales are used in testing ad copy to assess whether respondents like the message, understand it correctly, and regard it as effective and persuasive. Researchers also use day-after recall tests, in which viewers of TV shows or listeners to radio broadcasts are interviewed a day after watching or listening to a given program and asked to describe the commercials they recall.

CHAPTER OUTLINE INTRODUCTION 1. Communication is the transmission of a message from a sender to a receiver via a medium of transmission.

2. The five basic components of communications are: sender, receiver, medium, message and communication feedback. a) Senders encode their messages using words, pictures, symbols, spokespersons and persuasive appeals. b) Receivers decode the messages; to be persuasive, the messages must be decoded as the senders intended. c) Advertising appeals are the encoding used by marketers, and include humor, fear, sex, and comparative appeals. *****Use Key Learning Termcommunication Here; Use Figure #7.1 Here***** .

The Communication Process 1. Communications can be either impersonal or interpersonal.

a) The sources of impersonal communications are organizations that develop and transmit appropriate messages through their marketing departments, advertising or public relations agencies and spokespersons. b) The sources of interpersonal communications can be either formal or informal. i) A formal communications source represents either a for-profit or not-for-profit organization (e.g. a salesperson). ii) An informal source might be a parent or a friend who gives product information or advice. c) The key factor underlying the persuasive impact of messages is the source’s credibility (the extent to which the receiver trusts/believes the source sending the message. d) A key advantage of interpersonal communications is their ability to obtain immediate feedback. *****Use Key Learning terms impersonal communications, interpersonal communications, formal sources, informal sources Here; Use Learning Objective #7.1 Here***** 2 .

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Source credibility is important; it affects persuasive impact Perceive trustworthiness, expertise, and believability make the source more credible, which makes the message more persuasive Media are the channels for transmitting communications. a) Traditional media are the original communications channels that advertisers have used and are generally classified as print and broadcast. b) New media are online channels, social networks and mobile electronic devices.

*****Use Key Learning termssource credibility, media, traditional media, new media Here; Use Review and Discussion Question #7.3 Here ***** sleeper effect .

5. Remembering the message content but not its source is called the

6. Differential decay suggests negative memories of low-credibility sources decay faster than the content of the message.

7. Selective exposure refers to consumers’ selectivity in paying attention to advertising messages. a) Technology provides consumers with greater ability to control their exposure to media. b) Viewers can time shift by recording TV shows and may skip commercials when they watch them at their leisure. *****Use Key Learning termssleeper effect, differential decay, selective exposure, time shift Here*****

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8. Psychological noise includes competing advertising messages or distracting thoughts that

can affect the reception of the promotional message. a) Strategies to overcome or limit psychological noise include: i) Repeated exposure to an advertising message (principle of redundancy) ii) Using contrast: featuring an unexpected outcome, increasing sensory input, identifying message appeals that attract more attention. iii) Customizing messages via monitoring on digital technologies b) Positioning and providing value are the most effective ways to ensure that a promotional message stands out and is received and decoded appropriately by the target audience. *****Use Key Learning terms psychological noise, positioning, sensory inputHere***** Broadcasted versus Addressable Messages 1. Mid-roll ads are promotions that run in the middle of streaming video.

2. The term traditional mediais synonymous with broadcast media (or mass media) and consists of channels where all receivers receive the same one-way messages from marketers (i.e., they cannot send direct responses to the message sources).

3. New media are channels of narrowcasting, defined as means that permit marketers to send messages that are: a) Customized, and based on data gathered from tracing consumers’ surfing and clicks online, in combination with other information, to either small groups or individual consumers. b) More response-measurable than traditional broadcasted ads because communication feedback is more accurate and received sooner.

4. Addressable advertising consists of customized messages sent to particular consumers.

These messages are based mostly on the consumers’ prior shopping behavior, which marketers have observed and analyzed.

*****Use Key Learning terms mid-roll ads, traditional media, new media, narrowcasting, addressable advertising Here; Use Learning Objective #7.2 Here; Use Review and Discussion Questions #7.4 and #7.5***** Message Structure 1. The message (thought, idea, attitude, image, or other information that the sender

wishes to convey to the intended audience) can be verbal, (spoken or written) or nonverbal (a photograph, an illustration, or a symbol), or a combination of the two.

2. The sponsor, who may be an individual or an organization, must first establish the objectives of the message, select an appropriate medium for sending it, and design (encode) the message in a manner that is appropriate to each medium and to each audience. a) The objectives of a persuasive message include creating awareness of a service, promoting sales of a product, encouraging (or discouraging) certain practices, attracting .

retail patronage, reducing post-purchase dissonance, creating goodwill or a favorable image, or any combination of these and other communications objectives. b) Marketers encode messages by using words, pictures, symbols, spokespersons, and special channels. c) The message receivers decode the messages they receive on the basis of their personal experiences, characteristics, and motives. d) Cognitive learning models suggest message exposure leads to interest, desire and buying behavior. *****Use Learning Objective #7.3 Here ***** 3. Some of the decisions that marketers must make in designing the message include

selecting images, creating ad copy, positive or negative message framing, one-sided or twosided messages, and the order of presentation. a) Messages that depict images are often more effective that those with text only.

Advertisements are visually complex when they contain dense perceptual features and/or when they have elaborate creative designs. i) A study found that feature complexity hurts attention to the brand and attitude toward the ad, whereas design complexity enhances paying attention to the ad, raises its comprehensibility, and improves attitude toward the ad ii) The study demonstrated that marketers must assess the visual complexity of advertisements and use their findings to enhance their ads’ “stopping power.” b) Message framing: whether a marketer should stress the benefits to be gained by using a specific product (positive message framing), or the benefits to be lost by not using the product (negative message framing) depends on the consumer’s attitudes and characteristics as well as the product itself. *****Use Key Terms positive and negative message framing Here; Use Table 7.1 Here; Use Review and Discussion Question #7.6 Here; Use Hands-on Assignment #7.15 Here***** c)

One-sided messages tell consumers only the good points (benefits). i) This is most effectively used if the audience is friendly, if it initially favors the communicator’s position, or if it is not likely to hear an opposing argument. ii) Two-sided messages tell consumers both good (benefits) and bad (disadvantages) points of the product. iii) These are most effectively used when the target audience is critical or unfriendly, if it is well educated, or if it is likely to hear opposing claims.

*****Use Key Termsone-sided and two-sided messages Here; Use Hands-on Assignment #7.13 & #7.15 Here***** d) Native advertising (branded content) blend in with editorial content. e) Podcasts are audio stories that can be saved and played on a computer or smartphone f) It also produces greater acceptance and better understanding of the total message.

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*****Use Key Termsnative advertising, podcasts Here***** a) Order Effects —communications researchers have found that the order in which a message is presented affects audience receptivity. i) The television commercials shown first are recalled best, those in the middle the least. ii) Magazine publishers recognize the impact of order effects by charging more for ads on the front, back, and inside covers of magazines than for the inside magazine pages, because of their greater visibility and recall. iii) Order is also important in listing product benefits within an ad. iv) If audience interest is low, the most important point should be made first to attract attention (primacy effect). v) If interest is high, however, it is not necessary to pique curiosity, and so product benefits can be arranged in ascending order, with the most important point mentioned last (recency effect). b) When both favorable information and unfavorable information are to be presented (e.g., in an annual stockholders’ report), placing the favorable material first often produces greater tolerance for the unfavorable news.

*****Use Key Termsprimacy effect, recency effect Here*****

Persuasive Appeals 1. Several factors influence ad persuasiveness/appropriateness of different promotional appeals. a) Informational appeals are more effective in high-consumer involvement situations; emotional appeals did better in low-involvement situations. b) Promotional appeal impact is greater for new brands than brand extensions. c) People with higher need for cognition (NFC) are less likely to consider peripheral cues. *****Use Key Terms consumer involvement, need for cognition (NFC)Here; Use Learning Objective 7.4 Here***** claims product superiority for its brand over one or more 2. Comparative advertising explicitly named or implicitly identified competitors, either on an overall basis or on selected product attributes. a) Comparative advertising is useful in exerting positive effects on brand attitudes, purchase intentions, and actual purchases. b) A downside to comparative ads may be that they assist recall of the competitor’s brand at the expense of the advertised brand. c) Among more sophisticated consumers, comparative ads elicit higher levels of cognitive processing and better recall and are likely to be perceived as more relevant than noncomparative ads.

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d) A study that tested the degree of negativity in comparative messages (by using positive, negative, and mildly negative comparative messages) for several products reported that negative elements in an ad contributed to its effectiveness as long as they were believable or were offset by some elements that made the ad appear neutral. e) Another study uncovered gender differences in response to comparative ads; comparative ads generated greater levels of brand-evaluation involvement among men but not among women. Among women, attention-getting comparative appeals produced inferences regarding the ads’ manipulative intentions and reduced purchase likelihood. f) Yet another study found that “promotion-focused” consumers (i.e., those focused on the aspirational aspects and the likely positive consequences of a purchase) reacted to comparative messages differently than “prevention-focused” consumers (i.e., those focused on the presence or absence of negative outcomes such as safety). In comparative ads, negative framing led prevention-focused consumers to evaluate the advertised brand positively and the other brand negatively. Among promotion-focused consumers, positive framing led to positive evaluation of the advertised brand but did not affect evaluations of the comparison brand. g) The law requires companies to produce “reasonable factual evidence” in support of comparative claims, deciding what constitutes such evidence is difficult. *****Use Key Termcomparative advertising Here; Use Figure 7.10 Here; Use Review and Discussion Question #7.7 Here ***** 3. Fear appeals are often used in marketing communications. a) Some researchers have found a negative relationship between the intensity of fear appeals and their ability to persuade, so strong fear appeals tend to be less effective than mild fear appeals. b) Issue familiarity affects the persuasiveness of fear appeals. c) Fear appeals are unlikely to be effective among persons who score high on the personality variable termed sensation seeking. d) Males and females may have different responses to fear appeals. e) Several studies showed that adding disgust to a fear appeal enhanced message persuasion and compliance beyond that of appeals that elicited only fear. f) Marketers should follow several guidelines: i) Understand the audience’s reaction to a fear appeal and its previous experiences. ii) Beware the boomerang effect. iii) Realize changing behavior is a long and complex process. iv) Study the extent to which the fear appeal encourages people to take action without arousing too much anxiety, which may cause message rejection/avoidance. v) Determine whether to use a rational or emotional fear appeal. vi) Plan to repeat advertising using fear appeals over the long term, but recognize repetition may damage credibility. vii) Accept that some addicts may not respond to fear appeals. viii) Consider alternatives to fear appeals. *****Use Key Termsensation seeking Here; Use Figure #7.11 Here; Use Review and Discussion Question #7.9 Here ***** .

4. A significant portion of ads use humor because marketers believe it increases the acceptance and persuasiveness of the communication a) Humor is the most widely used of all advertising appeals; by some estimates, it is used in 80 percent of all ads. b) Humor attracts attention and enhances liking of the product advertised. c) Humor does not harm the comprehension of ads, and, in some cases, it actually aids comprehension. d) Humor does not always increase an ad’s persuasive impact or a source’s credibility and might actually distract from cognitive processing of the central benefits of the brand. e) Humor that is relevant to the product is more effective than humor unrelated to the product. f) Humor is more effective in ads for existing products than in ads for new products, and more effective in targeting consumers who already have a positive attitude toward the product. g) Using humor is more appropriate for advertising low-involvement than high-involvement products. h) The effects of humorous ads vary by the audience demographics. i) The impact of humor is related to the receiver’s personality. For example, higher sensation seekers were found to be more receptive to humorous appeals than lower sensation seekers j) A study developed a measure of a personality trait, named need for humor that is focused on a person’s tendency to enjoy, engage, or seek out amusement and suggested that these cognitive factors can better explain how consumers respond to humorous advertisements. k) Another study discovered that ad recall was damaged when the humor was expected, and this adverse effect was more pronounced in individuals with low need for humor. *****Use Key Termneed for humor Here; Use Figure #7.12 Here; Use Review and Discussion Question #7.8 Here***** 5. Punning is wordplay, often consisting of a humorous “double meaning.” a) The Start Ad Readership Studies suggest consumers are more likely to read ads that employ puns than those that do not. b) Punning can be used in imagery Sex appeals have attention-getting value, but studies show that they rarely encourage actual 6. consumption behavior and are only effective with sex-related products. a) Often, sexual advertising appeals detract consumers from the message content and tend to interfere with message comprehension, particularly when there is substantial information to be processed. b) Nudity may negatively affect the product message. c) Receptivity to sexual appeals varies among consumers. i) “Sexual self-schema,” which is one’s cognitive view of the self with regard to sexuality, originates in persons’ past experiences and influences their reactions to sexrelated promotional themes. .

ii) Sensation seeking, which is the pursuit of novel and exciting sensations and experiences, may increase favorable responses to nudity in advertising. iii) Extroverted people may be more receptive to sexual appeals and that such appeals should not be used in targeting consumers who are quiet, shy, and reserved. ***** Use Review and Discussion Question #7.10; Use Key Term sexual self-schema and Use Hands-on Assignment #7.14 Here***** 7. Timeliness appeals: During and following the financial crisis of September 2008, many marketers came up with advertising appeals designed specifically for tough economic times.

***** Use Review and Discussion Question #7.10; Use Key Term sexual self-schema and Use Hands-on Assignment #7.14 Here*****

Feedback and Effectiveness 1.Communication feedback is an essential component of both interpersonal and impersonal communications because it enables the sender to reinforce or change the message to ensure that it is understood in the intended way.

2. An important advantage of interpersonal communications is the ability to obtain immediate feedback through verbal as well as nonverbal cues. a) Because of the high cost of space and time in mass media, it has always been very important for sponsors of impersonal communications to obtain feedback as promptly as possible, so that they could revise a message if its meaning is not being received as intended or if the messages did not reach the intended audience.

3. In evaluating the impact of their advertising messages, marketers must measure persuasion effects (i.e., was the message received, understood, and interpreted correctly?), sales effects (i.e., did the ad increase sales?), and media exposure effects (i.e., how many consumers were exposed to the message?) of their advertising messages. *****Use Key Terms persuasion effects, sales effects, media exposure effects Here; Use Review and Discussion Question #7.1& #7.2 Here; Use Learning Objective 7.5 Here ***** a) Advertisers gauge the exposure and persuasion effects of their messages by buying data from firms monitoring media audiences and conducting audience research to find out which media are read, which television programs are viewed, and which advertisements were remembered by their target audience(s). Physiological measures b) track bodily responses to stimuli. Attitudinal measures gauge consumers’ cognitive c) responses to messages i) Researchers measure levels of engagement and involvement with messages tested. ii) Marketers use semantic differential scales and Likert scales to test ads and find out whether they were liked and understood. .

d) Researchers use recall and recognition tests, such as Starch tests and day-after recall tests in which viewers of TV shows or listeners to radio broadcasts are interviewed a day after watching or listening to a given program *****Use Key Termsphysiological measures, attitudinal measures, day-after recall tests Here; Use Review and Discussion Question #7.11 and #7.12 Here *****

REVIEW AND DISCUSSION QUESTIONS 7.1 Explain the differences between feedback from interpersonal communications and feedback from impersonal communications. How can the marketer obtain and use each kind of feedback? enables the sender to obtain immediate feedback. In personal Interpersonal communication selling situations, for example, the salesperson can obtain immediate verbal and nonverbal reactions from the prospect, which enable him or her to modify, repeat, or explain in greater detail the sales message. In impersonal communication, feedback is somewhat delayed.

Return coupons, requests for more information, sales figures, and brand awareness surveys are all methods of feedback as to the effectiveness of the marketing message. A marketer who plans to use a survey to assess the effectiveness of a communications campaign must take a similar survey prior to the campaign, in order to obtain “benchmark” figures against which to compare the campaign’s results. As in interpersonal communications, unfavorable feedback indicates that the communication campaign should be revised.

Individual, Moderate, 10-15 minutes Learning Objective 7.1: To understand the components of communications, source credibility, and barriers to effective transmissions.

AACSB: Application of knowledge

7.2List and discuss the effects of psychological noise on the communications process. What strategies can a marketer use to overcome psychological noise?

Psychological noise refers to issues such as competing advertising messages or distracting thoughts. Most consumers are bombarded daily with more messages than any one person could possibly comprehend; this clutter of competing commercial messages constitutes psychological noise. To preserve their sanity, individuals subconsciously direct their attention to those messages that are in their realm of interest or experience and ignore those that are not. In a marketing context, people selectively perceive information about products or services in which they are interested or which relate to their lifestyles, and they ignore information concerning products in which they have no interest. Thus, marketers must effectively position their products by communicating to consumers how these offerings meet their needs better than their competition. Many ads show how particular brands are related to particular lifestyles while trying to establish lasting brand images, which stand out within the advertising clutter and lead to brand loyalty on the part of consumers. .

Repeated exposure to an advertising message helps surmount psychological noise and facilitates message reception. Repeating an ad is a must. Copywriters often use contrast to break through the psychological noise and advertising clutter. Contrast entails using features within the message itself to attract additional attention. These features include developing an unexpected outcome or increasing the amount of sensory input. Digital technologies allow marketers to monitor the consumer’s visits to web sites, infer the person’s interest from this data, and design and send customized promotional messages to that person. In addition, positioning and a unique selling proposition helps the message stand out from psychological noise. Individual, Moderate, 15-20 minutes Learning Objective 7.1: To understand the components of communications, source credibility, and barriers to effective transmissions.

AACSB: Reflective thinking

7.3Discuss the strategic differences between traditional media channels and new media.

New media is considered alternative or non-traditional media while mass media uses traditional avenues for advertisements such as newspapers, billboards, radio, television and magazines. New media is more dynamic than traditional mass media. New media is addressable meaning it can be customized and addressed to a particular receiver and different receivers get varied rendering of the same basic message. It is interactive, receivers may interact with the sender during its transmission and it is responsemeasurable. This means that a receiver’s response to a promotional message can be measured more precisely and directly than his or her response to a message transmitted via mass media. Individual, Moderate, 7-10 minutes Learning Objective 7.2: To understand the distinctions between broadcasted and addressable messages. AACSB: Analytical thinking

7.4 Compare broadcasting and narrowcasting and explain why marketers are moving away from using broadcasting and into narrowcasting and addressable marketing.

Advertisers are unhappy with the current broadcast media because they are reaching increasingly smaller and more fragmented audiences and getting fewer “eyeballs” for the money spend for TV ads. Advertisers prefer the advantages gained via a narrowcast model. The term traditional media is synonymous with broadcast media (or mass media) and consists of channels where all receivers receive the same one-way messages from marketers (i.e., they cannot send direct responses to the message sources). In sharp contrast, new media .

are channels of narrowcasting, defined as means that permit marketers to send messages that are: More response-measurable than traditional broadcasted ads because communication feedback is more accurate and received sooner. Addressable and directed to specific persons rather than groups of consumers. Customized, and based on data gathered from tracing consumers’ surfing and clicks online, in combination with other information, to either small groups or individual consumers. The additional data includes the receiver’s location (which can be determined from an IP address or a GPS integrated into a mobile device) and information from “cookies” installed on the hard drive of a digital device. Interactive because, in most narrowcasts, an action by the consumer—in the form of a click on a link or banner—triggers the transmission of a message.

Individual, Moderate, 10-15 minutes Learning Objective 7.2: To understand the distinctions between broadcasted and addressable messages. AACSB: Analytical thinking

7.5How can marketers construct and transmit addressable ads? Illustrate with a promotion of a product or service of your choice.

Addressable advertising consists of customized messages sent to particular consumers.

These messages are based mostly on the consumers’ prior shopping behavior, which marketers have observed and analyzed. Some of this data comes from data aggregators that use data from users’ browsers, Google, Yahoo!, and Facebook to build models that marketers in turn use to design the different ads customers see, which are also a function of the viewers’ demographics and past advertising exposure. Student examples will vary but should reflect an understanding that the ads are related to the consumer’s past behavior. Individual, Moderate, 10-15 minutes Learning Objective 7.2: To understand the distinctions between broadcasted and addressable messages. AACSB: Application of knowledge

7.6Should marketers use more verbal copy than artwork in print ads? Explain your answer.

In general, the answer is no. A picture is worth a thousand words, and verbal information is more effective at communicating when it is accompanied by images. Consumers are more likely to read body copy if they have high involvement with the product/product category and are motivated to process details about the product. In those situations, and/or in situations where the receiver wants technical details, a copywriter may allocate more space to the verbal information than the visuals. Individual, Easy, 5-7 minutes Learning Objective 7.3: To understand how to design persuasive messages effectively.

AACSB: Reflective thinking

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7.7 For what kinds of audiences would you consider using comparative advertising? Why? Comparative advertising should be used if the audience is critical or unfriendly (e.g., if it uses competitive products), if it is well educated, or if it is likely to hear opposing product claims from competing marketers. A friendly audience (e.g., one which uses the advertiser’s products), tends to be favorably predisposed to the marketer’s message and screens out opposing arguments from competitors. Therefore, advertising which reinforces brand loyalty, rather than comparative messages, should be aimed at friendly audiences. Individual, Moderate, 5-7 minutes Learning Objective 7.4: To understand how to measure the effectiveness of advertising messages. AACSB: Reflective thinking

7.8What are the advantages and disadvantages of using humor in advertising?

Some key findings related to the use of humor in advertising include: 1. Humor attracts attention and enhances liking of the product advertised. (advantage) 2. Humor does not harm the comprehension of ads, and, in some cases, it actually aids comprehension. (advantage) 3. Humor does not always increase an ad’s persuasive impact or a source’s credibility. For example, one study showed that humor might actually distract from cognitive processing of the central benefits of the brand. (disadvantage) 4. Humor that is relevant to the product is more effective than humor unrelated to the product. (advantage or disadvantage, depending on relationship with product) 5. Humor is more effective in ads for existing products than in ads for new products, and more effective in targeting consumers who already have a positive attitude toward the product. (advantage or disadvantage, depending on product newness) 6. Using humor is more appropriate for advertising low-involvement than high-involvement products. (advantage or disadvantage, depending on consumers’ involvement with product) 7. The effects of humorous ads vary by the audience demographics. (advantage or disadvantage, depending on target audience) 8. The impact of humor is related to the receiver’s personality. For example, higher sensation seekers were found to be more receptive to humorous appeals than lower sensation seekers. (advantage or disadvantage, depending on personality of receivers) Humorous ads were found to be more memorable when humor was strong and related to the message.

Individual, Moderate, 10-15 minutes Learning Objective 7.4: To understand how to measure the effectiveness of advertising messages.

AASCB: Reflective Thinking

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7.9 Why and how must marketers use fear appeals in advertising cautiously? How can they do so? Fear is an effective appeal and is often used in marketing communications.

Some researchers have found a negative relationship between the intensity of fear appeals and their ability to persuade, so strong fear appeals tend to be less effective than mild fear appeals. Response to fear appeals varies with demographics, personality, issue familiarity and other creative elements. In one study, more females than males said that fear appeals will change distracted driving and suggested using interviews with people who had been affected by distracted driving accidents in advertisements against this behavior. Also, more males than females said that using legal action would discourage distracted driving. One study discovered that a strong graphic threat message had a greater effect for an unfamiliar issue than for a familiar issue. For an issue with which the subjects were very familiar, adding information to a weak-threat fear appeal increased the perceived severity of the undesired behavior. The perceived severity of threat and perceived probability of occurrence significantly influenced people’s intentions to adopt the recommended behavior. Fear appeals are unlikely to be effective among persons who score high on sensation seeking. Several studies showed that adding disgust to a fear appeal enhanced message persuasion and compliance beyond that of appeals that elicited only fear.

Individual, Moderate, 7-10 minutes Learning Objective 7.4: To understand how to measure the effectiveness of advertising messages.

AACSB: Reflective thinking

7.10 Do sexual appeals work better than other appeals? illustrate with examples.

Explain your answer and

Sexual themes have attention-getting value, but studies show that they rarely encourage actual consumption behavior and are only effective with sex-related products. Often, sexual advertising appeals detract consumers from the message content and tend to interfere with message comprehension, particularly when there is substantial information to be processed. Nudity may negatively affect the product message. Receptivity to sexual appeals varies among consumers. “Sexual self-schema,” which is one’s cognitive view of the self with regard to sexuality, originates in persons’ past experiences and influences their reactions to sex-related promotional themes. Sensation seeking, which is the pursuit of novel and exciting sensations and experiences may increase favorable responses to nudity in advertising. Another study indicated that more extroverted people were receptive to sexual appeals and that such appeals should not be used in targeting consumers who are quiet, shy, and reserved. Student examples to illustrate their position may vary. Look for opportunities to relate ads that are put forth as effective to previous study findings about the relationship between the product advertised and the sexual appeal and findings related to personality attributes of the receiver.

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Individual, Moderate, 20-25 minutes Learning Objective 7.4: To understand how to measure the effectiveness of advertising messages.

AACSB: Application of knowledge 7.11 How is communications feedback related to measurement of persuasion and sales effects?

Because marketing communications are usually designed to persuade a target audience to act in a desired way (e.g., to purchase a specific brand or product, to vote for a specific candidate), their ultimate test is the receiver’s response. Communication feedback is an essential component of both interpersonal and impersonal communications because it enables the sender to reinforce or change the message to ensure that it is understood in the intended way. Compared with impersonal communications in mass media, a key advantage of interpersonal communications is the ability to obtain immediate feedback through verbal as well as nonverbal cues. Immediate feedback is the factor that makes personal selling so effective, because it enables the salesperson to tailor the sales pitch to the expressed needs and observed reactions of each prospect. Experienced speakers are very attentive to feedback and constantly modify their presentations based on what they see and hear from the audience. Marketers measure their communications’ persuasion effects, that is, whether the message was received, understood, and interpreted correctly; and their sales effects, that is, whether the messages of a given campaign have generated the sales level defined in the campaign’s objectives. Individual, Moderate, 10-15 minutes Learning Objective 7.5: To understand how to measure the effectiveness of advertising messages. AACSB: Reflective thinking

7.12The sales effects of mass communication are difficult to assess. How can fast moving consumer goods (FMCG) companies such as Nestlé and Procter and Gamble use this method to measure the effectiveness of their advertising messages?

A widely used method of measuring the sales effects of food and other packaged goods advertising is by using the Universal Product Code (UPC), which is tied to computerized cash registers. Supermarket scanner data can be combined with data from other sources (e.g., media and promotional information) to measure the correlation between advertisements, special promotions, and sales. Individual, Moderate, 7-10 minutes Learning Objective 7.5: To understand how to measure the effectiveness of advertising messages. AACSB: Application of knowledge

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HANDS-ON ASSIGNMENTS 7.13 Find two print advertisements - one illustrating a one-sided message and the other a two-sided message. Which of the measures discussed in the chapter would you use to evaluate the effectiveness of each ad? Explain your answers.

Instructor’s Discussion A one-sided (or supportive) message is often used with audiences who are friendly (e.g., who are brand loyal to the product being advertised), who are not highly educated, and who are not likely to hear negative comments about the product.

Two-sided (or refutation) messages are often used in advertisements for products that are characterized by intense competition, such as cars, soft drinks, and headache remedies. A two-sided message provides audiences with counter-arguments when they hear competing ads and thus serves to inoculate them against a competing marketer’s claims. Two-sided ads tend to be more credible and more appealing to highly educated audiences. Individual, Moderate, 15-20 minutes Learning Objective 7.4: To understand the effectiveness and limitations of prominent advertising appeals. AACSB: Application of knowledge

7.14 Find print ads using each of the following advertising appeals: fear, sex and humor.

Discuss their effectiveness and persuasive value in class.

Instructor’s Discussion Students’ analyses will vary widely. There should be some gender differences in perceptions. This may be an opportunity to help each gender understand how the other perceives advertising. This exercise is designed to illustrate how marketers utilize the advertising appeals discussed in the text. Individual or Group, Moderate, 25-30 minutes Learning Objective 7.4: To understand the effectiveness and limitations of prominent advertising appeals. AACSB: Application of knowledge

7.15 Watch an hour-long TV program and its commercials, without writing any notes. A day later, list all the commercials you can recall seeing. For each commercial, identify (a) the message framing approach used and (b) whether the message was one-sided or two-sided. Discuss the information you remembered in the context of selective exposure and psychological noise.

Instructor’s Discussion This exercise is designed to illustrate the effect of message framing and one-sided versus two-sided messages on the recall and persuasive abilities of advertising messages. It also

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asks students to reflect on the relationships between information processing and selective exposure and psychological noise.

Individual, Moderate, 45-180 minutes Learning Objective 7.4: To understand the effectiveness and limitations of prominent advertising appeals.

AACSB: Application of knowledge

S.T.A.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 One of the most important aspects of consumer communication, whether it is impersonal or interpersonal, is that it be built on an ethical pillar. Company after company in the early twenty- first century faced ethical dilemmas with respect to public communications and disclosures. Some fared well with their dilemmas and some did not.

Worldcom, Andersen, Enron, Dynegy, and Bridgestone-Firestone were among those that faced their communication and ethics problems poorly. To learn more about these classic difficulties visit the Colorado State University E-business Ethics Center Web site at www.ebusinessethics.com. Once there, observe the several company stories found on the Web site’s case studies. Pick one company and investigate its difficulties with respect to consumer communication difficulties. Report your findings. Comment on what the company in question did right and what they did wrong. How do you feel about what you read?

Instructor’s Discussion The Web site is an excellent resource site for contemporary business ethics issues. The resource links are up-to-date and full of information. Additionally, special features of the Web site include information about codes of conduct, ethics centers, organizational citizenship, government citizenship, a gray matters ethics game, and surveys on ethics.

S.T.A.R. Project #2 The credibility of the message initiator (source) is an important aspect of an effective communication process. The credibility of the source affects the decoding of the message.

When the as spokesperson for a marketer’s message is a celebrity or an endorser, the credibility as well the acceptability of the message is affected. Obviously, because of the power that a celebrity (or endorser) has to impact acceptance, ethics can be an important factor in these message forms.

Using the facts about spokespersons and endorsers contained in the chapter, find one ad that displays what you perceive to be good ethical behavior by a spokesperson or celebrity endorser.

Find one ad that displays what you perceive to be poor ethical behavior by a . spokesperson or celebrity endorser. Explain your categorization and comment on the ethical behavior involved. In

the case of the poor ethical behavior, how could the situation be corrected?

Instructor’s Discussion The chapter presents a very interesting discussion about credibility of a message source and then refines this discussion by explaining the unique role of the spokesperson or endorser. The findings from the body of research in this area are interesting and noteworthy. Students should review this material before undertaking the assignment. Pick a few ad examples to show to the class and have the students that picked the ads explain the rationale for the picks.

Small Group Projects S.T.A.R. Project #3 Feedback is an important aspect of effective communication. Prompt feedback permits the sender to reinforce, to change, or to modify the message to ensure that it is understood in the intended way. The Internet provides an excellent way to provide almost instantaneous feedback to the communicator. Your group’s assignment is to review the process of feedback by undertaking an interesting experiment. A current popular collegiate Web site is Hot or Not (see www.hotornot.com). This Web site has been featured in People, Newsweek, Time, and USA Today. The Web site is simple in its makeup. Interested males and females submit a digital picture of themselves to the Web site and visitors to the Web site then vote on whether the person is attractive (hot or not). A running counter lets the viewer know how many other people have voted on the featured person and what the overall rating score is. The voting is not scientific but it is fun. Have your group review this process for its feedback value. How could it be improved? What are biases that might be involved? How could the males and females who score low improve their scores using effective communication principles?

Instructor’s Discussion This and Web site may not be for everyone, however, most students seem to have fun admiring poking fun at their peers. Beyond the fun, the Web site does illustrate how that effective communication may be worth more than just a pretty or handsome face. For example, students may observe that the picture itself and the setting of the picture may be more important to achieving a high score than the face that is in the picture. See how many communication principles can be associated with this exercise.

S.T.A.R. Project #4 One of the best sources of credibility evaluation with respect to products and services is Consumer Reports. This impartial organization rates products and services and then reports these findings to is the consuming public. The analysis of the products and services under investigation detailed, often scientific, and lengthy. Many consumers, whether they subscribe to the Consumer Reports magazine or not, frequently use the organization’s findings in assessing potential purchases. Your group’s assignment is to go to the Consumer Reports Web page (see www.consumerreports.o).

Pick a product or service category and investigate the credibility of the product or service. Write a short report about your findings. Next, go to a store that carries or supplies the product or service. Evaluate the product or service in the store environment the way a consumer normally would (i.e., talk to a sales or service person, observe, read, listen, etc.). .

Compare the two different approaches to gaining information about the product or service.

Write a short evaluation of what you have done and what you have learned.

Instructor’s Discussion This exercise affords the group an opportunity to examine one of the best sources of consumer information—Consumer Reports. Additionally, the students are required to use their own observational skills to make comparisons, judgments, and evaluations. This experience will help the students with material found in later chapters of the text and with any assigned term projects.

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CHAPTER 8 From Print and Broadcast to Social Media and Mobile Advertising LEARNING OBJECTIVES 8.1 To understand consumer behavior and engagement with social media.

8.2 To understand advertising channels and promotional strategies on social media.

8.3 To understand the dynamics and potential of mobile advertising.

8.4 To understand audience measurement and media reach.

8.5 To understand technology’s impact on traditional broadcast media.

CHAPTER SUMMARY Learning Objective 8.1: To understand consumer behavior and engagement with social media.

Social media channels enable interactions among people in which they create, share, and exchange information and ideas in virtual communities and networks. The channels comprise mobile and online technologies that support two-way communications for individuals and groups, giving them the means to form their own or co-create content with others, post and open it for discussions, modify it, and withdraw it. Social communication channels offer better engagement prospects because they can form comradeship among people with similar lifestyles, needs, and corresponding purchases. Marketers can use social media to engage customers with their offerings because websites can enliven people’s interactions with the promotional messages through moving images, links to related materials, and customizing viewing options (e.g., the “sort by” options). Additionally, websites gather data that enables marketers to understand their clients more acutely. People engage in social media to provide and receive information, cultivate relationships, show off expertise, and find others with similar interests.

Learning Objective 8.2: To understand advertising channels and promotional strategies on social media.

Social media channels include owned social media, paid social media, and earned social media.

Google is the most widely used search engine online and a prominent advertising medium.

Across browsers, most online surfers use Google to find answers to questions, locate websites and sources for products and services, track down information, and much more. Google is the largest provider of the data and targeting tools that advertisers need for impression-based targeting, as well as the major supplier of real-time bidding to advertisers seeking impressions among consumers who fit certain criteria (see Chapter 2).

Most brands now have official Twitter handles and Facebook pages. Companies have discovered that customers are highly enthused about and more responsive to Twitter messages from the corporate bosses, especially if such messages encourage consumers to tell the senders about their experiences with the brands.

Social media campaigns must be planned together with advertising in traditional media.

Additionally, marketers must consider the fact that social media simultaneously reaches several

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audiences (i.e., consumers, retailers, and other parties with whom the company does business), which justifies larger advertising budgets. Furthermore, executives should closely examine consumers’ clicks on the “like” buttons and “mine” and use data from their Facebook pages to develop new niches for their products (sometimes with partners in other product categories).

Learning Objective 8.3: To understand the dynamics and potential of mobile advertising.

Mobile advertising is the communication of products or services to mobile device and smartphone consumers. The mobile advertising spectrum ranges from short text messages to interactive advertisements. Mobile devices provide several types of value: (1) monetary— good value for the money that also exceeds the value consumers receive from using non-mobile devices; (2) convenience—saving time and money, improving efficiency, and making life easier; and (3) emotional and social—immediate and always available communications with others.

Mobile marketers are still spending most of their money on search ads placed on websites that show results from search engine queries. Also, they have been creating mobile ads that are fun, pay rewards, and help customers find useful information (e.g., referrals). As smartphone screens became larger, marketers began using mobile ads that take over the entire screen. And, some mobile marketers have been experimenting with inserting ads in places where consumers do not expect to see any, in an effort to overcome consumers’ tuning-out of promotional messages.

Many advertisers use banner ads on mobile devices’ screens because such ads are cheap, although most recognize that consumers find banners annoying.

Initially, the extent of mobile advertising in other countries, especially in Europe and even more so in Southeast Asia, was far greater than in the United States. However, there are indications that U.S. companies have been spending more on mobile advertising than any other country. The primary reason for the growth of mobile advertising is that more and more people are using smartphones and other mobile internet devices such as tablets and e-readers.

Mobile advertising should be distinguished from mobile advertising campaigns on social networks, which consist of ads that pop up on, for example, Facebook mobile news feeds to its users after marketers have purchased this advertising space from Facebook.

Learning Objective 8.4: To understand audience measurement and media reach.

Advertisers should use the following steps in designing social media campaigns: (1) define the campaign’s objectives; (2) examine the platforms available and determine which ones to use so as to achieve the objectives; (3) produce the campaign’s content using internal or external communication tools; (4) examine the pricing models for securing access to social media, which, unlike pricing for advertising space on traditional print and broadcast communication channels, vary greatly; and (5) measure campaigns effectiveness.

Google Analytics is a service that collects and analyzes (1) where visitors come from—referrals, search engines, display advertising, pay-per-click networks, email campaigns, and other digital

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links; (2) what customers’ actions are after they “land” at the initial page—viewing other pages, downloading files, registering with the site, and other actions; and (3) website visitors’ geographic location and their visits’ lengths, and then profiling and segmenting users.

Compared with TV—the primary advertising medium—it is very difficult hard to measure communications’ activity on social media. Truncated text, acronyms, and inside jokes, including those about TV programming, are the results of audiences interacting with programs in real time, posting their thoughts or sharing others’ posts as quickly as events unfold on screen with languages of their own.

Other problems in evaluating the effectiveness of advertising on social media include computergenerated visitors, or “bots,” designed to fool advertisers into paying for the made-up traffic.

Marketers frequently find their ads alongside unlicensed content from major content owners, or on sites promoting counterfeit goods. As more and more consumers have been watching programs on DVRs, the networks and advertisers have been at odds about how to count viewers.

Increasingly, ad buyers want more transparency into how data are collected on Facebook and Google’s YouTube in order to determine where and how to spend their marketing money.

Meanwhile, Facebook and Google argue that they provide and allow for plenty of measurement, just with some restrictions to protect users’ privacy. Internet users are increasingly making use of software that blocks ads from appearing as they move around the Web. The trend is a growing concern for online publishers, many of which rely on advertising as a major source of revenue.

Learning Objective 8.5: To understand technology’s impact on traditional broadcast media.

Originally, print and electronic media (TV, radio, newspapers, and magazines) were all one-way communications. The same promotional messages were sent to the same audiences, and receivers could not specify which content they were interested in and which they would have prepared not to receive. Nevertheless, new means to transmit messages have been fundamentally changing traditional promotional strategies.

Network and cable TV reach very large audiences. However, many programs, particularly on network TV, reach audiences that are heterogeneous in their demographics, spending power, interests, and lifestyles. Network TV (and later cable TV) has been the most desirable (and expensive) advertising medium for many decades because television enables marketers to send messages that draw attention and generate emotion. However, with many TV ads for competing and often similar brands creating clutter, marketers had to design short-duration messages and repeat them frequently. Furthermore, the feedback from TV ads has been imprecise and did not enable marketers to effectively determine which ads led to sales and which ones did not.

Interactive TV (iTV) combines the broadcasting capabilities of television and the interactivity of the internet. It can be delivered to one’s TV, computer, or mobile device in the form of a twoway communication between subscribers and providers of cable or satellite TV. Viewing on iTV is much more engaging, personal, and dynamic than watching one-way TV programs.

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Out-of-home media consist of communications that target consumers in captive and less cluttered environments outside of their homes. This category consists of new promotional tools as well as some older means that were significantly updated with new technology.

Branded entertainment (product placement) consists of featuring products within the contents of entertainment, such as TV, movies, video games, among others. In addition to embedding brands in films and TV programs, many marketers have developed webisodes (i.e., short videos shown online featuring entertainment centered on a brand) and advergames, which are video games with embedded brands.

CHAPTER OUTLINE Introduction 1. Social media channels enable interactions among people who create, share, and exchange information and ideas.

2. Worldwide ad revenue for social media networks is forecasted at over $50 billion in 2018.

3. Social media has transformed marketing – improving offerings, designing new products, customized and interactive advertising, distribution channels across time zones and physical locations, and innovative pricing models and payment systems. *****Use Learning Objective 8.1 Here; Use Figures 8.1A and 8.1B Here; Use Table 8.1 Here *****

Social Media and Consumer Behavior 1. The structure ofsocial media includes the following elements: a) Profiles are the ways by which consumers tell others about themselves (i.e., their age, personality, and interests). b) Friends are trusted members of the social network used. They are allowed to post comments that designated members of the network can read. The networks allow users to keep tabs on what their friends are doing online (e.g., posting new pictures or updating their profiles). c) Groups within social networks help users find people with similar interests. d) Social networks create interactions among group members via discussion boards and by allowing members to post pictures, music, video clips, and other tidbits for the groups’ members to view. e) Consumers must have opt-ins and opt-outs that allow them to control the information they share with friends and the information they receive from others. *****Use Key Termsocial media Here; Use Review and Discussion Questions #8.1 and #8.2 Here*****

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2. Apps, short for “applications”, are chunks of software—installed on one’s computer, tablet, or smartphone—that are gateways to games, online resources, and social networking.

3. Apps request four basic kinds of information: a) Basic permissions include name, identification, gender, photo, personal demographics, and list of friends. b) Users’ permissions are requests to allow the installation of the applications on the users’ computers. c) Friends’ permissions include requests to share information the users have about friends using the same app. d) Sensitive information requests include questions about users’ highly personal aspects, such as political or religious affiliation and even sexual orientation. *****Use Key Termapps Here ***** 4. Primary reasons for engaging in social media are: a) Sharing information with others b) Convenience and entertainment c) Passing time d) Interpersonal relations e) Promoting one’s self f) Bonding and social capital 5 .

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There is a distinction between browsing and engaging.

Cognitive learning can increase engagement. *****Use Key Term cognitive learningHere; Use Tables 8.2 and 8.3 Here*****

Advertising on Social Media 1. There are several types of social media channels a. Owned social media b. Paid social media c. Earned social media

*****Use Learning Objective 8.2 Here; Use Key Terms owned social media, paid social media, and earned social media Here; Insert Table 8.4 Here ***** 2. The most widely used social media platforms are: a. Branded blogs and microblogs b. Social networks such as Facebook c. Widgets, gaming, and other applications d. Mobile phones 3. Google is the most widely used search engine and a prominent advertising medium. a. Google is the largest provider of the data and targeting tools advertisers need for impression-based targeting b. Google is the major supplier of real-time bidding .

c. Google reaches consumers with i. Web-search ads ii. Online display ads iii. Mobile advertising d. YouTube is owned by Google e. Google’s search engine delivers organic and sponsored results

*****Use Key Termsimpression-based targeting, real-time bidding, web-search ads, online display ads Here; Use Figure 8.2 Here ***** 4. Marketers listen to the interactions, or social conversations, and use the information gathered to generate more buzz for their products within social networks. a. Most brands now have official Twitter handles and Facebook pages. i. Companies have discovered that customers are highly enthused about and more responsive to Twitter messages from the corporate bosses, especially if such messages encourage consumers to tell the senders about their experiences with the brands. ii. Some companies have decided that centralizing social media communications is impractical, so they train and empower their employees to participate in social conversations with customers, within defined guidelines. b. Savvy marketers combine their social media promotions with applications. c. Many marketers allow consumers to interact with their brands’ designs. Most companies selling consumer goods have integrated social media into their advertising campaign.

5. The characteristics of effective social media campaigns are: a. Effective social media is planned with traditional media advertising. b. Marketers must consider the fact that social media simultaneously reaches several audiences (i.e., consumers, retailers, and other parties with whom the company does business), which justifies larger advertising budgets. c. Executives should closely examine consumers’ clicks on the “like” buttons and “mine” data from their Facebook pages to develop new niches for their products (sometimes with partners in other product categories). d. Bosses who tweet personally strengthen the connections between their brands and customers. e. Employees should be encouraged to tweet, but guidelines for such communications must be set and monitored for compliance. However, research suggests that many CEOs resent (and even fear) using Twitter.

Mobile Advertising 6. Mobile advertising is communication of products or services to mobile device and smartphone consumers.

7. Mobile advertising ranges from short message service text to interactive advertisements.

8. Mobile advertising accounts for just 1% of total advertising spending in the United States and worldwide. .

9. Mobile devices provide four types of value: a) Monetary value: the device provides good value for the money that also exceeds the value consumers receive from using nonmobile communication devices. b) Convenience value: saving time and money, improving efficiency, and making life easier. c) Emotional value: feeling good and relaxed when using the device. d) Social value: being accepted by others and impressing them. *****Use Learning Objective #8.3 Here***** 4. Studies have identified cross-cultural differences and age cohort differences among consumers’ responses to mobile ads.

*****Use Figure #8.3 Here***** 5. An analysis of a large sample of mobile ads indicated that: a. Mobile marketers are spending most of their money on search ads. Search advertising is a method of placing online advertisements on Web pages that show results from search engine queries. b. Marketers have been creating mobile ads that are fun, pay rewards, and help customers find useful information (e.g., referrals). c. As smartphone screens became larger, marketers began using mobile ads that take over the entire screen. d. Some mobile marketers have been experimenting with inserting ads in places where consumers do not expect to see any, in an effort to overcome consumers’ tuning-out of promotional messages. e. Many advertisers use banner ads on mobile devices’ screens because such ads are cheap, although most recognize that consumers find banners annoying. *****Use Key Termsearch advertising Here ***** 6. Marketers are also developing technologies that enable advertisers to link what consumers do on their computers with their cell phones. a. Advantages: It can identify users’ geographic locations and deliver contextually relevant offers. It can provide consumers with access to online deals in stores and the ability to pay for deals in stores while en route. b. Disadvantages: Smartphones’ screens are small; impossible to use cookies with apps the way it is with browsers (so marketers cannot track actions and optimize their ads the way they do in response to customers’ computer surfing); most consumers are reluctant to receive ads when using their cell phones.

7. A joint venture between iPhone and Amazon.com resulted in special software that allows them to browse Amazon.com product offerings and purchase the products. iPhone users can take photos of products in stores and transmit them to Amazon.com. Amazon matches the photos to available products and recommendations. .

8. Google Goggles, mobile scan codes, custom shirts ordered via mobile devices at tennis tournaments, and culinary voyeurism are examples of creative mobile uses.

9. Mobile campaigns had a lower on-target percentage than desktop campaigns in broad campaigns but were more effective in targeting narrow segments.

10. In the future, we will be receiving constant access to our social lives, information, and buying opportunities at any time via our mobile devices.

Advertising’s Reach and Efficacy 1 Effective advertising is the result of careful and systematic planning. . Steps to design social media campaigns: 2 a) Define the campaign’s objectives and strategic approaches. . b) Examine the platforms available and determine which ones to use so as to achieve the objectives. c) Produce the campaign’s content using internal or external resources. d) Examine the pricing models for securing access to social media, which, unlike pricing for advertising space on traditional print and broadcast communication channels, vary greatly. Then, set the expenditures needed to achieve the campaign objectives. e) Measure the campaign’s effectiveness. *****Use Learning Objective #8.4 Here ***** 3. For the most part, marketers infer the purchase behaviors triggered by ads from broad sets of sales data, as it is rarely possible to identify a cause-and-effect relationship between a given message and the resulting purchase behavior.

4. In contrast, promotions placed in social media employ “electronic cookies,” which are digital tracking devices that enable senders to monitor the receivers’ responses precisely and often immediately.

5. However, even with electronic tracking, some advertisers have removed their Facebook ads because they had trouble measuring whether the ads led to sales.

6. Analyzing website visits involves tracking: a) Unique visitors. The number of visitors to the website that have accessed its content. User profiles (based on their Web addresses) are also monitored. b) Cost per unique visitor. The total cost of placing the application or ad divided by the number of unique visitors. c) Return visits. The average number of times a user returns to the site within a specific period. d) Time spent. The average amount of time from the start of the visit until the end of the last activity on the page. e) Page views. The average number of pages that users have clicked through. f) Interaction rate. The proportion of viewers who interact with an ad or application. g) Actions. The actions taken during visits, such as entering contests, responding to poll questions, redeeming coupons, playing games, posting comments, sending messages, inviting friends, and downloading or uploading materials and applications. h) Conversation-related measures. Data including the number of unique visitors participating, the number of links related to the conversation that participants reach .

during the conversation, the duration between the first and last posts during the conversation, and the average number of time between posts. i) Visitor demographics. (a) Examining how the target audience navigates around the site and which demographic profiles have the most engagement; (b) evaluating whether the content created is a good match with the users and whether it converts many into buyers; and (c) determining how to improve the sell rate and reduce the cost per impression.

7. One’s degree of influence on Twitter is measured as follows: one’s number of followers, the number of people following the followers, the frequency of updating tweets, and the extent to which one’s tweets are referenced or cited.

8. Twitter also identified several types of users: 1. Celebrities have many followers but follow very few, if any, users.

2. Conversationalists follow about the same number of users as follow them.

3. Spammers “collect” users with the intent to push content to as many people as possible.

9. Google Analytics is a service offered by Google that evaluates the effectiveness of websites and profiles their users by collecting and analyzing the following data: a) Tracking where visitors come from: Referrals, search engines, display advertising, payper-click networks, email campaigns, and other digital links (e.g., clicks within PDF documents). b) Customers’ actions after they “land” at the initial page: Viewing other pages, downloading files, registering with the site, and other actions. c) Website visitors’ geographic location and their visit lengths. GA also assigns websites’ users into profiles and segments them.

10. Google Analytics enables marketers to measure the effectiveness of their websites and promotional efforts, predict the impact of planned advertising campaigns on customers’ behavior and tracks sales activity and performance to provide marketers with their sites’ transactions, revenue, and many other commerce-related metrics. *****Use Key Term Google Analytics Here***** 11. Online fraud and unseen ads are a challenge for companies that try to capture actual traffic or video views.

1. Bots generate fake impressions and video views.

2. Just 54% of video ads are viewable, though view-ability is higher on mobile devices and tablets than on computers.

12. Due to the reliance on automated ad buying technologies, marketers also find their ads alongside unlicensed content from major content owners or on sites promoting counterfeit goods.

13. Nielsen measures media exposure effects, which measure how many consumers were exposed to the message and their characteristics. *****Use Key Term media exposure effects Here ***** 14. More consumers have been watching programs on DVRs, which makes it hard to count viewers.

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15. Ad buyers increasingly want transparency into how data are collected and used by Facebook and Google. Tags allow these companies to track behavior after the campaign.

16. Consumers skip or block ads.

17. Marketers also attempt to capture social television engagement.

Traditional Media’s Evolution 1. Print and electronic media were one-way communications - all the members of a given audience receive the same promotional messages from marketers.

*****Use Learning Objective #8.5 Here; Use Table #8.6 Here ***** 2. Network and cable television reach very large audiences. a. Many programs, particularly on network TV, reach audiences that are heterogeneous in their demographics, spending power, interests, and lifestyles. b. Network TV (and later cable TV) has been the most desirable (and expensive) advertising medium for many decades because television enables marketers to send messages that draw attention and generate emotion. c. With many TV ads for competing and often similar brands creating clutter, marketers had to design short-duration messages and repeat them frequently. d. The feedback from TV ads has been imprecise and did not enable marketers to effectively determine which ads led to sales and which ones did not. e. Devices that wirelessly transfer content from mobile devices to TVs have been emerging. f. Online video outlets draw TV ad dollars and are predicted to become more important than TV. 3. Interactive TV (iTV) combines the broadcasting capabilities of television and the interactivity of the internet. a. iTV is delivered to a TV, computer, or mobile device and represents two-way communication between subscribers and providers of cable or satellite TV. b. iTV viewing is more engaging, personal, and dynamic than watching one-way TV programs. c. iTV enables marketers to send addressable ads, deploy interactivity between the sender and the receiver, and to measure the persuasive impact of the messages quickly and effectively.

*****Use Key TermInteractive TV (iTV) Here *****

4. Radio’s advantages are its high geographic and demographic audience selectivity, as well as the short lead time needed for producing and placing commercials. a. Presently, almost all radio broadcasts, globally, are available online. b. Radio is an important advertising channel. i. There are 265 million Americans age 6 or older listening to the radio weekly. .

ii. Radio is an effective way to reach the largest age group of U.S. consumers, Millennials, because 66.5 million Millennials are weekly radio listeners. *****Use Key TermMillennials Here ***** 5. Print media includes newspapers and magazines. a. Newspapers provide access to large audiences and are effective for reaching large audiences. i. They are generally inadequate when it comes to reaching consumers with specific demographics. ii. Newspaper ads can be designed and published quickly, but they have a short life. iii. There is considerable clutter because many messages, particularly for local services and research outlets, compete for attention. b. Newspapers can phase in digital editions, bundle them with subscribers’ print editions, and develop structures for digital-only access; reduce print and home delivery; market digital editions more aggressively; and develop pricing tiers where subscribers to digital editions would be charged according to the volume of material they access. c. Magazines reach specific geographic, demographic, and interest-focused groups and enable more precise targeting than newspapers, with visually high-quality ads. i. Special-interest magazines are highly credible. ii. Magazines offer long message life and increased exposure to ads because of pass-along readership. iii. Ads require longer lead time for production, and numerous magazines do not guarantee ad placement in a particular position within the magazine. iv. Feedback from magazine ads is often delayed and is measured via Starch scores. d. Online, both magazines can flourish by offering readers customized editions that are based on their interests.

6. Out-of-home media consist of communications that target consumers in captive and less cluttered environments outside of their homes. a. Captive advertising screens are placed in locations where consumers spend time. b. By some estimates, spending on digital out-of-home media during a recent year was $2 billion and expected to rise 12.5% during the next one.

*****Use Key Terms out-of-home media, captive advertising screensHere; Use Hands On Exercise #8.15 Here ***** 7. Branded entertainment (product placement) consists of featuring products within the contents of entertainment, such as TV, movies, video games, among others. a. Paid for embeds of products and brands have appeared in most films and TV shows. b. Due to consumers’ ability to avoid viewing commercials, advertisers’ expenditures on branded entertainment have increase significantly. c. Marketers have developed webisodes and advergames. .

*****Use Key Termsbranded entertainment (product placements), webisodes, and advergames Here; Use Hands On Exercise #8.16 Here *****

REVIEW AND DISCUSSION QUESTIONS 8.1. What are the implications of social media for consumer behavior?

Social media has transformed consumer behavior by shaping how consumers communicate and learn about products. Networks allow users to keep tabs on what their friends are doing online and groups within networks help users find people with similar interests, and consumers learn about products and get reviews from a broader audience. Social networks create interactions among group members via discussion boards and by allowing members to post pictures, music, video clips, and other tidbits for the groups’ members to view, which gives consumers a voice that helps shape what other consumers think about brands. Consumers must have opt-ins and opt-outs that allow them to control the information they share with friends and the information they receive from others.

Individual, Moderate, 7-10 minutes Learning Objective 8.1 To understand consumer behavior and engagement with social media.

AACSB: Analytical thinking 8.2. How do marketers enhance consumer engagement with their offerings using social media?

Social media channels offer better engagement prospects because consumers can form comradeship among people with similar lifestyles, needs, and corresponding purchases.

The primary reasons for engagement are sharing information with others, convenience and entertainment, passing time, interpersonal relations, promoting one’s self, and bonding and social capital. Examples of how brands used Instagram, Pinterest, YouTube, and Facebook are found in Table 8.2, and examples to accomplish specific promotional goals are in Table 8.3. Marketers can use social media to engage customers using moving images, links to related materials, and customized viewing options.

Individual, Moderate, 3-5 minutes Learning Objective 8.1 To understand consumer behavior and engagement with social media.

AACSB: Analytical thinking 8.3 There are five characteristics of effective social media campaigns. List and describe them. .

(1) Social media campaigns must be planned together with advertising in traditional media; (2) marketers must consider the fact that social media simultaneously reaches several audiences (i.e., consumers, retailers, and other parties with whom the company does business), which justifies larger advertising budgets; (3) executives should closely examine consumers’ clicks on the “like” buttons and “mine” and use data from their Facebook pages to develop new niches for their products; (4) bosses who tweet personally strengthen the connections between their brands and customers; (5) employees should be encouraged to tweet, but guidelines for such communications must be set and monitored for compliance.

Individual, Moderate, 10-15 minutes Learning Objective 8.3: To understand the dynamics of social media and its strategic and promotional advantages over other media.

AACSB: Information technology 8.4. Describe how marketers can use Twitter effectively.

Most brands now have official Twitter handles. Companies have discovered that customers are highly enthused about and more responsive to Twitter messages from the corporate bosses, especially if such messages encourage consumers to tell the senders about their experiences with the brands. Some companies have decided that centralizing social media communications is impractical, so they train and empower their employees to participate in social conversations with customers, within defined guidelines. Companies can scan social conversations, including conversations on Twitter, to improve products and create promotional social messages modeled after the social conversations it has monitored.

Individual, Moderate, 7-10 minutes Learning Objective 8.2 To understand advertising channels and promotional strategies on social media.

AACSB: Analytical thinking 8.5. Describe Google’s role in advertising online.

Google is the most widely used search engine, so consumers use it to answer questions, locate websites and sources for products and services, track down information, and much more. After an online user types a query, two areas appear on the screen. The “organic results” are the links directing users to sites and resources that are applicable to their Google searches. The “sponsored space”—typically appearing on the top—consists of advertising banners that Google has sold to advertisers or “sponsors.” Each time a potential customer clicks on a sponsored banner ad, the advertiser pays Google a fee. Google is the largest providers of data and targeting tools that advertisers need for impression-based targeting and is a major supplier of real-time bidding to advertisers seeking targeted impressions. It sells video ads for content posted on YouTube, which is owned by Google, and on thousands of non-Google sites. Google also runs a shopping site where retailers pay for being displayed in Google’s product-search engine. Figure 8.2 shows that most advertising revenue comes from marketers of consumer goods.

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Individual, Moderate, 7-10 minutes Learning Objective 8.2 To understand advertising channels and promotional strategies on social media.

AACSB: Information technology 8.6. List and describe two advantages and two disadvantages of mobile advertising.

Advantages: It can identify users’ geographic locations and deliver contextually relevant offers. It can provide consumers with access to online deals in stores and the ability to pay for deals in stores while en route. Disadvantages: Smartphones’ screens are small; impossible to use cookies with apps the way it is with browsers (so marketers cannot track actions and optimize their ads the way they do in response to customers’ computer surfing); most consumers are reluctant to receive ads when using their cell phones.

Individual, Moderate, 3-5 minutes Learning Objective 8.3 To understand the dynamics and potential of mobile advertising.

AACSB: Information technology; Analytical thinking

8.7. Describe how one’s age impacts marketers’ targeting using mobile media.

Responses to promotional messages of mobile media are strongly related to one’s age.

According to one study, 19% of Millennials, 17% of Generation X, and 14% of Baby Boomers said they are most likely to view ads with coupons on their smartphones. Older consumer were most motivated by ads specifically relevant to intended purchases. Younger smartphone users were more willing to provide personal details in exchange for free or reduced-cost offerings than older consumers. They reported that 42% of Generation Z and 44% of Millennial smartphone users were okay with advertising if the content was free and the ads did not increase the costs of mobile data consumption. Figure 8.3 shows different responses by age cohort.

Individual, Moderate, 10-15 minutes Learning Objective 8.3: To understand the dynamics and potential of mobile advertising.

AACSB: Analytical thinking 8.8. Why is it more difficult to measure the effectiveness of advertising campaigns on social media than assess the results of advertising on traditional media?

Increasing, ad buyers want more transparency into how data are collected on Facebook and Google’s YouTube in order to determine where and how to spend their marketing money. Facebook admitted it inaccurately measure the number of people an advertiser had the potential to reach across the social network. Marketers are skeptical about Twitter ads because they have not delivered on promised metrics in the past. In the context of social activity around television programs, truncated text, acronyms, and inside jokes that take place as audiences interact with a show in real time create measurement challenges. Only 47% of tweets sent about a prime-time series included the official program hashtag, so they .

were not able to be captured by existing measures. Organic activity drives most engagement, but there is significantly more engagement per owned tweet.

Individual, Easy, 10-15 minutes Learning Objective 8.4: To understand audience measurement and media reach.

AACSB: Reflective thinking

8.9. List and describe the factors that negatively impact measuring the effectiveness of advertising on social media.

Online fraud and unseen ads, which are due to computer-generated visitors or bots that are designed to fool advertisers into paying for traffic and ad impressions that are placed on parts of webpages that didn’t appear on users’ screens, respectively, result in inaccurate measures of ad impressions. Some bots generated 30 million fake videos a day, and view-ability is limited, particularly on small video players. Ads may appear next to counterfeit goods or pirated content.

Individual, Easy, 5-10 minutes Learning Objective 8.4: To understand audience measurement and media reach.

AACSB: Reflective thinking 8.10. Compare advertising on traditional TV and doing so on interactive TV. Interactive TV combines the TV broadcasts with the interactivity of the internet. It is similar to television because it allows the consumer to view the show on a TV, computer, or mobile device. It is different from traditional television because it allows for two-communication between subscribers and providers. In the context of advertising, this means consumers who interact with the show are likely to be more engaged. Consumers can access highly targeted content, customize the advertising they want to see or experience, click links, get more information, and buy One study showed thatproducts during commercials or shows. interactive banners superimposed on TV commercials significantly reduced the rate at which viewers changed channels during ad breaks.

Individual, Easy, 5-10 minutes Learning Objective 8.5: To understand technology’s impact on traditional broadcast media.

AACSB: Analytical thinking 8.11. How has print media reacted to the decline of their advertising revenues?

Newspapers developed new digital options, reduced print and home delivery, marketed digital editions more aggressively, and developed new pricing tiers for digital editions.

Similarly, magazines offer online editions, and some chose to phase out paper editions. Both can offer customized editions based on readers’ interests and allow consumers to subscribe to online versions of their offerings where the stories are interested in show up first.

Advertisers can customize messages sent to readers.

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Individual, Moderate, 5-10 minutes Learning Objective 8.5: To understand technology’s impact on traditional broadcast media.

AACSB: Reflective thinking 8.12. What is branded content and how can it be used effectively?

Branded content is entertaining content that features products or brands. Branded content can be embedded in television shows, movies, and video games, but branded content can also exist independently as a custom webisode or an advergame. In the cases of webisodes and advergames, the entertainment is about enhancing brand recall or brand attitudes; the entertainment content is just a way to engage consumers.

Individual, Easy, 5-10 minutes Learning Objective 8.5: To understand technology’s impact on traditional broadcast media.

AACSB: Application of knowledge HANDS-ON ASSIGNMENTS 8.13. In groups of four, discuss and compare how social media has influenced your consumer behavior.

Instructor’s Discussion Student responses will vary, as will the channels they use to communicate or to access different kinds of information.

You can probe around the primary motivations for engagement that were listed in the text: provision and receipt of information, cultivation of relationships, showing off, and finding people with similar interests or ideas. Give them time to discuss their individual behavior and ask them to report back on similarities and differences.

Group, Moderate, 45-60 minutes Learning Objective 8.1: To understand consumer behavior and engagement with social media.

AACSB: Analytical thinking 8.14. Using the same format as in the previous question, discuss social media’s influence on your parents’ buying behavior.

Instructor’s Discussion Similar to 8.14, student responses will vary. In some cases, they may observe that channels they used to use are now more commonly used by their parents.

Give them time to discuss their parents’ behaviors and ask them to report back on similarities and differences among their parents and between them and their parents.

Group, Moderate, 45-60 minutes

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Learning Objective 8.1: To understand consumer behavior and engagement with social media.

AACSB: Analytical thinking 8.15. Take pictures of two illustrations of out-of-home media, present them in class, and describe why they are or are not effective.

Instructor’s Discussion Examples will vary, but may include billboards, captive advertising screens, digital billboards, or other posters/media on enclosures/ambient media.

Individual or Group, Moderate, 30-45 minutes Learning Objective 8.6: To understand the advancement of print and broadcast media into electronic communications.

AACSB: Application of knowledge; Analytical thinking 8.16. List and describe five product placements that you have seen in TV shows and movies.

Instructor’s Discussion This exercise is designed to get students to think about branded entertainment and its prevalence. Students may find that it is extremely easy to identify product placements and may start paying more attention to the product placements they see in movies and on television on an ongoing basis. You can ask students to journal these product placements and report back about their observations at the end of the semester.

Individual, Moderate, 45 - 60 minutes Learning Objective 8.5: To understand technology’s impact on traditional broadcast media. AACSB: Application of knowledge

8.17. Sort the permissions you have requested from sources according to the permissions categories discussed in this chapter.

Instructor’s Discussion The four types of permissions include 1. Basic permissions include name, identification, gender, photo, personal demographics, and list of friends. 2. User permissions are requests to allow the installation of the applications on the users’ computers. 3. Friends permissions include requests to share information the users have about friends using the same app. 4.

Sensitive information requests include questions about users’ highly personal aspects, such as political or religious affiliation and even sexual orientation.

Individual, Easy, 20-25 minutes Learning Objective 8.1: To understand consumer behavior and engagement with social media.

AACSB: Information technology

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8.18. If you have access to interactive TV, watch a program of your choice and make notes on how such viewing differs from watching traditional TV. Instructor’s Discussion Students may or may not have access to iTV. Further, students may interact with the television programs in different ways, which depend on their motivations and the content associated with the programming. For students who do not have access to iTV, consider asking them to engage in social media around a live television show. Have the individuals who use social media to engage with live television compare notes with the people who use iTV to engage around a live television show. Individual or Group, Moderate, 30-45 minutes Learning Objective 8.5: To understand technology’s impact on traditional broadcast media. AACSB: Application of knowledge; Analytical thinking

S.T.A.R. Projects Ethical Issues in Consumer Behavior S.T.A.R. Project #1 L’Oréal matches Revlon in almost all competitive categories. Examine the L’Oréal Web site at www.loreal.com for more information on this cosmetic industry giant. Having done this, consider the following imaginary scenario: as a marketing manager for Revlon, you have just discovered that L’Oréal is trying to persuade young teenage girls to switch from Revlon products to those of L’Oréal. L’Oréal ads show two teen girls discussing their difficulties in finding dates to a prom. One girl having seen that her friend has just applied Revlon nail polish and lipstick, says “Maybe the reason you can’t get a date is that you are using your mother’s nail polish and lipstick—it’s just too old-fashioned!” L’Oreal continues this theme through their social media advertising, including an app where they encourage teenage girls to “update their look” and use their information to share their made over pictures with friends and to make ongoing product recommendations.

Do you see any ethical problems with the approach used by L’Oréal? Explain.

Instructor’s Discussion First, This the students will find a wealth of consumer information on the L’Oréal Web site. information can be useful for constructing other projects or exercises. In the imaginary scenario, L’Oréal has commented no sin, however, labeling a competitive product as old-fashioned may not be fair (additionally, it might offend older users). Students also may question the use of information gathered from teenagers by the app.

S.T.A.R. Project #2 Your group’s assignment is to pick a product category such as personal computers, clothing, cars, or recreation. Using your chosen category, chart, outline, or diagram how consumers . use the Internet to search for information about the product. Conduct a search for the product

category. Then, keep track of the advertisements you see on the same computer that are related to your search. Note how well the ads you see related to the original search. Select a group “reporter” to summarize your group’s findings for the entire class. Instructor’s Discussion This assignment is a good summary for the group experience and the basic substance of the course and text. Add product categories for a large class to ensure that every group has a separate discussion area. Use this as a basis for discussion on how companies track information about searches and website visits to customize communications.

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CHAPTER 9 Reference Groups and Communities, Opinion Leaders, and Word-of-Mouth LEARNING OBJECTIVES 9.1 To understand the credibility and influence of reference groups.

9.2 To understand the persuasive power of spokespersons, endorsers, celebrities, salespersons, vendors, and media.

9.3 To understand the dynamics of opinion leadership and word-of-mouth. 9.4 To understand word-of-mouth’s online prevalence, strategic applications, and perils. 9.5 To understand how consumers adopt innovations over time.

CHAPTER SUMMARY Learning Objective 9.1: To understand the credibility and influence of reference groups.

Within any setting, including consumer behavior, people are strongly influenced by how others think and behave. Reference groups are groups that serve as sources of comparison, influence, and norms for people’s opinions, values, and behaviors. Word-of-mouth consists of communications where satisfied customers tell other people how much they like a business, product, service, or event, although word-of-mouth can also be negative.

Sociocultural groups that determine people’s behavior, norms, morals, and consumption patterns include Groups family, social class, culture, subculture, and (for global consumers) cross-culture. influencing consumption are friends, fellow shoppers, and virtual communities.

Source credibility represents the perceived honesty, objectivity, expertise, and trustworthiness of reference groups make them highly credible sources. A formal source is either a person or medium providing consumption-related information and is hired and paid by an organization. An informal source is a person whom the message receiver knows personally, such as a parent or friend who gives product information or advice, or an individual met and respected online.

Generally, consumers view informal sources as more credible than formal ones as sources of advice and information about products and brands.

There are two types of reference groups: a group to which a person belongs to, or realistically can join, is called a membership group. A symbolic group is a group to which an individual is unlikely to belong, but whose values and behaviors that person adopts.

The influence of reference groups reflects the way people adopt the groups’ norms and . compare themselves to others within the groups. This degree of influence is a function of the person’s tendency to conform, product expertise, the group’s power, and the product’s conspicuousness.

The perceived credibility of spokespersons, endorsers, and other sources that companies use in their advertising is the key to the ads’ effectiveness. The spokesperson can be an actual customer, a company employee, a celebrity, or a model. Marketers employ celebrities for product testimonials and endorsements, as well as spokespersons and actors in commercials.

Many marketers had terminated their associations with celebs who have been the center of public controversies, mostly following their inappropriate conducts and racism. Companies also convey their credibility through solid past performance, good reputation, high product quality, and good service. Their perceived credibility is also a function of the image and reputation of the retailers that carry their offerings and the media where they advertise.

Learning Objective 9.3: To understand the dynamics of opinion leadership and word-ofmouth. Opinion leadership is the process by which one person—the opinion leader— informally influences others, who might be either opinion seekers or recipients. This influence occurs between two or more people, neither of whom represents a commercial seller nor would gain directly from providing advice or information. Opinion leaders who have expertise in a given product category provide advice and influence the consumption of others within the same category. They also follow any new items introduced closely, and are the first to buy new items. They tend to be self-confident, outgoing, and sociable. Research methods that identify opinion leaders are self-designation, sociometric studies, key informants, and monitoring people who provide a lot of consumption-related advice online. Learning Objective 9.4: To understand word-of-mouth’s online prevalence, strategic applications, and perils. Electronic word-of-mouth takes place online and occurs in social networks, brand communities, blogs, chat rooms, and tweets. Marketers hire buzz agents and initiate viral marketing to stimulate word-of-mouth in cyberspace. Buzz agents are consumers who promote products clandestinely and generally receive free product samples but not monetary payments. Viral marketing is a marketing technique that uses preexisting social networks and other technologies to produce increases in brand awareness or to achieve other marketing objectives through encouraging individuals to pass along email messages or other contents online. It is impossible to control word-of-mouth communications. Negative comments, frequently in the form of untrue rumors, can sweep through the marketplace and undermine a product. The internet is a prolific ground for spreading negative rumors because disgruntled consumers can reach millions of people easily and exaggerate (or even lie about) their negative experiences with products and services. Learning Objective 9.5: To understand how consumers adopt innovations over time. Over time, positive word-of-mouth leads to the widespread adoption of products. However, not all consumers adopt new products or new versions of existing products simultaneously. Sociologists who studied how innovations are adopted within societies identified five adopter categories of adopters: innovators, early adopters, early majority, late majority, and laggards.

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The concept of adopter categories is a classification scheme that depicts where consumers stand in relation to other consumers in terms of the first time they purchase an innovation (e.g., a new product). Each category represents a distinct market segment, so marketers must study each group in order to target it effectively.

CHAPTER OUTLINE Introduction 1. Reference groups serve as sources of comparison, influence and norms for peoples’ opinions, values, and behaviors. a. People are strongly influenced by what others think and how they behave. b. The most important reference groups are families because they provide children with the skills, knowledge, attitudes, and experiences necessary to function as consumers, a process called consumer socialization.

2. Word-of-mouth represents communications where, when positive, satisfied customers tell other people how much they like a business, product, service or event. a. Word-of-mouth is one of the most credible forms of buying-related information because the communicators don’t stand to gain personally by promoting it. b. Reference groups, such as friends, neighbors, relatives, and other consumers from online networks and contact, strongly influence consumption behavior. *****Use Key Terms reference group, consumer socialization, word-of-mouthHere; Use Figure #9.1 Here ***** The Credibility and Persuasive Power of Reference Groups 1. Reference groupshave a high degree ofsource credibility , defined as a source’s persuasive impact, stemming from its perceived expertise, trustworthiness, and believability.

2. When the source of communications about a product is well respected and highly thought of by the intended audience, the message is much more likely to be believed. a. A formal source is either a person or medium providing consumption-related information and hired and paid by an organization. b. An informal source is a person whom the message receiver knows personally, such as a parent or friend who gives product information or advice, or an individual met and respected online. *****Use Learning Objective 9.1 Here; Use Key Termssource credibility, formal source, informal source Here; Use Review and Discussion Question #9.8 Here ***** 3. There are two types of influence from reference groups: normative and comparative. a.

Normative influence is learning and adopting a group’s norms, values, and behaviors. b. Comparative influence occurs when people compare themselves to others whom they respect and admire, and adopt some of those people’s values or imitate their behaviors. c. A group to which a person belongs or realistically can join is a membership group. .

d. There are groups in which an individual is not likely to receive membership, despite acting like a member by adopting the group’s values, attitudes, and behavior. This is called a symbolic . group *****Use Key Learning terms reference groups, normative Here; influence, membership group, and symbolic group Questions #9.1 and #9.2 Here ****

influence, comparative Use Review and Discussion

4. The consumption-related groups that influence consumers’ attitudes and behavior include friendship groups, shopping groups, virtual communities, and advocacy groups. a. Friends fulfill a wide range of needs: They provide companionship, security, and opportunities to discuss problems that an individual may be reluctant to discuss with family members. They may be a credible source of information about purchases. b. Fellow shoppers: People may shop together just to enjoy shopping or to reduce their perceived risk – to gain expertise or to feel more confident with a collective decision — related to a concept known as “social proof.” c. Virtual communities: Many websites encourage consumers to leave comments and have others respond to them. i. Most young adults have extensive “buddy lists” and regularly communicate with people whom they have met online but never in person. ii. The fact that people can share their interests, hobbies, and opinions with thousands of peers online has benefited marketers. d. There are two types of advocacy groups: entities organized to correct a specific consumer abuse and then disband, and groups whose purpose is to address broader, more pervasive problem areas and operate over an extended period of time.

5. The degree of influence that a reference group exerts on an individual’s behavior depends on the individual, product, and social factors. These factors include conformity, the group’s power and expertise, the individual’s experience and personality, and the conspicuousness of the product. a. Conformity: to influence its members, a reference group must i. Inform or make members aware that the brand or product exists. ii. Provide the individual with the opportunity to compare his or her own thinking iii. with the attitudes and behavior of the group. iv. Influence the individual to adopt attitudes and behavior that are consistent with the group’s norms.

Legitimize the member’s decision to use the same products as other members. *****Use Figures #9.2 and #9.3 Here***** b. Group power: different reference groups may influence the beliefs, attitudes, and behaviors of individuals at different times or under different circumstances. i. Consumers who are concerned with approval from others usually adopt the same products and brands as those group members who have status. ii. Power groups may bring about behaviors, but not changes in attitudes.

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c. Product expertise: people with firsthand experience or who can obtain detailed information about a product are less likely to be influenced by the advice of example of others. d. Product conspicuousness: a conspicuous product – one that stands out and is noticed by others – are more likely to be purchased with an eye to the reactions of relevant others. *****Use Table #9.2 Here***** Endorsers and Spokespersons 1. Source credibility is the believability of the endorser, spokesperson, or individual in an advertisement. a. A spokesperson can be an actual customer, a company employee, a celebrity, or a model. b. Researchers have identified the following dimensions in measuring the credibility of a person or organization: expertise, trustworthiness, attractiveness, and likability. *****Use Key Termsource credibility Here; Use Learning Objective #9.2 Here***** 2. Consumers recognize that the intentions of commercial entities (e.g., manufacturers, service companies, financial institutions, retailers) are to generate profits and view marketers as less credible than informal reference groups. a. Companies can convey their credibility through solid past performance, good reputation, product quality, and good service. b. Their perceived credibility is also a function of the image and attractiveness of their spokespersons, the reputation of the retailers that carry their offerings, and the media where they advertise. c. Marketers also use institutional advertising, which consists of promoting a company’s image without referring to any of its specific offerings. *****Use Key Terminstitutional advertising Here ***** d. The greater the fit between the celebrity and the product endorsed, the higher the persuasiveness of the message. e. Endorsers whose demographic characteristics (e.g., age and ethnicity) are similar to those of the target audiences are viewed as more credible and persuasive than those whose characteristics are not. i. Although consumers may like an ad featuring a famous endorser, they will buy the product advertised only if they trust the marketer as well. ii. Marketers who use celebrities in testimonials or endorsements must ensure that the message contents are congruent with spokespersons’ qualifications. iii. Marketers must ensure that there is a synergy among the celebrity’s trustworthiness, expertise, physical attractiveness, and the product or brand endorsed. iv. They must also take into account the celebrity’s number of prior endorsements, because consumers perceive celebrities who appear in .

commercials too often as less credible than celebs with lesser commercial exposure. f. Celebrities, particularly movie stars, TV personalities, popular entertainers, and sports icons, are a symbolic reference group because they are liked, admired, and often have a high degree of perceived credibility. g. Credibility is the most important thing the celebrity offers – the audience’s perception of both the celebrity’s expertise (how much the celebrity knows about the product area) and trustworthiness (how honest the celebrity is about what he or she says about the product).

3. Marketers employ celebrities in promotion in the following ways: a. Celebrity testimonial—Based on personal usage, the celebrity attests to the product’s quality. b. Celebrity endorsement—Celebrities appear on behalf of products, with which they may or may not have direct experience or familiarity, for extended periods. c. Celebrity actor—The celebrity plays a part in a commercial for the product. d. Celebrity spokesperson—The celebrity represents the brand or company over an extended period. *****Use Key Terms celebrity testimonial and celebrity endorsement Here; Use Hands-on Assignment #9.10 Here***** 4. Salespeople who engender confidence and who give the impression of honesty and integrity are most persuasive. a. A salesperson who “looks you in the eye” often is perceived as more honest than one who evades direct eye contact. b. For many products, a sales representative who dresses well and drives an expensive, latemodel car may have more credibility than one without such outward signs of success. c. For other products, a salesperson may achieve more credibility by dressing in the role of an expert.

5. The reputation of the retailer (vendor) who sells the product has a major influence on message credibility. a. Products sold by well-known, quality stores carry the added endorsement (and implicit guarantee) of the store itself. b. The consumer’s previous experience with the product or vendor has a major impact on the credibility of the message.

6. The reputation of the medium that carries the advertisement also enhances the credibility of the message. a. Most consumers believe that a respectable medium would only advertise products that it “knows” to be of good quality. b. Because specialization in an area implies knowledge and expertise, consumers regard advertising they see in special-interest magazines and websites as more credible than ads in general-interest sources. *****Use Review and Discussion Question #9.3 Here ***** Opinion Leaders and Word-of-Mouth

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1. Opinion leadership is the process by which one person—the opinion leader—informally influences others, who might be either opinion seekers or recipients, occurs between two or more people, neither of whom is or represents a commercial seller or would gain directly from providing advice or information. a) The information that opinion leaders transmit includes advice on selecting the best brands, using the products correctly, where to buy the products, and other aspects. b) Opinion leaders are especially important in recommending service providers with whom they have had personal relationships, such as doctors, lawyers, hairdressers, garage mechanics, restaurants, or travel companies, because small service businesses have very limited advertising resources, and the main way they can get new customers is via recommendations by existing clients. c) Opinion leadership is category specific; that is, opinion leaders often specialize in certain product categories about which they offer information and advice. d) The motivations of opinion leaders and receivers are shown in Table 9.3 *****Use Learning Objective 9.3 Here; Key Termopinion leadership Here; Use Table 9.3 Here***** 2. Characteristics of opinion leaders include: a) Opinion leaders are highly knowledgeable regarding a particular product category, follow new products that come into the markets, and are often consumer innovators in their area of expertise. b) Opinion leaders are self-confident, outgoing, and sociable. c) Opinion leaders read special-interest publications and regularly visit websites devoted to the specific topic or product category in which they specialize. They have specialized knowledge that enables them to make effective recommendations to relatives, friends, and neighbors. d) Usually, opinion leaders and receivers belong to the same socioeconomic and age groups. *****Use Figure 9.4 Here***** 3. Consumer researchers can measure the degree of opinion leadership and its impact on consumption behavior by using one of the following methods: a) The self-designating method employs a self-administered questionnaire that requires respondents to evaluate the extent to which they have provided others with information about a product category or specific brand or have otherwise influenced the purchase decisions of others. b) The sociometric method measures the person-to-person communications about a product or brand among members of a community where most people know each other by name (e.g., a college dormitory or sorority). Respondents are asked to identify: i. The specific individuals (if any) to whom they provided advice or information about the product or brand under study. ii. The specific individuals (if any) who provided them with advice or information about the same product or brand.

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c. Researchers can also study opinion leadership by using a key informant, that is, a person who is keenly knowledgeable about the nature of social communications among members of a specific group. d. Klout scores measure people’s degree of influence online. *****Use Key Terms self-designation method, self-administered questionnaires, sociometric method, key informants, Klout score Here; Use Review and Discussion Question #9.6 Here ***** Word-of-Mouth’s Strategic Applications 1. In marketing, word-of-mouth consists of transmitting advice and other types of information about products, brands, and shopping experiences.

2. Word-of-mouth occurs in social networks, brand communities, blogs, chat rooms, and tweets. ***** Use Learning Objective #9.4 Here ***** 3. Online, social networks are virtual communities where people share information about themselves with others, generally with similar interests, with whom they have established relationships that, for the most part, exist only in cyberspace. The major social networks are Facebook, YouTube, Twitter, and Instagram.

4. Three dimensions factor into consumers’ engagement in electronic word-of-mouth: a. Tie strength—the degree of intimacy and frequency of contacts between the information seeker and the source. b. Similarity among the group’s members in terms of demographics and lifestyles. c. Source credibility—the information seeker’s perceptions of the source’s expertise.

5. Negative reviews of hedonic (i.e., products used mainly for pleasure) products were considered less useful/attributed to the reviewer; negative reviews for utilitarian products were attributed to the product.

6. Involved consumers transfer and receive more rational product information than information appealing to emotions.

7. A brand community is a specialized, nongeographically bound community formed on the basis of attachment to a product or brand.

8. A blog is a discussion or informational site published on the Internet and consists of discrete entries (“posts”).

9. A microblog has less content than the traditional blog and allow users to exchange small elements of content, such as short sentences, individual images, and video links, mostly via Twitter . *****Use Key Terms social networks, brand community, blog, Twitter Here; Use Learning Objective #9.4 Here; Use Review and Discussion Question #9.6 Here ***** 10. Social media monitoring for word-of-mouth information can help shape products.

11. Marketers try to stimulate word-of-mouth.

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a. Many firms enlist typical consumers to serve as their buzz agents—consumers who promote products clandestinely and generally receive free product samples but not monetary payments. b. Technology start-ups with limited promotional budgets employ buzz agents by initiating ambassador programs on college campuses. *****Use Key Term buzz agentsHere; Use Hands-On Learning Question #9.14 Here***** 12. Viral advertising uses social networks and other technology to encourage consumers to pass along emails or content. It may take the form of advergames, or video games containing ads for products, services, or companies.

13. Online media made it easier for consumers to spread negative word-of-mouth. a. One study discovered that some consumers who posted unfavorable information wanted to vent negative feelings or warn others. b. Others sought exposure, self-enhancement, social benefits, and even economic rewards. c. Persistent spreaders of negative word-of-mouth are determined detractors.

Innovations’ Adopters as Reference Groups 1. Groups greatly affect diffusion of innovations.

2. The time it takes for an innovation to spread is affected by: a. Nature of the group involved b. Type of innovation decision required c. Extent of marketing effort d. Strength of felt need e. Compatibility of the innovation with existing values f. Relative advantage g. Complexity of the innovation h. Ease in observing usage i. Easy in trying j. Perceived risk in trying the innovation *****Use Learning Objective #9.5 Here; Use Figure #9.6 Here ***** 3. Adopter categories is a classification that depicts where consumers stand in relation to other consumers in terms of the first time they purchase an innovation (e.g., a new product or model).

4. Sociologically, the model assumes that all members of a given society would, eventually, adopt the innovation under a theory called Diffusion of Innovations.

5. The number of people belonging to each category was calculated in a manner resembling a statistical normal distribution: innovators— the first 2.5% to adopt; early adopters—the next 13.5%; early majority—the next 34%; late majority—the following 34%; and the laggards— the last 15%.

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***** Use Learning Objective #9.5 Here; Use Review and Discussion Question #9.4 Here ***** 6. The innovators are the earliest consumers to buy new products. a. They are prepared to take the risk that the product will not work well, become unavailable, or be quickly replaced by an improved model (i.e., they are broad categorizers). b. They are often willing to pay somewhat higher prices for newly introduced products, because they enjoy being the first to own gadgets and show them off. ***** Use Figure #9.7 Here***** 7. The early adopters are consumers who buy new products within a relatively short period following introduction, but not as early as the innovators. a. They are venturesome, likely to engage in word-of-mouth. b. They are likely to assist others who are considering adopting the new products.

8. The early majority consists of consumers who buy innovations after the early adopters have done so. a. This segment is larger than the preceding two groups combined. b. Risk aversion is defined as the reluctance to take risks and low tolerance of ambiguous situations. *****Use Key Termsinnovators, early adopters, early majority, and risk aversion Here; Use Figure #9.8 Here ***** 9. Members of the late majority are risk averse and slow to adopt innovation. They wait until most other consumers have adopted the new product before buying it.

10. The laggards are the very last consumers to adopt innovations.

11. Marketers often “write off” non-adopters, but not all non-adopters are the same, and understanding nonusers is important. *****Use Key Terms late majority, laggards Here *****

REVIEW AND DISCUSSION QUESTIONS 9.1. What are reference groups? List and discuss at least four groups that influence your purchases. For each group, indicate whether its influence is comparative, normative, or both, and explain your answers.

Reference groups serve as comparative and normative frames of reference for a person’s values and behaviors. Responses about the four reference groups will vary. Normative influence consists of learning and adopting a group’s norms, values, and behaviors. The most pertinent normative influence comes from groups to which people naturally belong, such as family, peers, and other members of one’s community. Comparative influence arises when .

people compare themselves to others whom they respect and admire, and then adopt some of those people’s values or imitate their behaviors.

Individual, Moderate, 20-25 minutes Learning Objective 9.1: To understand the credibility and influence of reference groups.

AACSB: Reflective Thinking 9.2. What is the difference between membership groups and symbolic groups? List one membership group and one symbolic group that influence your purchases. Explain which group influences you more and why.

A group to which a person either belongs or would qualify for membership is called a membership group. There are groups in which an individual is not likely to receive membership, despite acting like a member by adopting the group’s values, attitudes, and behavior. This is called a symbolic group. Student responses to the membership and symbolic groups that influence their purchases are likely to vary. Responses may reference normative influence, comparative influence, or both. Individual, Moderate, 10-15 minutes Learning Objective 9.1: To understand the credibility and influence of reference groups.

AACSB: Application of knowledge

9.3. List and discuss the factors that affect the credibility of formal communications sources of product information. What factors influence the perceived credibility of informal communications sources?

Informal sources such as friends, neighbors, and relatives have a strong influence on receiver’s behavior because they are perceived as having nothing to gain from a product transaction they recommend. Among formal sources, neutral rating services or editorial sources have greater credibility than commercial sources because of the likelihood that they are more objective in their product assessments. Individual, Moderate, 5-7 minutes Learning Objective 9.2: To understand the persuasive power of spokespersons, endorsers, celebrities, salespersons, vendors, and media. AACSB: Analytical thinking

9.4. Why is an opinion leader a more credible source of product information than an advertisement for the product? Are there any circumstances in which information from advertisements is likely to be more influential than word-of-mouth?

Communication with an opinion leader is interpersonal, informal and takes place between two or more people. Feedback is part of the communication process. The opinion leader does not represent a commercial selling source and therefore does not gain directly from the sale of something. The opinion leader often bases his/her product comments on firsthand experience. The opinion leader is perceived as highly credible. .

An advertisement is designed primarily to sell a product. Commercial gain is the intent, therefore credibility may be questioned. When the intentions of an advertisement is clearly profit making, then reputation, expertise, and knowledge become important factors in message credibility. The credibility of commercial messages is often based on the composite evaluation of the reputation of the company sending the message, the retail outlet that carries the product, the medium that carries the message, and the company spokesperson (the actor or sales representative who delivers the message). When the source of a message is well respected and highly thought of Individual, Moderate, 15-20 minutes Learning Objective 9.3: To understand the dynamics of opinion leadership and word-of- mouth. AACSB: Reflective Thinking

9.5. How can companies strategically use buzz agents and viral marketing? Illustrate with examples.

Buzz agents are enlisted to share products with their friends/family and/or to use products in public. These “agents” typically do not receive payment but are motivated by being called upon to serve as opinion leaders. They may bring a particular brand of barbeque sauce to a picnic to introduce it to others or read a book on mass transit. Viral marketing uses existing social networks/encourages individuals to pass on a message to others, thus creating the potential for exponential growth in the message’s exposure and influence. An example is Netflix asks users to share what they are watching on Facebook so other friends will be encouraged to enroll in and use Netflix. Individual, Easy, 10-15 minutes Learning Objective 9.4: To understand word-of-mouth’s online prevalence, strategic applications, and perils. AACSB: Application of knowledge

9.6. Compare the advantages and disadvantages of the methods of measuring opinion leadership.

The self-designating method employs a self-administered questionnaire that requires respondents to evaluate the extent to which they have provided others with information about a product category or specific brand or have otherwise influenced the purchase decisions of others. It is easy to add to questionnaires, but often consumers overestimate their influence. The sociometric method measures the person-to-person communications about a product or brand among members of a community where most people know each other by name (e.g., a college dormitory or sorority). Respondents are asked to identify:

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1. The specific individuals (if any) to whom they provided advice or information about the product or brand under study.

2. The specific individuals (if any) who provided them with advice or information about the same product or brand. If respondents identify one or more individuals to whom they have provided some form of product information and those individuals confirm this attribution, the respondents receive “opinion leadership points.” On the basis of these interviews, respondents receive “opinion receivership points.”

The results of this method are most valid, but the questioning is expensive, analysis is complex, community members must know each other/it is not applicable in large populations. Researchers can also study opinion leadership by using a key informant, that is, a person who is keenly knowledgeable about the nature of social communications among members of a specific group. This method is inexpensive, but it is often difficult to find the right person. The Klout score measures people’s influence online based on their abilities to generate engagement and feedback to what they post. The Klout score measures how much conversation an individual generates, but the number of sources it pulls from are still somewhat limited and the conversation measurement is limited to data mined from online sources. Individual, Moderate, 20-25 minutes Learning Objective 9.3: To understand the dynamics of opinion leadership and word-of- mouth. AACSB: Analytical thinking; Information technology

9.7. How can marketers use social networks, brand communities, and weblogs to locate new customers and target them? Electronic word-of-mouthoccurs in social networks, brand communities, blogs, chat rooms, and tweets. Three dimensions underlie consumers’ engagement in electronic word-of-mouth: 1. Tie strength—the degree of intimacy and frequency of contacts between the information seeker and the source. 2. Similarity among the group’s members in terms of demographics and lifestyles. 3. Source credibility—the information seeker’s perceptions of the source’s expertise. Social networks are virtual communities where people share information about themselves with others, generally with similar interests, with whom they have established relationships that, for the most part, exist only in cyberspace. A brand community is a specialized, non-geographically bound community formed on the basis of attachment to a product or brand. A blog is a personal online journal initiated and managed by a blogger, which includes comments from the reader. These online journals are now probably the most powerful platform for the exchange of consumption-related information. However, marketers cannot control what is written or the comments in any of these forums. However, marketers can listen in to learn about opportunities for improvement and generate new product ideas, and can profile brand users and non-users, which can help them identify new consumers to target.

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Marketers can encourage or stimulate word-of-mouth among its consumers using advertising slogans or by instituting referral programs through which customers are rewarded for bringing in new clients. Individual, Moderate, 10-15 minutes Learning Objective 9.4: To understand word-of-mouth’s online prevalence, strategic applications, and perils. AACSB: Application of knowledge; Information technology

9.8. Roger Federer, one of the world’s best tennis players, promotes products like Rolex watches, Mercedes-Benz cars, Lindt chocolate, Wilson rackets, and Nike sportswear.

Which reference group is envisaged here? Discuss the fit between these brands and Mr. Federer and the benefits the companies may be hoping for.

Reference groups can be classified by membership status. Celebrities often constitute a symbolic group—a group in which an individual (consumer) is not likely to receive membership despite acting like a member by adopting the group’s values, attitudes, and behavior. When a firm considers employing a celebrity for brand endorsement, numerous issues should be explored. One is the effectiveness of the spokesperson in relation to the message. When message comprehension is low, receivers rely on the spokesperson’s credibility in forming attitudes toward the product, but when comprehension is high, the expertise of the spokesperson has far less impact on a receiver’s attitudes. In addition, the synergy between the endorser and the type of product or service advertised is important, as celebrities are conditioned with the products they promote. When there is an appropriate fit between the celebrity and the product endorsed, the conditioning is more effective, robust, and enduring. Furthermore, students can be encouraged to think about why Roger Federer has been used across a range of product categories. Do the companies behind the products share similar values? What makes Roger Federer a good celebrity ambassador for products as far apart as chocolates and cars? Is there a risk of his credibility waning? Is he equally credible in different parts of the world? For example, celebrities who have demographic characteristics that are like those of the target audience are viewed as more credible and persuasive than those that do not. Students should explore all these elements in relation to Roger Federer and the brands mentioned. Perhaps other factors, like physical attractiveness or the reputation of Roger Federer, can be investigated. The endorser’s credibility may impact the audience’s attitudes toward ads, but the endorser’s credibility is not a substitute for corporate credibility. Students might want to explore this circumstance as well. Individual, Moderate, 20-25 minutes Objective 9.1: Understand the credibility and influence of reference groups. Objective 9.2: Understand the persuasive power of spokespersons, endorsers, celebrities, salespersons, vendors and media. AACSB: Analytical thinking

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9.9. A car manufacturer is about to launch a new model with an innovative new engine system. How can an understanding of the adopter categories influence the manufacturer’s communication for the new car over time?

Adopter categories is a classification depicting where consumers stand in relation to other consumers in terms of the first time they purchase an innovation. This classification, which was developed by sociologists who conceived a theory called the Diffusion of Innovations, consists of five categories of adopters: innovators, early adopters, early majority, late majority, and laggards. In marketing terms, each category represents a distinct market segment, so marketers must study each group in order to target it effectively.

Adopter Category Innovators

Early Adopters

Early Majority Late Majority

Laggards

Communication message Distribution Appeals that stress the Selective product’s newness and “snob appeal” Factual appeals stressing the Selective product’s attributes and related benefits “Expert” appeals and Intensive endorsements or testimonials Conformity appeals (e.g., “Everyone has it; why not you?”)

Intensive

Appeals suggesting that the Intensive new product does what existing competitive products

Pricing Skimming

Skimming

Lower prices A lot of competition and prices keep dropping As above

do, but better

Individual, Moderate, 25-30 minutes Objective 9.5: Understand how consumers adopt innovations over time.

AACSB: Application of knowledge 9.10. While doing your daily or weekly shopping (everything from food to clothes), take note of any products that feature endorsers or spokespersons (in the form of celebrities, actual customers, etc.) on packaging or accompanying advertising material. What is the content of their message? How credible are these statements for you as a consumer? Do they influence your choice in favour of the product? Explain why.

The perceived credibility of a spokesperson or endorser used for marketing purposes is key to its effectiveness. Students should be asked to do this task out of their classrooms. Their answers may vary. While presenting their findings, students should address the relationship between the product, the message, and the spokesperson/endorser for them as consumers. They might find that their consumption behavior and needs are different, resulting in .

different levels of importance being given to spokespersons or endorsers. If students are not convinced by the endorser or the spokesperson for a product, ask them who they think would have been more appropriate for the endorsement and why. Individual, Moderate, 75-90 minutes, out-of-class Objective 9.2: Understand the persuasive power of spokespersons, endorsers, celebrities, salespersons, vendors and media. AACSB: Reflective thinking

HANDS-ON ASSIGNMENTS 9.11. Suppose that you are looking for a new computer and a new pair of shoes at the same time. Thinking of these two different shopping objectives, the advice of which people would you seek if you were not sure about the decision for a particular brand or model?

Why would you choose these particular people?

Instructor’s Discussion Opinion leaders informally influence others by providing information and advice though they are not a commercial seller and do not gain directly from providing this assistance. Student answers will differ. Answers should show an understanding of opinion leadership as well as the characteristics of opinion leaders.

Answers might include “traditional” sources like family and friends but also online reference groups, social media, and social influencers. These new media sources could be explored further to understand how decision-making changes with technological advances.

Students might discuss credibility and how it relates to their choice of the opinion leader from whom the information was sought. Different types of people chosen by students might spur a discussion regarding the differences in the information needs of opinion receivers. Students might notice a difference between who they choose for the two different products when the price points are different, resulting in different risk perceptions.

Individual, Moderate, 10-15 minutes Objective 9.3: Understand the dynamics of opinion leadership and word-of-mouth AACSB: Reflective thinking

9.12. Find ads that encourage consumers to engage in word-of-mouth communications.

Instructor’s Discussion Students will show a variety of ads. Ask them if the advertiser was successful in showing personal, or face-to-face communication. Discuss how different media (television, newspapers, Web, radio, etc.) can model/demonstrate WOM communication. Individual, Moderate, 30-45 minutes Learning Objective 9.3: To understand the dynamics of opinion leadership and word-of- mouth.

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AACSB: Application of knowledge 9.13. Prepare a list of negative rumors that you (or your friends) have heard recently about a company or a product.

Instructor’s Discussion When discussing negative rumors, ask the students if the rumor is true. Do they know? Can they track how the rumor was started and spread? What role did the web play in spreading the rumor? What was the motive for starting and spreading the negative rumor? Has the “accused” responded? How effective was the response?

Individual, Moderate, 20-25 minutes Learning Objective 9.3: To understand the dynamics of opinion leadership and word-of- mouth. AACSB: Reflective thinking

9.14. Choose two brands of your liking and check their Facebook accounts, including posts and replies. Which word-of-mouth interactions do you see? Which consumer interactions can you find on these accounts? Do the brands engage in a dialogue with consumers on these channels? Discuss your impressions of these brands based on your observations.

Instructor’s Discussion Social networks allow companies to share information about their activities and products with consumers, engage with them, and stimulate word-of-mouth.

Students may come back with different findings. Some brands may only post company information; some might engage with consumers or even encourage users to share their experiences. If brands do not engage with their consumers on the platforms, discuss the potential consequences of this for the companies. Discussions may include the topic of “shitstorms” (i.e., online outrage that gains momentum) for this purpose. Students can add what the they would expect from brands on their social media channels. The creditability of source of word-of-mouth can be discussed too.

Individual, Moderate, 60-90 minutes Learning Objective 9.4: Understand word-of-mouth’s online prevalence, strategic applications, and potential perils.

AACSB: Application of knowledge S.T.A.R. Project Buzz marketing is a way for a marketing message to spread exponentially throughout the marketplace using e-mail or other Internet formats, such as chat rooms. After reading the examples from the chapter, your assignment is to find what you perceive to be a viral or buzz effort that has recently occurred. Analyze the effort for its marketing effectiveness and its .

adherence to sound or good business ethics. Think about the effort carefully—was anyone harmed? Was the truth told? Were facts accurate? Was this the most ethical way to transmit information about the product or service? Write a short summary report about the viral or buzz event, its impact, its effectiveness, and any ethical issues of note. Instructor’s Discussion This project asks students to review the concept of viral or buzz marketing. Several publications have examined the phenomenon (see Business Week and others). The emphasis is on whether this popular idea is ethical or whether the tendency toward excess may doom it.

Small Group Project StumbleUpon calls itself a “discovery engine” because, at one time, 50.27% of all traffic from a top 10 list of social sites came from StumbleUpon. Their relatively small group of users (15 million) often out-refers the larger user base from Facebook (over 1.15 billion). In fact, the influential users of StumbleUpon generate 1 billion page referrals per month. Their users, called “Stumblers”, introduce other Stumblers and non-users to web content, providing a “map to an adventure you wouldn’t otherwise have found out about.” The influence of these Stumblers was deemed valuable by film marketers, who worked with StumbleUpon to promote films like Jurassic Park 3D and Evil Dead. Stumblers are young and highly engaged, so studios see the personalized search engine, which “learns” the preferences of its Stumblers, as a way to reach early influencers. Each group member should go to StumbleUpon (stumbleupon.com), join, and evaluate the accuracy of recommendations. Students should keep a journal and see if the accuracy improves over time. Finally, students to compare their experiences and write a reflection paper on whether/how StumbleUpon leverages opinion leaders to add value to the Web. Instructor’s Discussion This project asks students to review the concept of electronic word-of-mouth and opinion leadership. Students should have individual observations as well as a comparison of their individual perspectives. The emphasis should be on whether the Stumblers represent opinion leaders, as determined by the group’s consensus.

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CHAPTER 10 The Family and Its Social Standing

LEARNING OBJECTIVES 10.1 To understand consumer socialization.

10.2 To understand how families make purchase decisions.

10.3 To understand the family life cycle.

10.4 To understand the consumer behavior of nontraditional families and households.

10.5 To understand the impact of social class on consumer behavior.

10.6 To understand the demographics, lifestyles, and consumption patterns of social classes.

10.7 To understand how to employ geodemographics to locate target markets.

CHAPTER SUMMARY Learning Objective 10.1: To understand consumer socialization.

The family is the primary reference group for many attitudes and behaviors. The family is also the prime target market for most products and product categories. As the most basic membership group, a family consists of as two or more persons related by blood, marriage, or adoption who reside together. Socialization is the process of making people behave in a way that is acceptable to their society. In the context of marketing, the most important role of the family is the socialization of family members, ranging from young children to adults. This process includes imparting to young children the basic values and modes of behavior consistent with their culture, including moral principles, interpersonal skills, acceptable dress and grooming standards, appropriate manners and speech, and the selection of suitable educational and occupational or career goals.

Learning Objective 10.2: To understand how families make purchase decisions.

Marketers recognize that families operate as units in terms of consumption behavior, and many researchers have studied the dynamics of family decision-making. Specifically, marketers focus on husband–wife decision-making; the relative influence each family member has regarding consumption; children’s role in family decision-making; and the multiple roles family members can assume in buying, using, and maintaining their possessions. Most consumer studies classify . family consumption decisions as husband-dominated, wife-dominated, joint, or autonomic decisions. The relative influence of a husband and wife on a particular consumer decision depends mainly on the product or service category. Over the past several decades, there has been a trend toward children playing a more active role in what the family buys, as well as in the family decision-making process. Measuring family decision-making is complex, because marketing research questionnaires are designed to be administered to only one respondent at a time. degreeAlso, family members may not all agree with each other’s perspective regarding the

of relative influence during a purchase decision, which precludes interviewing all members together.

Learning Objective 10.3: To understand the family life cycle.

The family life cycle represents the life stages of a typical family. It is a composite variable that combines marital status, size of family, age of family members (focusing on the age of the oldest or youngest child), and employment status of the head of household, and then classifies the family into a “typical” stage. The ages of the parents and the relative amount of disposable income are inferred from the family’s stage in the cycle. The family life cycle starts with bachelorhood/bachelorette and then moves on to marriage (and creation of the family unit).

Marriage usually leads to a growing family (with the birth of children) and later to family contraction (as grown children leave the household). The cycle ends with the dissolution of the family unit (due to the death of one spouse).

Learning Objective 10.4: To understand the consumer behavior of nontraditional families and households.

Some living arrangements today cannot be categorized as “typical.” Families that do not readily fit into the family life cycle include childless couples, people who marry late in life, young people who continue to live with their parents or return after having moved out, and divorced couples. Living situations that are not legally defined as families (e.g., couples who live together but are not married) include unmarried couples, single parents, and unmarried gay spouses. The number of nonfamily households has been on a rather steep rise, which represents a marketing dilemma: Marketers of many products must now acknowledge the existence of nontraditional household segments, but must do so without offending members of traditional families who might react negatively to portrayals of nontraditional households because of religion and beliefs as to what is or is not “right.”

Learning Objective 10.5: To understand the impact of social class on consumer behavior.

Social stratification (or social class) is the division of members of a society into a hierarchy of distinct status classes, so that members of each class have relatively the same status and members of all other classes have either more or less status. Some form of class structure (or social stratification) has existed in all societies throughout history. In contemporary societies, people who are better educated or have prestigious occupations have more status relative to other members of the same society. Belonging to a given social class is also reflected in differences in the values, attitudes, and behaviors (including consumer behavior) among members of different social classes. Social class is a continuum along which society’s members— usually as households—are placed into one stratum; that is, they are “assigned” to a social class according to their relative prestige within that society.

The measurement of social class is concerned with classifying individuals into social-class groupings. These groupings are of particular value to marketers, who use social classification as an effective way to identify and segment target markets. There are two basic methods for measuring social class: subjective measurement and objective measurement. Subjective measures

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rely on an individual’s self-perception, whereas objective measures use specific socioeconomic measures, either alone (as a single-variable index) or in combination with others (as a compositevariable index). Composite variable indexes, such as the Index of Status Characteristics and the Socioeconomic Status Score, combine a number of socioeconomic factors to form one overall measure of social-class standing.

Learning Objective 10.6: To understand the demographics, lifestyles, and consumption patterns of social classes.

Lifestyles, consumption patterns, leisure activities, hobbies, media exposure, and scores of other factors are homogeneous within and heterogeneous among social classes. There is no uniform definition or even general agreement as to how many distinct classes depict the class structure of the U.S. population accurately. Most early studies divided Americans into five or six social-class groups; other researchers have found nine-, four-, three-, and even two-class schemas suitable.

The choice of how many separate classes there are depends on the amount of detail that the researcher believes is necessary to adequately explain the attitudes or behavior under study. We identified seven social classes: 1. Upper-Upper class—inherited wealth and privilege; 2. Nouveau Riche—new money; 3. Upper-Middle class—high educational attainment and prestige; 4. Lower-Middle class—semi-professional, non-managerial employees and skilled crafts people, whose lifestyle is considered average; 5. Upper-Lower class—solidly blue collar, with highly routinized jobs and steady incomes; 6. Working Poor—low on the social ladder and economically insecure); and 7. Underclass—mostly unemployed and dependent on the government).

Learning Objective 10.7: To understand how to employ geodemographics to locate target markets.

Marketers use geodemography to identify the geographic locations of consumers belonging to different social classes. The rationale for using geodemographics is that families with similar socioeconomic status reside in the same neighborhoods or communities, as illustrated by the saying that “birds of a feather flock together.” Geodemographic segments are groups of households that have been identified, classified, and described according to zip codes and data from the U.S. Census and state and local governments. The most sophisticated geodemographic segmentation is Nielsen’s PRIZM®.

Marketers recognize that families operate as units in terms of consumption behavior, and many researchers have studied the dynamics of family decision-making. Specifically, marketers focus on husband–wife decision-making; the relative influence each family member has regarding consumption; children’s role in family decision-making; and the multiple roles family members can assume in buying, using, and maintaining their possessions. Most consumer studies classify family consumption decisions as husband-dominated, wife-dominated, joint, or autonomic decisions. The relative influence of a husband and wife on a particular consumer decision depends mainly on the product or service category. Over the past several decades, there has been

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a trend toward children playing a more active role in what the family buys, as well as in the family decision-making process. Measuring family decision-making is complex, because marketing research questionnaires are designed to be administered to only one respondent at a time. Also, family members may not all agree with each other’s perspective regarding the degree of relative influence regarding a given purchase decision; this fact also precludes interviewing all members together.

CHAPTER OUTLINE INTRODUCTION 1. Family and social class are two reference groups that have a powerful impact on consumer behavior. a) Family is two or more persons related by blood, marriage, or adoption who reside together. b) Social class is the division of members of a society into a hierarchy of distinct status classes, in which members of a class have relatively the same status and members of all other classes have more or less status. *****Use Key Terms family, social classHere; Use Figures #10.1A and 10.1B Here***** Family and Consumer Socialization 1. Socialization refers to the process of making people behave in a way that is acceptable to

their society a) In the case of young children, this process includes imparting to children the basic values and modes of behavior consistent with the culture (moral principles, interpersonal skills, dress and grooming standards, appropriate manners and speech, and the selection of suitable educational and occupational or career goals). b) Parental socialization responsibility seems to be constantly expanding.

2. The aspect of childhood socialization that is particularly relevant to the study of consumer behavior is consumer socialization, which is defined as the process by which children acquire the skills, knowledge, and attitudes and experiences necessary to function as consumers. a) Many preadolescent children acquire their consumer behavior norms through observation of their parents and older siblings who function as role models and sources of cues for basic consumption learning.

In contrast, adolescents and teenagers are likely to look to their friends for models of b) c) acceptable consumption behavior.

Shared shopping experiences (i.e., co-shopping is when mother and child shop together) also gives children the opportunity to acquire in-store shopping skills.

3. A socialization agent is a person or organization involved in the socialization process “because of frequency of contact with the individual and control over the rewards and punishments given to the individual. “

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a) Mothers are generally considered to be stronger consumer socialization agents than

their husbands, because they tend to be more involved with their children, and are more likely to mediate their children’s exposure to commercial messages. b) Consumer socialization of children does not function identically in all families. *****Use Key Terms consumer socialization and socialization agent Here; Use Learning Objective #10.1 Here; Use Review and Discussion Question #10.1 Here; Use Figures #10.2, #10.3 and #10.4 Here; Use Table #10.1 Here; ***** 4. Parental styles influence children’s development and consumer socialization. a) Parental styles are classified along two dimensions:

i) permissive vs restrictive. ii) very nurturing vs. non-nurturing. b) Four parental styles include: i) Indulgent parents ii) Neglecting parents iii) Authoritative parents iv) Authoritarian parents *****Use Key Terms indulgent parents, neglecting parents, authoritative parents, authoritarian parents Here; Use Figure #10.3 Here***** 5. Consumer socialization is learning.

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7.

8.

9.

a) Materialism increases from middle childhood to early adolescence then declines from early to late adolescence. b) There is an inverse relationship between self-esteem and materialism in children and adolescents.

Socialization begins in early childhood and extends throughout a person’s life. a) Adolescents may become skeptical about marketing. b) Life changes (marriages, births, pet adoptions) also affect socialization.

Product preferences and brand loyalties are often transferred from one generation to another, which is known as intergenerational brand transfer.

There are three stages to consumer socialization: a) Perceptual (3-7 years) b) Analytical (7-11 years) c) Reflective (11-16 years) Families have supportive functions: economic well-being, emotional support, and suitable family lifestyles. a) Economic well-being: Providing financial means to its dependents is unquestionably a b) basic family function. c) Emotional support: The provision of emotional nourishment (including love, affection, and intimacy) to its members is an important core function of the contemporary family.

Suitable Family Lifestyles: Another important family function in terms of consumer behavior is the establishment of a suitable lifestyle for the family. .

*****Use Figures #10.4, #10.5 Here*****

Family Decision-Making and Members’ Roles 1. Marketers recognize that families operate as units in terms of consumption behavior. making, children’s role in family decision-making, etc.).

2. Marketers study the dynamics of family decision making (e.g. husband-wife decision*****Use Learning Objective #10.2 Here***** 3. Four consumption patterns of husband-wife decision-making. a) Husband dominated b) Wife dominated c) Joint decisions d) Autonomic decisions 4. The relative influence of a husband and wife on a particular consumer decision depends in part on the product and service category. a) The relative influence has changed over time. b) Husband-wife decision-making also appears to be affected by cultural influence. *****Use Key Termshusband-dominated decisions, wife-dominated decision, joint decisions, and autonomic decisions Here ***** 5. Over the past several decades, children have played a more active role in what the family buys, as well as in the family decision-making process. a) This shift in influence has occurred as a result of families having fewer children, more dual-income couples who can afford to permit their children to make a greater number of the choices, and the encourage of the media to allow children to “express themselves.” b) The strategies used by children to influence their parents’ food purchasing decisions included such persuasive strategies as: pressure, exchange, rational, consultation and ingratiation.

6. Children are three markets; marketers can apply the framework in Table 10.2 7. Adult children who care for aging parents may help assist with decision making.

8. Family members play different roles in buying decisions. a) Parents are gatekeepers b) Children might be influencers, deciders, buyers, preparers, and users depending on the product category. c) Maintainers and disposers also participate. ***** Use Review and Discussion Question #10.2 Here; Use Hands-on Assignment #10.9 Here ***** The Family Life Cycle .

1. The family life cycle (FLC) represents the life stages of a typical family. a) The FLC is a composite variable created by systematically combining such commonly used demographic variables as marital status, size of family, age of family members (focusing on the age of the oldest or youngest child), and employment status of the head of household. *****Use Key Term family life cycle (FLC) Here; Use Learning Objective #10.3 Here; Use Review and Discussion Question #10.3 Here ***** 2. The model has five basic stages. a) Bachelorhood. Young single adult living apart from parents. b) Honeymooners. Young married couple. c) Parenthood. Married couple with at least one child living at home. d) Post-parenthood. An older married couple with no children living at home. e) Dissolution. One surviving spouse. *****Use Key Terms bachelorhood, honeymooners, parenthood, post-parenthood, dissolution Here; Use Figure #10.9 Here**** Nontraditional Families and Non-Family Households 1. Marketers distinguish between two type of families or households that are not typical. a) Nontraditional families do not readily fit into the family life cycle b) Non-family households are not legally defined as families nontraditional families, non-family *****Use Learning Objective #10.4 Here; Use Key Terms household; Use Figure #10.10 Here***** 2. When households undergo status changes, they become attractive targets for many marketers.

3. Same-gender families are a lucrative market for many marketers. *****Use Figures #10.12A and #10.12B Here***** Social Standing and Consumer Behavior 1. Social class is the division of members of a society into a hierarchy of distinct status classes, so that members of each class have relatively the same status and members of all other classes have either more or less status. a. Some form of class structure or social stratification has existed in all societies throughout the history of human existence. b. Social class can be thought of as a continuum – a range of social positions on which each member of society can be placed – researchers have preferred to divide the continuum into a small number of specific social classes, or stratum. .

*****Use Learning Objective #10.5 Here; Use Key Term social class Here***** 2. Researchers define each social class by the amount of social status or prestige the members of that class have in comparison to members of other social classes. Status is composed of: a. Wealth (economic assets) b. Power (degree of influence over others) c. Esteem 3. To secure an understanding of how status operates within the minds of consumers, researchers have explored the idea of social comparison theory: individuals quite normally compare their own material possessions with those owned by others in order to determine their relative social standing. The level of identification with a given social class is 4. social-class consciousness. *****Use Key Termsocial-class consciousness Here ***** 5. There is no general agreement as to how to measure social class. a. The choice of how many separate classes to use depends on the amount of detail that the researcher believes is necessary to explain adequately the attitudes or behavior under study. b. Objective measures consist of selected demographic or socioeconomic variables concerning the individual(s) under study.

1. These are measured through questionnaires of factual questions.

2. The most frequently used questions are about occupation, amount of income, and education.

3. Sometimes geo-demographic data in the form of zip codes and residence-neighborhood information is added.

4. Occupation is a widely accepted and probably the best documented measure of social class, because it reflects occupational prestige.

5. The level of a person’s formal education is another commonly accepted approximation of social class standing (the more education a person has, the more likely it is that the person is well paid).

6. Researchers who favor income as a measure of social class use either amount or source of income. a. A recent effort to differentiate between “income” and “wealth,” points that wealth, not income, is the primary driver to financial freedom. b. Wealth and money are not the same; for wealth you need to network and build personal alliances.

7. You need to find ways to minimize your taxes because taxes reduce your ability to create wealth.

6. A multivariable index systematically combine a number of socioeconomic variables to form one overall measure of social-class standing. a. They seem to better reflect social class complexity than single element indicators. b. Two of the more important composite indexes are: .

i. Index of Status Characteristics—the Warner Index of Status Characteristics (ISC)—is a classic composite measure of social class that weighs occupation, source of income, house type, and dwelling area ii. equality of neighborhood. Socioeconomic Status Scores—the United States Bureau of Census developed the Socioeconomic Status Score (SES) that combines the socioeconomic variables of occupation, family income, and educational attainment. *****Use Key TermsIndex of Status Characteristics, and Socioeconomic Status Scores Here***** America’s Social Classes 1. Lifestyle factors (shared beliefs, attitudes, activities, and behaviors) distinguish members of a

social class from members of other social classes. *****Use Learning Objective #10.6 Here; Use Figure 10.14 Here; Use Review and Discussion Question #10.8 Here ***** 2. Individuals can move either up or down in social class standing from the class position held

by their parents. a) Upper-Upper class—inherited wealth and privilege; b) Nouveau Riche—new money; c) Upper-Middle class—high educational attainment and prestige; d) Lower-Middle class—semi-professional, non-managerial employees and skilled crafts people, whose lifestyle is considered average; e) Upper-Lower class—solidly blue collar, with highly routinized jobs and steady incomes; f) Working Poor—low on the social ladder and economically insecure); and g) Underclass—mostly unemployed and dependent on the government).

3. Most Americans think of upward mobility. a) This results in the upper classes being the reference group for many ambitious men and women in America. b) Recognizing these aspirations, marketers frequently incorporate higher-class symbols into their advertising.

4. Social class mobility also contributes to products and services filtering down from a higher level to a lower one trickle-down ( effect ). *****Use Key Termsupward mobility, trickle-down effect Here ***** 5. It is not easy to define the borders of what is meant by “middle class.”

a) The dynamic nature of social class in the United States has been working against the middle class. b) There is mounting evidence that the “middle class” is shrinking in America.

6. Lower-income, or downscale consumers are households earning $35,000 or less. .

a) Downscale consumers are more brand loyal than wealthier consumers because they can not afford to make mistakes in switching to unfamiliar brands. b) Marketers need to be sensitive to the reality that downscale consumers often spend a higher percentage of their available incomes on food than do their middle-class counterparts. c) Food is an important purchase area for low-income consumers because it represent an area of “indulgence.”

7. Most people dress to fit their self-images, which include their perceptions of their own social class membership.

8 Saving, spending, and credit card usage all seem to be related to social class standing. . Social class groupings differ in terms of how they transmit and receive communications.

9 a) When it comes to describing their world, lower-class consumers tend to portray it in . rather personal and concrete terms, although middle-class consumers are able to describe their experiences from a number of different perspectives. b) Such variations in response indicate that middle-class consumers have a broader or more general view of the world, although lower-class consumers tend to have a narrow or personal view, seeing the world through their own immediate experiences.

10. Downward mobility, defined as moving down, rather than up the social ladder, is taking place with today’s second youngest generation; they will experience lower living standards than their parents. *****Use Key Termdownward mobility Here ***** Geodemography and Social Class 1. Marketers use geo-demography to identify the geographic locations of consumers belonging to various social classes. a) “Birds of a feather flock together” b) Geodemographic segments have been classified and described according to zip codes and data from census sources. c) PRIZM is the most sophisticated geodemographic segmentation, as it combines socioeconomic and demographic factors with buying and media habits. *****Use Key Termsgeodemographic segments, PRIZM Here *****

REVIEW AND DISCUSSION QUESTIONS 10.1 How does the family influence the consumer socialization of children? What role does television advertising play in consumer socialization?

The family influences the consumer socialization of its children by imparting values, beliefs, attitudes and modes of behavior that relate to consumption through either direct instruction of children, or indirectly as children imitate the behavior of other family members. It was found that TV commercials have great influence on children. Thus, television advertising conveys .

consumption-related values and is part of the consumer socialization of children. This role of TV is important to both marketers and legislators because of the sometimes rather fine distinction between what constitutes effective marketing and potentially harmful influence on children. Individual, Moderate, 10-15 minutes Learning Objective 10.1: To understand consumer socialization. AACSB: Reflective thinking

10.2For many years, the key subjective measurement of social class has been particular items of value, such as the type of car, brand of clothing, and the technology that an individual has access to. Looking at recent advancements in technology and consumer buying power, is this still one of the measures used today?

Students should define what a social class is and the specific items they feel suit these social groups. Items could include branded clothes, cars, phones, etc. While discussing advances in technology and consumer buying power, ask students if they are different from their parents, and if yes, how. Do they feel that they form another social group or do they see themselves adapting into their parents’ group? Individual, Moderate, 20-25 minutes Learning Objective 10.6: To understand how to measure social class and segment consumers accordingly. AACSB: Application of knowledge

10.3As individuals reach the age of retirement, they become more dependent on services.

These services can be provided by both private and public sectors. Identify which services are required, and how involved the government should be in providing these services.

Students should identify postretirement service segments and the marketing opportunities in these segments, which could be associated with healthcare, hobbies, travel, nondegree coursework, and so on. Individual, Moderate, 10-15 minutes Learning Objective 10.1: To understand the family as a consumer socialization agent. Learning Objective 10.3: To understand the family life cycle in market segmentation and targeting.

AACSB: Reflective thinking

10.4 Why do marketing researchers use objective, rather than subjective, measures of social class?

The is often preferred objective methodbecause: a) The objective approach is based on consumers’ responses to one or more factual questions about socioeconomic items (e.g., occupation, income, education), which can be easily included in most self-administrated .

marketing research questionnaires. b) Most media have socioeconomic profiles of their audiences; therefore, objective measures are useful for matching media audiences and target markets. c) Because the subjective method relies on self-perception, it tends to produce an overabundance of people who classify themselves as “middle class” or “don’t know.” d) The reputational method relies on an informed participant to make judgments concerning the social class membership of others and, therefore, it is limited to small community studies. On the other hand, a marketing research study that utilizes a sample drawn from a large population is generally required to yield the kind of findings needed for formulating marketing strategies. Individual, Moderate, 5-10 minutes Learning Objective 10.5: To understand the impact of social class on consumer behavior. AACSB: Reflective thinking

10.5 A composite-variable index is used to better understand social class. Explain and evaluate each element of the index. The three key elements are: a. Occupation b. Education c. Income Students should evaluate how well the three elements can be used to understand the characteristics of a social class and identify a social group with the same characteristics.

Individual, Moderate, 5-10 minutes Learning Objective 10.6: To understand how to measure social class and segment consumers accordingly.

AACSB: Analytical thinking

10.6 Which status-related variable—occupation, education or income—is the most appropriate segmentation base for: (a) family vacations, (b) opera subscriptions, (c) subscribing to online.wsj.com, (d) shopping at Whole Foods supermarkets, (e) buying from freshdirect.com, (f) purchasing new models of the iPhone, and (g) becoming a member of a 24-hour fitness center?

Occupation is the most appropriate segmentation base for personal computers and cellular telephones because these products reflect a person’s career and profession.

Education should be used to segment markets for opera and magazine subscriptions and for products and services that are related to physical health (e.g., fat-free foods, health clubs) because such purchases reflect a person’s educational attainment.

Expensive vacations (e.g., flying to Europe or winter weekend trips to an island with a warm climate) are non-necessity, luxurious activities that only individuals with very high incomes can afford.

Individual, Moderate, 20-25 minutes Learning Objective 10.6: To understand the demographics, lifestyles, and consumption patterns of social classes.

AACSB: Application of knowledge .

10.7 To what extent is technology an aspect of social class? Does it require its own social group?

Technology is a major part of our society today. The use of technology has replaced most of our communication processes, and individuals lacking these skill sets are seen as classless. Peer pressure to gain the latest technological gadgets, such as smartphones and tablet computers, is extremely high, and failure to conform may lead to classlessness.

Individual, Moderate, 15-20 minutes Learning Objective 10.8: To understand how to measure social class and segment consumers accordingly. AACSB: Application of knowledge

10.8Lifestyles, consumption patterns, leisure activities, hobbies, media exposure, and scores of other factors are homogeneous within social classes and heterogeneous among them. What age subculture and social class subculture do clothing brands such as UNIQLO and OLD NAVY target for their respective winter line of clothing? How different are they?

UNIQLO is owned by one of Japan’s top companies, Fast Retailing Co. Ltd. It is a designer, manufacturer, and retailer of clothing accessories for women, men, and kids. Its Heattech line of winter apparels is popular with consumers who are looking for lightweight, comfortable- yet-stylish pieces to wear during the winter season. It targets Generations X, Y, and Z and the upper-middle class and high-income earners. Its customers are well-travelled, socially active, and culturally aware. OLD NAVY is a brand owned by American multinational corporation Gap Inc., which is the largest specialty retailer in the United States. It offers a variety of products such as apparels, accessories, and personal care products for men, women, children, and babies. OLD NAVY’s winter coats and jackets target age subcultures such as parents and to a lesser extent, young adults and teens, generally falling within lower-middle to middle-income earners. Individual, Moderate, 15-20 minutes Learning Objective 10.7: To understand the demographics, lifestyles, and consumption patterns of America’s social classes. AACSB: Application of knowledge

HANDS-ON ASSIGNMENTS 10.9 In this chapter, we have considered how parents and siblings play a role in consumer socialization of their children and young brothers and sisters, and how adults continue to be socialized throughout their lives. However, we have not considered how children (especially teens and young adults) influence the socialization of their parents. .

List ten ways in which you have contributed to or influenced the ongoing socialization of your parents.

Instructor’s Discussion This exercise will illustrate the wide variation of roles that family members play in the family consumption decision-making process.

Individual, Moderate, 10-15 minutes Learning Objective 10.1: To understand consumer socialization.

AACSB: Application of knowledge

10.10 Discuss and evaluate the social changes in the last 100 years. Consider global events such as the two World Wars, the global recessions of the 1930s and 2008, technology advancements, and changes in work−life balance. What has influenced changes in society over time, and how has family as a social institution influenced this change?

Please provide examples.

Instructor’s Discussion Students should consider the major social changes over the last 100 years. There should be a common thread across the responses. There was a major depression in the U.S. economy during the 1930s. World War I had recently concluded and the imperialist nations were strengthening their military defenses in anticipation of World War II. As a result, spending power was at an all-time low. The 1940s saw World War II culminate, only to be followed by a similar economic situation as before. Rationing was used to ensure there was food available to feed the masses.

The 1950s, 1960s, and 1970s saw the economy improve. Trade and commerce were on the rise an and the introduction of modern technology such as the commercial aircraft meant increased level of interconnectivity, which essentially meant newer and more easily accessible markets.

The 1980s and 1990s saw the introduction of the Internet and the IT revolution. The family unit with began to change. The world became a much smaller place where communicating family and friends abroad became easier. No longer was there a need to write letters and wait for them to reach their destination; clicking a button sent an email in less than a few seconds.

The changes in the 2000s have been huge as well. Family units have become more distorted and technology has become a major factor in the shaping of societal structures. Every household has a range of technological products such as phones, tablets, PCs, laptops, and . iPods.

What has influenced the changes will receive a number of responses. The key influences should include the following: MediaWith the help of media, products can be promoted in a favorable market directly.

InnovatorsEarly innovators purchasing and promoting new products within social groups

IncomeOver the last century, the flow of income has increased and the overall standard of living has improved, which means families are always striving to do better.

Individual, Moderate, 20-25 minutes Learning Objective 10.3: To understand the role of the family life cycle in market segmentation and targeting.

Learning Objective 10.4: To understand the consumption patterns of non-traditional families and non-family households.

AACSB: Application of knowledge 10.11 Discuss what is meant by the term “social status”? What are the features you can identify in an individual’s social group? Do you feel you belong to a social group?

Instructor’s Discussion Students should begin by defining and understanding the term “social status.” There will be differences of opinion as the topic is subjective and draws from one’s personal experiences and one’s own understanding of society. Students should look at the different social groups and the constituents that can be identified as belonging to those groups. This will again have varied responses based on personal experiences. The key responses we are looking for are based on internal and external features of individuals.

Internal features are more difficult to spot than external features. They consist of features based within family units, including the methods of communication and both financial and cultural capital. External features are much easier to spot. These can be the power individuals possess, such as political power, social influence, and work-based power (management roles). Prestige is another feature, such as the manner of dress, clothing styles, cars, the number of leaves taken, and holiday destinations. Education attainment is another feature; the level of education and the university one graduates from could influence the type of social group one belongs to. Students should explore the above items and discuss the features of the social group they belong to. The features could be all of the above, including friends and the places they frequent socially. Individual or Group, Moderate, 45-60 minutes Learning Objective 10.5: To understand how to measure social class and segment consumers accordingly. AACSB: Application of knowledge

S.T.A.R. PROJECTS Ethical Issues in Consumer Behavior .

S.T.A.R. Project #1 The National Beverage Company (see www.nationalbeverage.com) makes the popular Shasta and Faygo drinks. The company also produces water products and juices. The company has provided low cost alternatives to store brands and more heavily advertised national brands (such as Coca-Cola and Pepsi-Cola) for a number of years. The Shasta brand is especially popular with cost-conscious moms. Assume that National Beverage is considering a product line expansion to include a wine cooler product. The product will be named Shasta Cooler—“Shasta with a punch!” The rationale behind the move is to capitalize on the popular Shasta name, expand into the rapidly growing wine cooler field, and to increase profits. Assume the company believes that this spin-off brand will also be popular with cost conscious consumers. Evaluate the possibility of this line expansion from an ethical perspective. Considering what you have learned about groups and the family, make a decision for the company. Be sure to explain your position and describe any modifications that you might feel are necessary.

Instructor’s Discussion Students should see that, although adding the wine cooler product might be an opportunity for the company, confusion with the popular family-oriented product is bound to occur. Is this right or wrong? Will the product’s name and slogan be the main issue? Have students discuss and comment. Be sure to discuss the responsibilities that companies owe to their customers.

Small Group Projects S.T.A.R. Project #2 The modern grocery store has undergone some dramatic changes that have mirrored the demographic changes that have occurred in our society over the last ten to fifteen years. Family units, singles, and relationships between couples have changed and are continuing to change.

Your group assignment is to go to a local grocery store and observe the product categories on the grocery shelves. Consider product line mixes and any perceived changes from a few years ago.

For example, which is more dominant—single-serving items or multiple-serving items? Assess what you see. Next, interview a store manager and get his or her impressions on the changing grocery customer. Match this material to the information provided in the chapter. Write a short paper that summarizes your observations, your interview, and your discoveries.

Instructor’s Discussion This is a good project to help the group master observation and assessment. The group will find that many changes have occurred in the grocery store. How does information technology assist the grocery store in tracking changes (e.g., bar codes)? Read the best of the papers to the class and discuss the perceived changes. Do the changes match the information provided in the chapter?

S.T.A.R. Project #3 Ask any bride what the major problem with holding her wedding was and she will probably respond, “the planning and all the tension it brought.” As experts in human behavior studied this problem, a simple solution was derived — have someone else do the planning and bear the .

tension. Today, this is all possible (with a minimal cost) by using the Internet. Many brides-to-be have been thrilled to discover that such Web sites as The Knot (www.theknot.com) or Brides.com that take the burden off of their beautiful shoulders and place it where it should be— with the experts. Does the process work? Your assignment is to see. In other words, plan your own wedding using one of the sites above. Once you have made the attempt, write a short evaluation paper that describes your experience. What connections did the merchants involved attempt to make with you as a potential consumer? What do you perceive to be the principle value of such sites? What problems did you encounter? What other services besides wedding planning could such sites undertake?

Instructor’s Discussion Yes, even males find this assignment interesting. Students can begin the assignment by listing all the advantages to using such services. Follow with disadvantages. How do the two lists compare? Do such services have a role to play in other events? Could funerals, moving, child birthing, choosing a college, picking a mate, or other tension events be aided through such sites?

Students normally have fun discussing this subject. As I have discovered, it is not unusual for a bride-to-be to plan her whole wedding in such a manner. Would there be a cultural stigma associated with such a bold move? Think about it.

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CHAPTER 11 Cultural Values and Consumer Behavior

LEARNING OBJECTIVES 11.1 11.2 11.3 11.4

To understand culture’s dynamics and impact on consumer behavior.

To understand cultural learning.

To understand the means to study cultural values.

To understand core cultural values and their marketing applications.

CHAPTER SUMMARY Learning Objective 11.1: To understand culture’s dynamics and impact on consumer behavior.

Culture represents a society’s values, customs, norms, arts, social institutions, and intellectual achievements of a particular society. Cultural values express the collective principles, standards, and priorities of a community. Most of the promotional messages across the world reflect, to some degree, the cultural values of the target audiences. Cultures always evolve, so marketers must monitor the sociocultural environment so as to market existing products more effectively and develop new products that are congruent with changing cultural trends. Understanding cultural changes is not an easy task because many factors produce cultural changes within a given society, including new technologies, population shifts, resource shortages, and customs from other cultures.

Learning Objective 11.2: To understand cultural learning.

Society’s members share their values and customs through a common language, although some cultures include more than one language. We learn cultural norms and customs mostly from family and peers, and begin at a very young age to understand that some behaviors are appropriate and others are not. Anthropologists have identified three forms of cultural learning: formal learning, informal learning, and technical learning. Our ethical values are also formed during childhood, as we learn them from parents, teachers, and other significant adults.

Anthropologists distinguish between enculturation (learning one’s own culture) and acculturation (learning about a new or foreign culture). The contents of media, advertising, and marketing reflect cultural values and convey them to all members of society very effectively. Given Americans’ extensive exposure to print, broadcast, and online media, as well as the easily ingested and entertaining presentation formats of their contents, media and advertising are powerful vehicles for imparting cultural values.

Cultural values are reflected in societies’ languages, symbols, communications, and artifacts. A symbol is anything that represents something else; symbols can be either verbal or nonverbal.

Words are verbal symbols, and the text of any ad is a composition of symbols. In addition to language and symbols, cultures include ritualized behaviors. A ritual is a symbolic activity

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consisting of a series of steps (multiple behaviors) occurring in a fixed sequence and repeated periodically.

Learning Objective 11.3: To understand the means to study cultural values.

The most widely used measurements of cultural values are content analysis, consumer field observation, and value measurement instruments. Content analysis focuses on the content of societies’ verbal, written, and pictorial communications, including promotional messages. When examining a specific society, anthropologists frequently study cultures through field observation, which consists of observing the daily behavior of selected members of a society. Based on their observations, researchers draw conclusions about the values, beliefs, and customs of the society under investigation. There are also structured, self-administered questionnaires that measure individuals’ cultural values, such as the Rokeach Value Survey, the Values and Lifestyles instrument, and Gordon’s Survey of Personal and Interpersonal Values.

Learning Objective 11.4: To understand core cultural values and their marketing applications.

Americans’ and other societies’ core values—often employed as persuasive appeals in advertising campaigns—include achievement and success, time and activity, efficiency and practicality, progress, comfort and pleasure, individualism and conformity, freedom of choice, humanitarianism, youthfulness, fitness and health, and environmental concerns.

CHAPTER OUTLINE Introduction 1. Culture is the collective values, customs, norms, arts, social institutions and intellectual achievements of a particular society. a) Cultural values express the collective principles, standards and priorities of a community. b) Promotional messages often reflect the target audiences’ cultural values.

2. The study of culture is a challenging undertaking because its primary focus is on the broadest component of social behavior in an entire society. *****Use Figures #11.1 and #11.2 Here; Use Review and Discussion Question 11.1 Here*****

Culture’s Role and Dynamics 1. Culture , the collective values, customs, norms, arts, social institutions, and intellectual achievements of a particular society which express its principles, standards, and priorities, is often referred to as an “invisible hand” that guides the actions of people of a particular society. There are three “levels” of cultural norms: 2.

.

Supranational level – reflects the underlying dimensions of culture that impact multiple cultures or different societies. A lifestyle matrix for four segments of global youth (1424) includes: i) In-crowd – privileged and seeking approval from others ii) Pop mavericks – word-of-mouth spreads rapidly; passion, individuality, instant gratification and personalization important iii) Networked intelligentsia – hub of online social networks; revolution, creativity, deconstruction iv) Thrill renegades – infamy, adrenaline, anarchy National level factors – such as b) shared core values, customs, personalities, and predispositional factors that tend to capture the essence of the “national character” of the citizens of a particular country.

Group Level factors – are concerned with various subdivisions of a country or c) society. They might include subcultures’ difference, and membership and reference group differences. a)

***** Use Learning Objective #11.1 Here***** 3. Researchers identified four segments of global youth aged 14 to 24: a) In-Crowd

b) Pop Mavericks c) Networked Intelligentsia d) Thrill Renegades 4. Marketers should periodically reconsider why consumers are doing what they do, who are the purchasers and users, when they shop, how and where they can be reached by the media, and what new product and service needs are emerging. Culture expresses and 5. satisfies the needs of societies. a) It offers order, direction and guidance for problem solving by providing methods of b) satisfying physiological, personal, and social needs. c) Culture determines whether a product is a necessity or discretionary luxury.

Culture dictates which clothes are suitable for different occasions. d) When a specific standard no longer satisfies the members of a society or reflects its needs, it is modified or replaced.

Learning Cultural Values 1. We learn cultural norms and customs mostly from family and peers.

2. There are three distinct forms of learning: a. Formal learning—adults and older siblings teach a young family member “how to behave.” b. Informal learning—a child learns primarily by imitating the behavior of selected others. c. Technical learning—teachers instruct the child in an educational environment as to what, how, and why it should be done.

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formal learning, informal *****Use Learning Objective #11.2 Here; Use Key Terms learning, technical learning Here ***** 3. The learning of one’s own culture is known as enculturation . enculturation is consumer socialization.

4. The learning of a new or foreign culture is known asacculturation .

5. A consumer can be a “foreigner” in his or her own country.

A key component of

*****Use Key Terms acculturation and enculturation Here ***** 6. Marketing influences cultural learning.

7. Products can become cultural icons and help provide a cultural identity.

8. Social media conveys and shapes cultural values; influential people communicate.

9. A symbol is used to convey desired product images or characteristics; it is anything that stands for something else. a) Symbols can be verbal or nonverbal. b) Symbols may have several, even contradictory, meanings. c) Marketers use symbols to convey desired product images or characteristics. d) Price and channels of distribution (including the type of store where the product is sold) are symbols of the marketer and the marketer’s product. *****Use Key Term symbol Here***** 10. A ritual is a type of symbolic activity consisting of a series of steps occurring in a fixed sequence and repeated over time. a. They can be public or private, elaborate, religious, or civil ceremonies, or they can be mundane. b. Rituals tend to include ritual artifacts (products) that are associated with, or somehow enhance, performance of the ritual. c. Ritualistic behavior is any behavior that is made into a ritual. *****Use Key Termsritual and ritualistic behavior Here; Use Figures #11.4 and #11.5 Here; Use Assignment #11.8 Here***** Measuring Cultural Values 1. There are a variety of measures of culture, including: content analysis, consumer field

observation, and value measurement instruments. *****Use Learning Objective #11.3 Here ***** 2. Content analysis focuses on the content of verbal, written, and pictorial communications. It

can be used to: a) Identify the intentions, focus, or communication trends of an individual, group or institution. .

b) Describe attitudinal and behavioral responses to communications. c) Determine psychological or emotional state of persons or groups.

3. When examining a specific society, anthropologists frequently study cultures through field observation, which consists of observing the daily behavior or selected members of a society and has the following characteristics: a) It takes place within a natural environment. b) It is performed sometimes without the subjects’ awareness. c) It focuses on observation of behavior. d) Instead of just observing behavior, researchers sometimes become participantobservers, or active members of the environment they are studying.

4. In addition to fieldwork methods, depth interviews and focus groups are also quite often employed by marketers to study social and cultural changes.

5. Researchers exploring the symbolic meanings of food conducted 30 in-depth interviews suggested there are six types of foods: a) Symbolic b) Individual c) Social d) Ritualistic e) Context f) Experience *****Use Key Termscontent analysis, field observation, and depth interviews Here ***** 6. Recently there has been a gradual shift away from inferring characteristics about culture via

observation to directly measuring values by means of survey research. a) Value instruments ask people how they feel about such basic personal and social concepts as freedom, comfort, national security, and peace. b) The Rokeach Value Survey is a self-administered value inventory, which is divided items, designed to measure the relative into two parts. i) Part one consists of 18 terminal value importance of end-states of existence (personal goals). ii) Part two consists of 18 instrumental value items, designed to measure the basic approaches an individual might take to reach end-state values. c) Gordon’s Surveys of Personal and Interpersonal Values measures values that determine how people cope with their daily lives. i) One survey is forpersonal values . ii) One survey is for interpersonal values . *****Use Key Terms Rokeach Value Survey, terminal values, interpersonal values, and Gordon’s Surveys of Personal and Interpersonal Values Here; Use Figure #11.6 Here ****** Core Cultural Values 1. Identification of core values in the United States is a very difficult task for several reasons. .

a) The United States is a very diverse country consisting of a variety of subcultures, each of which interprets and responds to society’s basic beliefs and values in its own specific way. b) The United States is a dynamic society, as illustrated by changes due to rapid technological developments, which makes it difficult to monitor changes in cultural values. c) Finally, the existence of contradictory values in American society is somewhat confusing.

2. When selecting specific core values researchers are guided by three criteria: a) The value must be pervasive—accepted and used by a significant portion of the American people b) The value must be enduring—influencing the actions of Americans over an extended period of time c) The value must be consumer-related—providing insights that help marketing people understand the consumption actions of the American people. *****Use Key TermAmerican core values Here; Use Learning Objective #11.4 Here***** 3. The core values identified include achievement and success, time and activity, efficiency and

practicality, progress, materialism (comfort and pleasure), individualism and conformity, freedom of choice, humanitarianism, youthfulness, fitness and health. a) Achievement and Success i) These values have historical roots in the traditional Protestant work ethic, which considers work to be wholesome, spiritually rewarding, and an appropriate end in itself. ii) Research shows the achievement orientation is closely associated with the technical development and economic growth of the American society. iii) Individuals who consider a sense of accomplishment to be an important personal value tend to be achievers who strive hard for success. iv) Although closely related, achievement and success are different. a) Achievement is its own direct reward—it is satisfying to the achiever. b) Success implies an extrinsic reward—financial or status improvements. ii) Both achievement and success influence consumption. They often serve as social and moral justification for the acquisition of goods and services and the conspicuous consumption of symbols of personal accomplishments. b) Time and Activity i) Americans consider time valuable and feel it is important to be active and involved. ii) The premium on time affects consumption of convenience goods, including fast food. c) Efficiency and Practicality i) In terms of efficiency, Americans admire anything that saves time and effort. ii) In terms of practicality, Americans are generally receptive to any new product that makes tasks easier and can help solve problems. d) Progress is linked to the values reviewed earlier and the central belief that people can always improve themselves and change should be accepted, including new products or services designed to fulfill previously under- or unsatisfied needs. .

Materialism (comfort and pleasure) leads to the perception that material comfort and possessions signify attainment of “the good life” f) Individualism and Conformity i) Americans want to be themselves. ii) Self-reliance, self-interest, self-confidence, self-esteem, and self-fulfillment are all expressions of individualism. iii) Although Americans deeply embrace freedom of choice and individualism, they accept the reality of conformity. g) Freedom of Choice means the opportunity to choose from a wide range of alternatives and is reflected in the large number of competitive brands and product variations that can be found on the shelves of the modern supermarket or h) department store. Humanitarianism i) Americans tend to be charitable and willing to come to the aid of people less fortunate. ii) Consumer researchers have validated two scales that deal with attitudes toward helping others and attitudes toward charitable organizations. iii) Beyond charitable giving, other social issues have an impact on both what consumers buy and where they invest. iv) Many companies try to appeal to consumers by emphasizing their concern for environmental and social issues. i) Youthfulness: Americans tend to place an almost sacred value on youthfulness, so messages create a sense of urgency about retaining youth and avoiding aging. j) Fitness and Health: Americans are preoccupied with it and may feel it gives them control over their environment. e)

*****Use Figures #11.7 Here***** 4. Four distinct benefits donors received from monetary pledges to ALS were belongingness,

trust, social-practical motivation, and prestige.

5. Green marketing is producing and promoting reusable and eco-friendly products.

a) Virtually all companies have adopted at least some environmentally friendly practices in response to global awareness of climate change and its consequences for our planet. b) Many Americans consider buying environmentally sound products part of their duties as consumers and societal and cultural priority. c) Green attitudes do not always result in pro-environmental behavior. *****Use Key Termgreen marketing Here; Use Review and Discussion Question 11.11 Here ***** 6. Consumer environmental stewardship

is one’s personal sense of responsibility for the environment, accountability for purchases’ environmental impact, and willingness to sacrifice personal comfort for the good of the environment.

7. One study identified three types of “green” consumers: Environmental Activists; Organic Easters, and Economizers.

8. Another study identifies four groups of “green” consumers: True Greens, Donor Greens, Learning Greens, Non-Greens. .

*****Use Key Term consumer environmental stewardship Here; Use Tables 11.9A and 11.9B Here; Use Review and Discussion Question 11.6 Here *****

REVIEW AND DISCUSSION QUESTIONS 11.1 Distinguish between terminal and instrumental values and their subsets. What does this classification identify? According to the Rokeach typology, in terms of cultural orientation, individuals can belong to one of four types. Make a list of them, including the subsets, and analyze their characteristics.

The Rokeach Value Survey is a well-known classification system of values developed

by Milton Rokeach in 1968. It consists of two sets of values: terminal values and instrumental values. Terminal values reflect goals and desired states of existence, defined as ends, such as happiness, pleasure, freedom, and self-respect. Some terminal values focus on personal aspects, such as a comfortable or exciting life, happiness, and inner harmony; others target interpersonal factors, such as a world of peace and beauty or national security. Instrumental values, such as ambition, honesty, politeness, and responsibility, are the means to achieve the ends. The instrumental values examine competence, such as being ambitious, intellectual, and responsible, as well as being a moral person—forgiving, helpful, and polite. Individual, Moderate, 1520 minutes Learning Objective 11.4: To understand Americans’ core values and how to apply them to persuasive communications. AACSB: Application of knowledge

11.2 In what ways do the three forms of cultural learning differ from one another? How can each be used effectively in marketing and advertisements?

Anthropologists have identified three distinct forms of cultural learning. Formal learning takes place when parents, older siblings and other family members teach young family members how to behave. Informal learning takes place when children learn primarily by imitating the behavior of selected others, such as family, friends, or heroes and characters on film and TV. Technical learning happens when teachers instruct children in educational environments about what should be done, how it should be done, and why it should be done, in social as well as personal settings. Marketers might target parents with informative or educational advertisements so that they will tell their children that the products being marketed are acceptable for use or consumption. Marketers might use superheroes to endorse products, showing how the products help them defeat “bad guys.”

Marketers might use slice- of-life commercials to show children how to use products.

Individual, Moderate, 15-20 minutes Learning Objective 11.2: To understand language, symbols and rituals as expressions of a learned culture. AACSB: Application of knowledge

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11.3Malaysian Palm Oil Association (MPOA) is planning a persuasive advertising campaign to encourage consumers to switch diet of *teh tarik (literally “pulled tea”) to drinking coconut water. By measuring the influence of culture on consumer behavior (cultural, consumption and product-specific), explain how the data is useful to MPOA for their campaign planning.

The instructor should stress that there are links between cultural, consumption-specific, and product-specific values. The attitudes and values regarding coconut water are culturally derived. MPOA must convey the notion that the product-specific values of drinking coconut water are congruent with consumption-specific and cultural values.

Some of the possible links between cultural, consumption-specific, and product-specific values are: Cultural Values Consumption-specific Values Product-specific Values *symbol of prosperity *physical heath *natural nutritious drink with vitamins, minerals, amino acids and phytohormones *an auspicious fruit in *well being *good for consumption any several cultures time of the day and night *an active life *friendship

*enjoying life *Sense of belonging

*hydration capabilities *natural alternative to sports drink

Individual, Moderate, 25-30 minutes Learning Objective 11.3: To understand how to measure culture’s influence on consumer behavior.

AACSB: Application of knowledge 11.4 For each of the following products and activities listed below: a. List two relevant core values and explain your choices. b. Describe how each value either encourages or discourages buying the product or engaging in the activity.

The products and activities are: 1. Donating blood 2. Visiting tanning salons 3. Buying a smartphone 4. Buying a table device 5. Drinking diet beverages 6. Travelling overseas 7. Using sun protection products regularly 8. Buying a convection oven 9. Buying a pair of sneakers online 10. Following the latest fashions

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Core Values Humanitarianism Donating blood Visiting tanning salons Individualism Buying a smartphone Time Buying a tablet device Drinking diet beverages Health Travelling overseas Achievement Progress Practicality Progress Fitness Health Individualism Activity Using sun protection products regularly Health Youthfulness Time Buying a convection oven Buying a pair of sneakers online Progress Following the latest fashions Fitness Efficiency Materialism Individualism

Encourages/Discourages Encourages Discourages Encourages Discourages Encourages Encourages Encourages Encourages Encourages Discourages Encourages Encourages Encourages Encourages Encourages Encourages Encourages Encourages Encourages Encourages

Individual, Moderate, 25-30 minutes Learning Objective 11.4: To understand core cultural values and their marketing applications.

AACSB: Application of knowledge 11.5 Food companies are now modifying their products to cater to health-conscious consumers. Why? Health and fitness has been a significant part of Western culture. As a result of the far- reaching effects of American media, healthcare has become a point of cultural reference in contexts and countries that have adopted the American way of life.

With a rise in the number of health clubs; fitness-related services; wearable technologies that monitor heart rate, body fat, and calories; and diet programs, consumers have become more conscious of their lifestyles. Companies make decisions about the kind of products to offer based on these trends. They often introduce variants of their products that are “light,” “fat-free,” “no- preservatives,” etc. Individual, Easy, 7-10 minutes Learning Objective 11.5: To understand green marketing and ecologically responsible consumption. AACSB: Reflective thinking

11.6 Do consumers react differently to green products depending on their countries of origin? If so, why? .

Sensitivity and interest toward the environment has become an important feature in Western societies, and now many companies use it in their marketing to enhance the appeal of their products. However, this is an aspect that substantially varies across cultures, as not all of them are equally receptive in the same way to it. China, for example, has been traditionally been less concerned by environmental issues than others, but this may be changing. China has started paying more attention to environmental concerns, representing a huge opportunity for many companies in the country. The companies are also responding to increased consumer awareness of global warming and the desire to be more eco-conscious, which results in greater demand for green products.

Individual, Easy, 5-7 minutes Learning Objective 11.5: To understand green marketing and ecologically responsible consumption. AACSB: Reflective thinking

HANDS-ON ASSIGNMENTS 11.7 Identify a singer or singing group whose music you like and discuss the symbolic function of the clothes that person (or group) wears.

Instructor’s Discussion This exercise will illustrate how nonverbal symbols communicate cultural values. Depending on your current taste in music you might want to pick a couple of students to be the monitors of the accuracy of the students’ analysis. Or, show YouTube music videos in class and have the students comment. Individual or Group, Moderate, 20-25 minutes Learning Objective 11.2: To understand cultural learning.

AACSB: Application of knowledge

11.8Rituals and routines are highly subjective and culture-specific. For example, an Asian breakfast may be different from a Western one in terms of food selection, time of day, and favored location. With the help of online research, identify the major differences in the two by preparing a list of the respective features and offering a suitable explanation for them. What values do the features transmit?

Instructor’s Discussion Prepare to share a couple of your own rituals or those of your family to prime the pump. Students’ responses will vary based on their backgrounds. This can be an exercise that provides students with insights into how others live.

Individual, Moderate, 15-20 minutes Learning Objective 11.2: To understand language, symbols and rituals as expressions of a learned culture.

AACSB: Application of knowledge .

11.9 a. Summarize an episode of a Netflix, TV show, or online series that you watch regularly. Describe how the episode transmitted cultural beliefs, values, and customs. b. Select three commercials that were broadcast during the episode and describe how each reflects cultural value(s).

Instructor’s Discussion In advance of the class, the professor should assign a TV program that all students must watch and analyze. The discussion of the programs’ content and commercials provides an excellent illustration of utilizing content analysis to explore cultural beliefs, values, and customs. Individual, Moderate, 30-45 minutes Learning Objective 11.1: To understand culture’s dynamics and impact on consumer behavior.

AACSB: Application of knowledge

11.10An advertisement has to be quite specific in order to adequately target the interests of a populace. In many Asian countries, language is the first variable of choice, and the specific language used in an ad can help identify its intended customers. Select and study five different audio-visual advertisements of cars in Southeast Asia. Identify the core values portrayed and examine how the ads are similar to or different from those of another country.

Instructor’s Discussion In Asian countries, companies that target local markets run advertisement campaigns in local languages. When targeting the whole population or expatriates, they will instead use English. Search YouTube for national TV channels run in Thailand, China, Hong Kong, Japan, and Malaysia to select five different audio-visual advertisements of cars for analysis. Individual, Moderate, 25-30 minutes Learning Objective 11.1: To understand culture’s role, dynamics, evolution, and impact on consumers’ priorities and behaviors. Learning Objective 11.2: To understand language, symbols, and rituals as expressions of a learned culture. Learning Objective 11.3: To understand how to measure the influence of culture on consumer behavior. AACSB: Application of knowledge

11.11Find five ads promoting “green” products or activities and explain whether you believe each one is effective or not.

Instructor Discussion This exercise provides students with an opportunity to identify the products and services that are communicating that they minimize the harm associated with consumption and/or .

The ads may advocate for environmental prompt discussions protection. about the fit between the firms’ environmental claims/advocacy and the firms’ practices, whether or not the ads resulted in goodwill toward the advertiser, and whether or not the ad changed attitudes or resulted in behavioral intentions toward the firm (which may be integrated with a discussion of why consumers often have favorable attitudes toward green products but do not necessarily follow through with actions).

Individual or Group, Moderate, 30-45 minutes Learning Objective 11.4: To understand core cultural values and their marketing applications.

Learning Outcome 6: Explain the influence of the needs and cultural values of consumers AACSB: Reflective thinking

S.TA.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 Do a search of popular magazines that carry a number of clothing and consumer products ads.

Select magazines that are clearly targeting an Anglo market, an African-American market, and a Hispanic market. Compare the ads in the different magazines for similarities and differences.

How are the beliefs, values, and customs of the three American-cultural groups different and/or similar? What different symbols are used to convey messages within the different magazines?

Are the predominant color schemes different? Once the preceding analysis is completed, comment on any ethical issues that you have observed during your research. Write a short paper that summarizes your findings.

Instructor’s Discussion This exercise asks students to review contemporary magazines and use these publications to observe cultural differences between the three primary ethnic subcultures in our society. Pick the best of the short papers and discuss the results with the class. Especially focus on any discovered ethical issues.

S.T.A.R. Project #2 Review the material found in the chapter on American Core Values. As you read about the general features and relevance to consumer behavior of the American Core Values, consider the ethical responsibility that marketers must have when directing promotional efforts toward these values. Write a short paper that expresses what you perceive these ethical responsibilities to be.

You may pick a particular company or product to use as an example or may discuss the issues generally. Be sure to consider using illustrations (advertisements) of your thoughts or position.

Instructor’s Discussion The primary purpose of this exercise is to get students to review material in the chapter on American Core Values. The exercise will give them the opportunity to once again review the .

material found in the chapter. Additionally, the exercise asks students to consider the values in light of ethical responsibility. For example, individualism (free speech) may give one the right of expression but it does not guarantee racism, bigotry, or harmful actions toward others. Or consider that although material comfort is great, everyone cannot afford this. What problems might be encountered by those that feel slighted by promotions that stress material acquisition?

Small Group Projects S.T.A.R. Project #3 The learning of one’s own culture is called enculturation. How do we learn this culture?

Members of society learn a great deal through communication in a common language. Your group’s assignment is to examine three different age groups with respect to communication.

Examine children (aged 5–8), teens (aged 13–16), and young adults (aged 19–22) with respect to their slang language and symbols that convey messages. Devise a table that describes at least ten (10) language or symbols for communication illustrations for each group. Write a short paper that discusses what you have done and conclusions on the differences and similarities found.

Present the information in class.

Instructor’s Discussion This exercise asks students to review three stages that they should have some familiarity with because each has been through these stages or is currently in the last stage. Slang language is an interesting cultural expression because it not only identifies age groups but ethnic formations as well. Put the best of these lists on the board and discuss how marketers might use this information.

S.T.A.R. Project #4 “We all live in tribes.” Well, maybe not all of us, but those on the hit CBS TV series Survivor certainly do (see www.cbs.com). Your group’s assignment is to examine tribal (ritual) behavior and its impact on consumer behavior. Begin the assignment by examining the Survivor TV show’s history found on the CBS Web site. Next, do secondary research on tribal behavior (rituals). For example, review rituals in the military, sports, fraternities, sororities, clubs, and organizations and how these rituals are transferred to consumptive behavior. Once this has been completed, write a short position paper that summarizes your findings and indicates what you have learned about the relationship between tribal (ritual) behavior and consumer behavior.

Instructor’s Discussion Most students really enjoy considering tribes and rituals. After reviewing the material in the chapter, most will have a good basis on which to build this project. By going to the CBS Web site, students can trace the history of the survivor series by going to the “select a show” feature and scrolling to the Survivor series.

S.T.A.R. Project #5 Advertising symbols are important ways that companies communicate with consumers. We all know the logos for Kellogg’s, Chevrolet, and IBM. Your assignment in this question is to play a symbols game and see how you score. Mr. Joey Katzen has developed an excellent symbols recognition game to be found at www.joeykatzen.com/alpha. The Retail Alphabet Game takes .

letters (symbols) from well-known retail names or phrases and asks you to identify them. This trivia game helps us to understand how important symbols and names are to the marketing and communication effort. Play the game and tell us how you scored. What did you miss? What did you get right? What conclusions can you draw about your ability to recognize symbols? Write a short paper that expresses your thoughts.

Instructor’s Discussion The game is fun and informative. The students can play historical versions of the game at no cost. Mr. Katzen only charges for the most recent version. The Web site is also an excellent download site. Have fun with this one.

S.T.A.R. Project #6 One of the easiest ways to examine one’s values is to observe how they dress. Specifically, jewelry says a lot about the man or woman. Your assignment is to find four (4) wrist watch Web sites and review the products found on these Web sites. Taking the American Core Values discussed in the chapter, write a short paper about how the companies you investigated appeal to American Core Values. Be sure to include examples to illustrate your feelings. Lastly, comment on how the opening Web pages of the sampled sites set the stage for value transmission to the consumer. What specific devices are used by the site marketers?

Instructor’s Discussion Students will find several illustrations in the chapter that can be used to begin the search (such as Citizen and Rolex). Students should next carefully examine the values included. Does the wrist watch appeal to the efficiency and practically value or the individualism value? Be sure that students are clear as to their conclusions. This subject is an easy one to discuss in class. Try pulling up several Web sites to illustrate.

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CHAPTER 12 Subcultures and Consumer Behavior

LEARNING OBJECTIVES To understand the subcultures and consumption globally and within the United States.

12.1 12.2 12.4the 12.5 12.6 of nationality and ethnicity subcultures on consumer behavior.

To12.3 realize influence To understand the impact of religious affiliations on consumer behavior.

To know about the influence of geographic locations and regional characteristics on consumer behavior.

To comprehend age and generational influences on consumer behavior.

To understand the influence of gender, gender identity, and sexual orientation on consumer behavior.

SUMMARY Learning Objective 12.1: To understand the subcultures and consumption globally and within the United States.

Subcultural analysis enables marketers to segment their markets to meet the specific needs, motivations, perceptions, and attitudes shared by members of a specific subcultural group. A subculture is a distinct cultural group that exists as an identifiable segment within a larger, more complex society. Its members possess beliefs, values, and customs that set them apart from other members of the same society; at the same time, they hold to the dominant beliefs of the overall society. Major subcultural categories in the United States include nationality and ethnicity, religion, geographic location, age, and gender. Each of these can be broken down into smaller segments that can be reached through special copy appeals and selective media choices. In some cases (such as the elderly consumer), product characteristics should be tailored to the specialized needs of the market segment. Because all consumers simultaneously are members of several subcultural groups, the marketer must determine how specific subcultural memberships interact to influence the consumer’s purchases of specific products and services.

Learning Objective 12.2: To realize the influence of nationality and ethnicity subcultures on consumer behavior.

The three ethnic subcultures in the United States that constitute unique market segments are Hispanics (or Latinos), African Americans, and Asian American consumers.

Latino Americans represent 15% of the U.S. population, and their number is estimated to become 30% of the U.S. population by the year 2050. They have an estimated purchasing power approaching $1.2 trillion, large families, and many live in extended family households consisting of several generations of family members.

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The African American population of the United States consists of 42 million persons, and is estimated grow to 70 million African Americans by 2050. African Americans have a purchasing power estimated to have reached $1 trillion. It is also important to note that more than half of African American consumers are less than 35 years of age. Generally, the consumption of African Americans consumers is a function of their social standing rather than ethnicity. There are approximately 17 million Asian Americans, representing 5.6% of the U.S. population, and they are the fastest-growing American minority, with some estimates showing that their numbers will reach 35 million by 2050. The largest nationalities within America’s Asian population are Chinese, Filipino, Indian, Vietnamese, Korean, and Japanese. Asian Americans do not share a common language and are a highly diverse market segment. The Asian American population is greatly urbanized, and the three metropolitan areas with the highest Asian American populations are the Greater Los Angeles area, the New York metropolitan area, and the San Francisco Bay area. The most striking characteristics of Asian Americans is a high level of educational attainment. Learning Objective 12.3: To understand the impact of religious affiliations on consumer behavior. The United States reportedly has more than 200 different organized religious subcultures. Of this number, Protestant denominations, Roman Catholicism, Islam, and Judaism are the principal organized religious faiths. The members of all these religious groups at times make purchase decisions that are influenced by their religious identity. Commonly, consumer behavior is directly affected by religion in terms of products that are symbolically and ritualistically associated with the celebration of various religious holidays. Learning Objective 12.4: To know about the influence of regional characteristics on consumer behavior. The United States is a large country that includes a wide range of climatic and geographic conditions, and Americans have a sense of regional identification and use it as a way of describing themselves and others. These labels often assist us in developing a mental picture and supporting a “stereotype” of the person in question. There are geographic differences in the consumption of staple foods and brand preferences. National brands are products that are available in all 50 states, although the market shares of most brands vary among geographic regions. Geographic differences in sales and market share are common for many brands of consumer packaged goods in the United States, but brands in nations that are smaller in geographic area do not exhibit similar regional differences. However, the consumer behavior in more diversified countries, such as large Asian nations, varies significantly among regions. Learning Objective 12.5: To comprehend age and generational influences on consumer behavior.

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According to the latest U.S. Census, there are 317 million Americans. Each generation constitutes a distinct subculture and market segment, because its members have unique priorities and purchase patterns. Important shifts occur in an individual’s demand for products and services as he or she goes from being a dependent child to a retired senior citizen. The primary age groups applicable to market segmentation are Generations X, Y, and Z, baby boomers, and older Americans.

Generation Z is the cohort of people born from 1997 to the present day. Members of Gen Z are highly “connected,” having had lifelong exposure to and use of communication and media technology. Gen Z is the most diverse American generation ever, and is the last generation to have a Caucasian majority in the United States. Gen Z persons have social circles that are much more diverse than those of older generations and include people from different ethnic groups, races, and religions. Marketers expect Gen Z members to be the first generation to earn less than their parents, because they are growing up in a period of economic uncertainty.

Generation Y are people born between 1980 and 1996. Gen Y members grew up with technology and embraced it. They are attracted to higher levels of stimulation and are easily bored. They are more confident than other generations were at their age because of growing up in childcentric households, a youth-oriented society, and the American emphasis on self-esteem. As consumers, they want faster product turnover, personally relevant promotions, and interactive marketing platforms. Many want to design their own products and get involved with messaging through their own networks and rate products. The most effective way to reach Gen Y members is by messages appearing online and cable TV. Gen Y people are the heaviest users of text messaging and smartphones.

Generation X consists of about 50 million individuals born between 1965 and 1979. As consumers, they represent a market with a spending power in excess of $1 trillion. They do not like labels, are cynical, and generally do not want to be singled out and marketed to. Unlike their parents, the baby boomers, they are in no rush to marry, start a family, or work excessive hours to earn high salaries. For Generation X consumers, job satisfaction is typically more important than salary. Therefore, they are not particularly interested in long-term employment with a single company, but instead prefer to work for a company that can offer some work–life flexibility and can bring some fun aspects into the environment. They want to be recognized by marketers as a group in their own right and not as mini-baby boomers.

Baby boomers were born between 1946 and 1964. These 78 million or so baby boomers represent more than 40% of the U.S. adult population, which makes them a much sought-after market segment. They constitute about 50% of all those in professional and managerial occupations and more than half of those have at least one college degree. They are a large and distinctive age category. (The term baby boomers was probably the first distinct and universally recognized name of an American generation.) They frequently make similar purchase decisions that influence entire categories of consumer goods. They include trendsetting, upwardly mobile professionals who have influenced the consumer tastes of all age segments. They account for nearly half of consumer packaged goods spending and control between 65% and 75% of the disposable income in the United States. In the year 2010, fully one third of Americans, 97.1

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million of them, were over 50 years old, and the American Association of Retired Persons (AARP) estimated that U.S. consumers in this age bracket own 80% of U.S. financial assets.

In 2015, there were more than 47 million people in the United States who are 65 years of age or older (almost 15% of the population). Projecting ahead to the year 2050, it is anticipated that more than 88 million Americans (20% of the total population) will be 65 years of age or older. In addition, from the start to the end of the twentieth century, life expectancy in the United States rose from use older Americans’ lifestyles to segment their markets.

Learning Objective 12.6: To understand the influence of gender on consumer behavior.

Because gender roles have an important cultural component, it is quite fitting to examine gender as a subcultural category. All societies tend to assign certain traits and roles to males and others to females. In terms of role differences, women have historically been cast as homemakers with responsibility for child care, and men as the providers or breadwinners. Because such traits and roles are no longer relevant for many individuals, marketers are appealing to consumers’ broader vision of gender-related role options. Also, the “gender gap” is narrowing for many areas, products, and behaviors that used to be strongly gender-linked. Marketers are paying particularly close attention to the working-woman segment of society, and investigating the various subgroups in this segment.

CHAPTER OUTLINE INTRODUCTION

1. A subculture is a group that shares certain beliefs, values and customs and exists within a

larger society.

2. A subculture can stem from a person’s ethnicity, religion, geographic location, age or gender,

among other things.

3. Marketers may single out a subculture to better meet the needs of the targeted consumers and change the marketing message to suit the subculture’s values and tastes. *****Use Key Term subcultureHere; Use Figure #12.1 Here***** Subcultures in the United States 1. A society’s cultural profile includes the unique beliefs, values and customs of specific

subcultures and the central or core cultural values and customs share by most of the population, regardless of subcultural memberships.

2.Most Americans belong to more than one cultural group. ***** Use Learning Objective #12.1 Here; Use Figures 12.2 and 12.3 Here; Use Review and Discussion Question 12.1 Here*****

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Nationality and Ethnicity Subcultures 1. America’s immigrants brought cultural values and lifestyles that blended into American

culture. When it comes to consumer behavior, “ancestral pride” is manifested most 2. strongly in the consumption of ethnic foods, in travel to their “homeland,” and in the purchase of numerous cultural artifacts. Nationality and ethnicity affect geographic concentration, consumption patterns, media usage and responses to communications.

3.

***** Use Learning Objective #12.2 Here***** 1. Latino (Hispanic) consumers are the largestethnic subculture . a) Hispanic Americans represented approximately 15 percent of the United States b) population in the 2010 Census (buying power of $1.2 trillion in 2011). The number of c) Hispanics is estimated to reach 30 percent of the population by the year 2050.

Hispanic Americans are younger (the median age of Hispanics is about 9 years younger than the median age of all Americans), they are members of larger families, and they are more likely to live in an “extended family” household—consisting of several generations of family members. Not only are Hispanic households more likely than black or non-Hispanic white families to contain children, but Hispanics also d) spend more time caring for their children. The recent Census found that 77 percent live in the seven states that have Hispanic populations of one million or more (California, Texas, New York, Florida, Illinois, Arizona and New Jersey). There are e) 12 distinct Hispanic subgroups now identified in the United States.

f)

i)

The three largest Hispanic subcultural groups consist of Mexican-Americans (about 67 percent of total Hispanic-Americans), Puerto Ricans (approximately 86 percent of the total), and Cubans (about 4 percent of the total). ii) These subcultures are heavily concentrated geographically, with more than 70 percent of their members residing in California, Texas, New York, and Florida iii) Los Angeles, alone, is home to one-fifth of the Hispanic population of the United States. g) More than 60 percent of all Mexican-Americans (the largest Hispanic group) were born in the United States and 72 percent of Cuban-Americans were born in Cuba. h) Hispanics have a strong preference for well-established brands and traditionally prefer i) to shop at smaller stores.

They appear to be in the process of acculturation, which changes consumption patterns and makes targeting them more challenging. *****Use Key Termethnic subcultures Here; Use Figure #12.4 Here***** 2. African American consumers consist of 42 million persons and is estimated to grow to 70

million African Americans by 2050. .

African American consumers currently constitute approximately 13.6 percent of the U.S. population and have estimated purchasing power of $1 trillion. b) More than half of African American consumers are less than 35 years of age. c) Consumption patterns are a function of their social standing, not ethnicity. d) African American consumers tend to prefer popular or leading brands, are brand loyal, and are unlikely to purchase private-label and generic products. e) Almost two-thirds of African-Americans are willing to pay more to get “the best.” f) African Americans account for more than 30% of spending in the $4 billion hair care market. g) Approximately $400 million of the $1.7 billion spent annually on ads reaching out to African Americans is spent on magazine advertising. a)

***** Use Hands-on Assignment #12.3 Here ***** 3. The Asian American population (primarily Chinese, Filipino, Japanese, Indian, Korean, and

Vietnamese) is currently about 21 million in size and a fast-growing American minority. a) Asian Americans are a diverse ethnic group in the United States and include the b) influences of 15 different cultures and a wide range of languages. Because Asian Americans are largely family-oriented, highly industrious, and strongly driven to achieve a middle-class lifestyle, they are an attractive market for increasing numbers of marketers. Educational attainment is an important goal for this segment of the c) population. Asian Americans are urbanized and more likely to own their own d) business and earn college and advanced degrees than other minorities. e) Many Asian Americans are young; about 26% of Asians live in multi-generational households. f) Asian Americans value quality and associate quality with well-known, upscale brand. g) Asian Americans are tech savvy and digitally fluent. h) Asian Americas should not be treated as a single market. **** Use Figures # 12.5A and #12.5B Here ***** Religious Affiliation Subcultures 1. Today, seven of the G8 nations have Christian-majority populations but by 2050, the only

country projected to have a majority Christian population is the United States. a) India has a Hindu majority b) Indonesia as a Muslim majority 2. The United States has more than 200 different organized religious affiliations (or subcultures). a) Of this number, Protestant denominations, Roman Catholicism, Islam, and Judaism b) are the principle organized religious faiths. Consumer behavior is commonly directly affected by religion in terms of products that are symbolically and ritualistically associated with the celebration of various religious holidays.

.

c)

Religious requirements or practices sometimes take on an expanded meaning beyond their original purpose (e.g. dietary laws).

3. Targeting specific religious groups with specially designed marketing programs can be very profitable (e.g. 450 religiously oriented mobile apps on iTunes). ***** *****Use Key Term religious affiliationsHere; Use Learning Objective #12.3 Here Geographic Subcultures 1. The United States is a large country, one that enjoys a wide range of climatic and

geographic conditions, resulting in regional identifications and geographic subcultures.

2. There are regional differences in consumption behavior, especially when it comes to food 3 .

4 .

and drink. A national brand is a brand that is available in all fifty states. In larger and more diversified countries, such as large Asian nations, geography is related to consumption in systematic ways that are related to geography, topology, and cultural factors like values, motives, and lifestyles.

geographic subcultures Here; Use ***** Learning Objective #12.4 Here; Use Key Term Review and Discussion Question #12.2 Here***** Generational Subcultures segments from the 317 million Americans are discussed (Generation and seniors) because their distinctive , ZGeneration Y, Generation X, baby boomers, lifestyles qualify them for consideration as subcultural groups.

2. Generation Z is a cohort of people born from 1997 to the present day. a) They are highly connected with lifelong exposure to media technology like the Internet b) The value of connectedness is unrelated to connectedness among preteens c) Teens and early twenties are unlike tweens aged 8 to 12. i) Teens are more independent in their behavior and less reliant on their parents for day-to-day stuff than tweens. ii) Teens spend about $160 billion each year, while tweens have about one quarter of that.

1. Five age subculture

Generation Z, teens, tweens, ***** Use Learning Objective #12.5 Here; Use Key Terms Here; Use Figure 12.6 Here; ***** 3. Millennials (Echo Boomers, Generation Y), the largest age cohort, were born between the

years 1980 and 1996 or between the late 1970s and the late 1990s (i.e., the children of the baby boomers). a) They are confident and have a high need for stimulation. b) Many want to design their own products and rate products. c) Millennial adults are the largest users of cell phones and text messaging. d) Millennials fall into six segments: .

i)

Hip-ennials: believe that they can have an impact on the world and make it better; aware of what’s going on globally, give to charity, and search for information regularly; read, but don’t produce, social media content. ii) Millennial Moms: enjoy traveling, getting in shape, and treating their “children” as they were treated (pampered); confident, very family oriented, and proficient in technology; participate in social networks online; attached to their peer groups. iii) Anti-Millennials: mostly care about their businesses and their families; do not buy green products like most Millennials do; seek comfort instead of change. iv) Gadget Gurus: always looking for the next big gadgets, usually from Apple, and will stand in line to get them first; highly egotistical, wired, free spirited, and laid back; often create content online and tweet continuously; male dominated and single. v) Clean and Green Millennials: take care of themselves and support others; driven by social causes, ecological issues, philanthropy, and positive outlooks on life. vi) Old-School Millennials: did not adopt many of the typical Millennial rituals, like updating their Facebook pages during meals; would rather meet people in person than online or through text, and read books instead of blogs; independent and selfdirected. e) Millennials are content without cable or satellite because they rely on internet streaming video. f) Millennials are okay with being forced to watch ads on their media if it means that the content is free, but they are distracted when they are exposed, so they tend not to pay attention to the ads. ***** Use Key Term Millennials Here***** 4. Generation X (Xers) consists of about 50 million individuals born between 1965 and 1979.

As consumers, they represent a market with a spending power in excess of $1 trillion. a) They do not like labels, are cynical, and generally do not want to be singled out and marketed to. b) Unlike their parents, the baby boomers, they are in no rush to marry, start a family, or work excessive hours to earn high salaries. c) For Generation X consumers, job satisfaction is typically more important than salary, they do not neglect their families while striving to secure higher salaries and career advancement, and they are not loyal to employers. d) Members of Generation X are sophisticated consumers. Although many claim that they are not materialistic, they purchase prestigious and pricey brands, but not necessarily designer labels.

***** Use Key Term Generation X Here; Use Figure #12.9 Here***** 5. The term baby boomers refers to 78 million people that were born between 1946 and 1964.

a) They make up 40% of the U.S. adult population and 50% of all those in professional and managerial occupations. .

b) c) d) e) f) g)

They frequently make similar purchase decisions that influence entire categories of consumer goods They include trendsetting, upwardly mobile professionals who have influenced the consumer tastes of all age segments.

They account for nearly half of consumer packaged goods spending and control between 65% and 75% of the disposable income in the United States They want to look and feel young.

They enjoy buying for themselves, for their residences, and for others.

Yuppies – the younger segment among the baby boomers that includes urban, upwardly mobile persons -- are the most sought-after subgroup of baby boomers. i) They are well off financially, well educated, and in professional or managerial careers. ii) Many buy status brand names, such as BMWs or Lexus hybrid cars, Prada shoes and clothing, Rolex watches, expensive adventurous vacations, and scores of pricey gadgets. iii) As many yuppies are maturing, they are shifting their attention away from expensive status-type possessions to travel, physical fitness, planning for second careers, or some other form of new life directions. iv) People’s outlooks about retiring are related to their levels of fulfillment during their professional careers, their accumulated financial resources, and their health status.

*****Use Key Term baby boomers Here; Use Figure 12.10 Here; Use Review and Discussion Question #12.5 Here; Use Hands-on Assignments #12.9 and #12.10 Here***** 6. America is aging.

a) Projecting ahead to the year 2050, it is anticipated that more than 88 million Americans (20% of the total population) will be 65 years of age or older. b) Later adulthood (those who are 50 years of age or older) is the longest adult life stage for most consumers). c) People over 50 constitute about one-third of the adult U.S. market. d) Americans over the age of 65 control about 70% of the net worth of American households. e) Cognitive age is a person’s perception of how old he or she is. Marketers realize that people’s perceptions of their ages are more important in determining behavior than their chronological ages. i) Feel Age —how old one feels. ii) Look Age —how old one looks. iii) Do Age —how involved a person is in activities favored by his or her age group cohort. iv) Interest Age —how similar a person’s interests are to those of others in his or her age group. *****Use Key Termcognitive age Here; Use Table 12.1 Here***** f)

Age is not necessarily a major factor in determining how older consumers respond to marketing activities. .

g) Older consumers are not a homogeneous subcultural group. i) The young-old – age 65 to 74. ii) The old – age 75 to 84. iii) The old-old – age 85 and older. h) A study of elderly consumers’ “quality-of-life orientation” identified a distinct group of older persons, which the researchers named the “new-age elderly.” i) The new-age elderly are individuals who feel, think, and do according to a cognitive age that is younger than their chronological age. ii) They retire later than other elderly and feel more in control of their lives. iii) They are self-confident in making consumer decisions and view themselves as more knowledgeable and alert consumers. iv) Many are “selectively innovative” and only adopt innovations that truly enhance their lives. i) Seniors often want to be identified not for what they did in the past but by what they would personally like to accomplish in the future. i) They have a strong commitment to remaining functionally young. ii) Research has found that when considering how to advertise to seniors, older adults have a higher liking for and better recall of emotional appeals (younger consumers have a higher liking for and recall of rational appeals). j) Older Internet users (aged 65 and older) are the fastest-growing demographic group with respect to the U.S. Internet market because the computer “empowers” older consumers/allows them to regain some of the control that was lost. *****Use Figures #12.11 and #12.12 Here; Use Review and Discussion Questions #12.5 and #12.6 Here; Use Hands-on Assignment #12.11 ***** Gender Subcultures 1. Women and men respond differently to messages and products.

a) Women show superior affect and purchase intention toward ads that are verbal, harmonious, complex, and category oriented. b) Men exhibit superior affect and purchase intention toward ads that are comparative, simple, and attribute oriented. c) Gender subcultures play an important role with respect to shopping motives. i) Female shoppers tend to be more prone to such shopping motives as uniqueness and assortment seeking, social interaction, and browsing. ii) Women are more loyal to local merchants than their male counterparts. d) Women control a substantial portion of the household’s expenditures and the family’s spending. Because of this, women are frequently a household’s “chief purchasing officer” or “chief financial officer.” *****Use Learning Objective 12.6 Here; Use Key Termgender subcultures Here***** 2. Within every society, it was quite common to find products that were either exclusively or

strongly associated with the members of one sex.

3. Companies like CoverGirl are attempting to be more inclusive. .

4. Many women feel that the media and advertising create an expectation of beauty that most

women can never achieve.

5. Working women (60% of American women 16) are one segment of the female population, which has been segmented as follows: a) Stay-at-home housewives b) Plan-to-work housewives c) Just-a-job working women d) Career-oriented working women 6. The segments of working women are somewhat self-explanatory, but there is an important between “Just-a-job” women” because theworking familywomen. requires the additional distinction “just-a-job” and work “career-oriented” income, whereas “career-oriented” women are driven more by a need to achieve and succeed in their chosen careers. Working women have also been segmented as: 7.

a) The Independent (Single, 28 to 34 years old, with a median income of $33,200 and college degree; busy building her career and loves it; outs off marriage and having kinds because she does not want to have obligations to others; likes to work late, go out late, and come and go as she pleases; aspires to buy luxury brands across categories like travel, clothes, jewelry, and automobiles (e.g., Chanel, Prada, Ritz-Carlton and BMW) but loves to shop for bargains; considers virtual image as important as her real-world one; heavy social media user, mostly via mobile devices) b) The Mom Achiever (Working mother, 35 to 45 years old, with a median income of $75,000); highly driven, has advanced degrees, and earned executive jobs; applies her professional knowledge and ethics to being a mom; has a hard time leaving her job behind; would choose a 50% pay raise over 50% more time with her kids; spends a lot of money on herself, mostly on prestige beauty products and services; spends little time on research before buying high-end products, but is also thrifty and looks for discount websites) a) The Alpha Goddess (Working mother, 55-to-64-year-old, with a median income of $69,000); knows what she wants and has the resources to get it; loves to lavish gifts on her family, but her top purchases are for herself (e.g., luxury cars, travel, prescription drugs); buys expensive fragrances and is influenced by celebrity endorsements; confident in her relationships; receptive to new technologies; watches more TV than other age groups, but is not a captive audience; unlikely to compromise on either love or sexual attractiveness in order to have a committed relationship.) *****Use Figure #12.13 Here; Use Review and Discussion Question #12.7 Here *****

REVIEW AND DISCUSSION QUESTIONS 12.1 Why is subcultural analysis especially significant in a country such as the United States?

The United States is becoming an increasingly diverse society. Subcultures based on nationality, religion, geographic location, race, age, and sex provide markets with exciting opportunities and numerous pitfalls to negotiate in their promotional strategies. American .

companies will increasingly target advertising at growing subcultures, including African Americans, Hispanic Americans, and Asian Americans.

Individual, Easy, 5-7 minutes Learning Objective 12.1: To understand the subcultures and consumption globally and within the United States.

AACSB: Reflective thinking

12.2Discuss the importance of subcultural segmentation to marketers of food products.

Identify a food product for which the marketing mix should be regionalized. Explain why and how the marketing mix should be varied across geographic areas of the United States.

Subcultures are identifiable groups within a society, and as such, constitute “natural” segmentation variables. In the United States, people belong to many subcultural groups that influence the consumption of food products. For example: (a) nationality influences the consumption of many ethnic foods; (b) religion places restrictions on eating certain foods; and (c) different geographic regions have different food tastes and customs, (e.g., grits in the South and the general popularity of Mexican food in the West and Southwest).

As illustrated in the answer to the previous question, the United States is increasingly becoming ethnically diverse, and many marketers are targeting nationality/ethnic subcultures. Individual, Moderate, 10-15 minutes Learning Objective 12.4: To know about the influence of geographic locations and regional characteristics on consumer behavior.

AACSB: Application of knowledge

12.3Savvy marketers understand and recognize subcultures in targeting consumers.

How do marketers for the brands Safi Shayla, Tan Ngan Lo, and Uncle Saba’s Poppadom use advertising appeals and elements in targeting their customers?

Advertising appeals for the Safi Shayla hair care range (a homegrown brand that caters to Muslim women who wear headscarves all day) emphasized its halal ingredients. Advertising appeals for Tan Ngan Lo (a homegrown Chinese medicated herbal tea brand) stressed the concept of yin and yang, according to which the opposing energies in the human body must be balanced for good health and vitality.

Advertising appeals for Uncle Saba’s Poppadoms (a homegrown Indian-Muslim brand for ready-to-eat poppadoms packed in canisters) highlighted its ingredients, which contain 30 percent less saturated fat than other brands in the same category.

Individual, Moderate, 20-25 minutes Learning Objective 12.2: To understand the influence of nationality and ethnicity subcultures on consumer behavior. AACSB: Application of knowledge

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12.4 Asian Americans are a small proportion of the total U.S. population. Why are they an important market segment? How can a marketer of tablet computers effectively target Asian Americans?

Asian Americans are the fastest growing segment, have high incomes, tend to be welleducated, and are concentrated in metropolitan areas. A marketer of tablet computers should consider the diversity in countries-of-origin and language, and might rely on aspirational appeals that emphasize the use of tablets for entrepreneurial and educational pursuits. Individual, Moderate, 10-15 minutes Learning Objective 12.2: To realize the influence of nationality and ethnicity subcultures on consumer behavior. AACSB: Application of knowledge

12.5

In view of the anticipated growth of the over-50 market, a leading cosmetics company is reevaluating the marketing strategy for its best-selling moisturizing face cream for women. Should the company market the product to younger (under age 50) as well as older women? Would it be wiser to develop a new brand and formula for consumers over age 50 rather than trying to target both age groups with one product?

Explain your answer.

(The Global Edition included a different question in place of this one. The error is regretted.)

A moisturizer face cream is a product that should probably be positioned in a way depicting the target consumer’s perceived or cognitive age rather than the individual’s chronological age. Because most older consumers feel and consider themselves younger than their chronological ages, developing a new brand and formula for over-50 consumers is unlikely to be successful. Research suggests that people’s perception of their ages is more important in determining behavior than their chronological age.

Elderly consumers perceive themselves to be younger than their chronological age on four perceived age dimensions: (a) feel-age—how old they feel, (b) look-age—how old they look, (c) do-age—how involved they are in activities favored by members of a specific age group, and (d) interest-age—how similar their interests are to those of members of a specific age group. Therefore, the company should not design a new brand specifically for older consumers and continue marketing the existing brand to younger as well as older women. This may prove to be a complex endeavor, however, and the company must ensure that none of the advertising messages and appeals directed at older women alienates the under-50 users of the product. Individual, Moderate, 20-25 minutes Learning Objective: 12.5: To understand age and generational influences on consumer behavior. AACSB: Application of knowledge

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12.6Marketers realize that people of the same age often exhibit very different lifestyles. Using the evidence presented in this chapter, discuss how developers of retirement housing can use older Americans’ lifestyles to more effectively segment their markets.

Marketers of retirement housing should be careful to avoid falling into the myths of the elderly market. Similar to other market segments, the elderly market is not homogeneous.

Some argue their interests, etc., are even more diverse than other markets. One simple segmentation scheme partitions the elderly into three chronological age categories: (a) young-old—65 to 74 years old—tend to have health and money; (b) old—75 to 84 years old, and (c) old-old—85+ usually require various specialized housing and medical services.

Individual, Moderate, 20-25 minutes Learning Objective: 12.5: To understand age and generational influences on consumer behavior. AACSB: Application of knowledge

12.7 a. How should marketers promote products and services to working women? What appeals should they use? Explain. b. As the owner of a BMW automobile dealership, what kind of marketing and service strategies would you use to target working women? The marketer avoids high-pressure sales approaches and stresses sincere, polite, and helpful salespeople. When it comes to the features a woman seeks in a new car, emphasize safety and reliability. Address product design. For example: (1) recognizing that men and women are generally not the same height, car makers are replacing the front “bench-type” seat with split seats which the driver and passenger can adjust independently; (2) lumbar support was built into seat backs to make them more comfortable for pregnant women (they also relieve back strain for men); (3) buttons are spaced farther apart to accommodate females’ long fingernails (and, also, men with big fingers); (4) power steering was originally developed for women, recognizing that they have less strength than men (this feature is also preferred by men, and especially many older consumers); and (5) reinforced side-door impact beams, child safety locks, and integrated child seats are features developed to appeal specifically to women. Individual, Moderate, 20-25 minutes Learning Objective 12.6: To understand the influence of gender, gender identity, and sexual orientation on consumer behavior.

AACSB: Application of knowledge

12.8 Identify a group that can be regarded as a subculture within your university or college. a. Describe the norms, values, and behaviors, of the subculture’s members. b. Interview five members of that subculture regarding attitudes toward the use of credit cards. c. What are the implications of your findings for marketing credit cards to the group you selected. .

The answer to this exercise provides an interesting foundation for a class discussion. If students select one of the subcultures described in the text, their findings should be compared with the book’s information and used to formulate a strategy for a credit card company targeting the subculture chosen. Individual, Moderate, 15-20 minutes Learning Objective 12.1: To understand age and generational influences on consumer behavior.

AACSB: Application of knowledge

12.9 Interview one baby boomer and one adult Generation Y consumer regarding the purchase of a car. Prepare a report on the differences in attitudes between the two individuals. Do your findings support the text’s discussion of the differences between boomers and Gen Y buyers? Explain.

This exercise is designed to illustrate the differences in the values of two generations.

The professor should compare the students’ observations to the information presented in the chapter. Individual, Moderate, 60-90 minutes Learning Objective: 12.5: To understand age and generational influences on consumer behavior. AACSB: Application of knowledge

12.10Perceptions and age influence consumer behavior. Experiences from an early age have shaped and influenced people’s consumption patterns. These experiences are known as cohort effects. Therefore, different influences—political, economic, sociocultural, and technological—have played roles in influencing an individual’s purchase and consumption patterns as they age. Describe an incident where an older generation disagreed with or criticized purchases you have made. In addition, describe the cohort effects that explain each generation’s view during these disagreements.

Instructor’s Discussion This exercise is designed to demonstrate that individuals who experienced similar economic, political, and cultural environments during their youth share a common generational personality in their present consumption habits. Students’ answers will vary. Individual, Moderate, 10-15 minutes Learning Objective: 12.5: To understand age and generational influences on consumer behavior. AACSB: Reflective thinking

12.11 Find two good and two bad examples of advertising directed toward elderly consumers. To what degree are these ads stereotypical? Do they depict the concept of

.

perceived age? How could these ads be improved by applying some of the chapter’s guidelines for advertising to elderly consumers? Instructor’s Discussion The professor should provide examples for the students to analyze using the information contained in the text. A recent review of successful marketing to older consumers indicates that these individuals respond well to messages that stress autonomy, altruism, personal growth, and revitalization. Furthermore, marketers targeting this group must recognize that, compared with young adults, mature adults are less influenced by peers, more introspective, more sensitive to the context of messages, more flexible, more individualistic, less price sensitive, determine values in more complex ways, and are whole-picture oriented (rather than detail-oriented). Individual, Moderate, 30-45 minutes Learning Objective: 12.5: To comprehend age and generational influences on consumer behavior. AACSB: Application of knowledge

S.T.A.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 The United States is a nation of many religions. This nation was founded on each citizen’s right to express religious beliefs and to live with religious freedom even if that freedom meant to have no religion at all. “In God We Trust” is a great part of our heritage. In recent years, however, organized religion and religious teaching has suffered some setbacks because of the nation’s fundamental desire to separate church and state. For example, prayer is no longer appropriate in schools or in certain governmental gatherings. Has this shift affected our culture? Your assignment is to study the religious subculture section of the chapter.

Write a short position paper that outlines how marketers should ethically appeal to this subculture. What is appropriate and what is not? Is a religious appeal by marketers appropriate at all? Comment on these issues. Instructor’s Discussion Nothing gets one’s attention more than discussions about religion or sex. We all have opinions about each. This assignment asks students to consider the religious subculture as a viable marketing segment.

The chapter provides ample illustrations of how appeals are made by marketers to this subculture. The assignment asks students to consider the ethics of such approaches. Because of the inflammatory nature of this area, be sure to carefully control discussion to avoid hurting someone’s feelings or positions.

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Small Group Projects S.T.A.R. Project #2 Action, action, action! Those words would be appropriate to the National Organization of Women (N.O.W.) (see www.now.org). N.O.W. has supporters and detractors. No matter how you look at this organization you have to respect its dedication to women’s causes. Others, however, believe that a less direct approach to women’s issues is more appropriate. Many of these see Cosmopolitan magazine as a better spokesperson for female positions. Your group’s assignment is to do a comparison between how N.O.W. and Cosmopolitan magazine (see www.cosmopolitan.com) approach women’s issues. Many believe that the two organizations are on the opposite end of the spectrum from one another. Your group should construct a method to compare the two organizations. Once this is done, write a short position paper that describes which of the two organizations does a better job of addressing women’s issues. Which organization does a better job of marketing to the female subculture? Explain your rationale.

Instructor’s Discussion Talk about differences—N.O.W. and Cosmo are often miles apart. Although female students may not be closely aligned with either organization, both organizations are interesting studies.

Both are marketing dynamos (though N.O.W might not like to admit it). Students can examine each organization through stances on political protest, women’s rights, women’s relationships, and women’s purchasing. Be careful to control discussion as some (even males) may have very pronounced feelings about either or both of these organizations.

S.T.A.R. Project #4 One of the easiest ways to study marketing’s relationship to racial subcultures is to use the Internet. Recent statistics indicate that African American and Hispanic Americans are using the Web in increasing numbers. Therefore, marketing efforts via the Web are increasing for both of these two groups. Your assignment is to take one (1) of the following Web sites and examine how the Web site is making marketing appeals to its particular racial subculture. Specifically, describe the chosen site’s marketing activities, how the site attempts to build relationships with viewers, and how the site might impact a viewer’s consumptive behavior. Pick from these Web (see (see sites: Black Entertainment Network (see www.bet.com); Ebony magazine www.telemundo.com).

Have each (see memberwww.univision.com); of your group select a different site. Compare your www.ebony.com); Univision or, Telemundo findings. Write a short summary paper about your findings and thoughts.

Instructor’s Discussion Most students will pick one of the two African American Web sites because the Hispanic Web sites are in Spanish only. Whichever site is chosen, the students’ learning experience should be enhanced. Another good idea is to ask minority students to comment on Web sites that do a better job of reaching their racial group. This query usually produces a variety of specific racial Web sites that can be discussed by the entire class. Most will find these sites to be interesting.

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CHAPTER 13 Cross-Cultural Consumer Behavior: An International Perspective

LEARNING OBJECTIVES 13.1 13.2 13.3 13.4 13.5

To understand how cultural values and customs impact the buying patterns of consumers in other countries.

To understand how to research the cultures of consumers in other countries.

To understand localization and standardization of products and promotions.

To understand how to evaluate global marketing prospects.

To understand the applications of psychographics in targeting consumers in other countries.

CHAPTER SUMMARY Learning Objective 13.1: To understand how cultural values and customs impact the buying patterns of consumers in other countries.

Within the scope of consumer behavior, cross-cultural analysis consists of determining to what extent the consumers of two or more nations are similar or different. Such analyses provide marketers with an understanding of the psychological, social, and cultural characteristics of the foreign consumers they wish to target, so that they can design effective marketing strategies for the specific national markets involved.

Learning Objective 13.2: To understand how to research the cultures of consumers in other countries.

An understanding of the similarities and differences that exist between nations is critical to the multinational marketer who must devise appropriate strategies to reach consumers in specific foreign markets. Some of the problems involved in cross-cultural analysis include differences in language, consumption patterns, needs, product usage, economic and social conditions, marketing conditions, and market research opportunities. Acculturation is the process by which marketers learn—via cross-cultural analysis—about the values, beliefs, and customs of other cultures and apply this knowledge to marketing products internationally.

Learning Objective 13.3: To understand localization and standardization of products and promotions.

The greater the similarity between nations, the more feasible it is to use relatively similar marketing strategies in each nation. When the cultural beliefs, values, and customs of specific target countries are found to differ widely, then a highly individualized marketing strategy is indicated for each country. In deciding whether or not to customize products to local cultures, marketers must consider local values, linguistic barriers, and legal issues.

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Learning Objective 13.4: To understand how to evaluate global marketing prospects.

Firms are increasingly selling their products worldwide for a variety of reasons. Many firms have learned that overseas markets represent an important opportunity for their future growth when their home markets reach maturity. This realization is propelling them to expand their horizons and seek consumers in markets all over the world. Moreover, consumers around the globe are eager to try “foreign” products that are popular in different and far-off places. As increasing numbers of consumers come in contact with the material goods and lifestyles of people living in other countries, and as the number of middle-class consumers grows in developing countries, marketers are eager to locate these new customers and offer them the products.

Learning Objective 13.5: To understand the applications of psychographics in targeting consumers in other countries.

Global psychographic research often reveals cultural differences of great importance to marketers. Psychographics identifies shared values, irrespective of national borders. Much of this research has sought to uncover the bedrock values in people’s lives in order to understand the motivations that drive both attitudes and behavior. The VALS research methodology has been used to identify psychographic segments in other countries.

CHAPTER OUTLINE INTRODUCTION 1. American companies selling their products in other countries must carefully research the cultures of the nations that they target.

2. For example, some American brand names indicate what they represent and other do not.

3. Many American brand names and slogans must be revised or changed in non-English speaking countries. a) Linguistic differences may be the most challenging factor facing companies that are expanding globally. b) Many companies have made errors with their translations. *****Use Figure #13.1 Here***** Global Brands 4. Global brands (e.g. Apple, Disney, eBay, Coca-Cola) hold significant market shares in

many countries.

5. Global brands are associated with three characteristics:

a) Quality signal b) Global myth c) Social responsibility 6. Intracountry segments (with respect to how a country’s citizens view global brands) include: a) Global Citizens (55%) .

b) Global Dreamers (23%) c) Antiglobals (13%) d) Global Agnostics (8%) 7. A study of consumers from eight countries discovered that self-enhancement advertisements and advertising that stressed openness (in terms of allowing people to pursue their goals in exciting ways) were perceived most favorably. *****Use Learning Objective 13.1 Here; Use Key Terms global brand Here***** Analyzing Global Markets 1. Cross-cultural analysis is defined as determining to what extent the consumers of two or more nations are similar or different. a. This type of analysis provides marketers with an understanding of the psychological, social, cultural, and environmental factors. b. The increased understanding enables the design of effective marketing strategies for specific countries. c. Buying styles – collectivistic vs individualistic – can impact consumer behavior i. Countries like China and Mexico are collectivistic (we) cultures ii. Countries like the U.S. and the U.K. are individualistic (I) cultures iii. Collectivists rely more on word-of-mouth iv. Individualists attach more importance to explicit and implicit promises and third parties d. Unique consumption styles have been identified by countries: i. German consumers were less brand loyal, more price-sensitive, and least likely to seek variety in products; they do not consider themselves impulsive shoppers. ii. American consumers were more likely to seek new and different products than French and German consumers, and see advertising as more informative than their French and German counterparts. iii. British consumers were more likely to seek new and different products than French and German consumers. iv. French consumers believed that shopping is not fun. They claim to engage in comparison shopping, but are not most likely to purchase products on sale. e. Based on consumer style, the researchers were able to segment these consumers into four clusters: i. Price-sensitive consumers ii. Variety-seeking consumers iii. Brand-loyal consumers iv. Information-seeking consumers *****Use Learning Objective 13.2 Here; Use Key Termcross-cultural analysis Here; Use Figure #13.2 Here***** 2. Research issues that should be considered include: .

a. Judgments regarding the quality of a country’s products b. Willingness to buy a country’s products c. Ethnocentrism d. Perceptions of a country’s consumption culture e. Acculturation f. Ethnic self-identification g. National self-identification 3. One way of studying the interrelationship between consumers’ attitudes toward local and global products identified the following dimensions: a. Entertainment b. Furnishings c. Food d. Lifestyles e. Brands 4. Another study identified personal cultural orientations and measured: a. Independence b. Interdependence c. Power d. Social inequality e. Risk aversion f. Ambiguity tolerance g. Masculinity h. Gender equality i. Traditio j. n Prudence ethnocentrism k. Consumer l. Consumer innovativeness 5. Acculturation is the process by which marketers learn – via cross-cultural analysis - about values, beliefs, and customs of the new society.

6. Acculturation is a dual learning process: a) First marketers must learn everything that is relevant to the product and product category. b) Marketers must persuade the members of that society to modify or break with their own traditions. *****Use Key Termacculturation Here ***** 7. It is often difficult for a company planning to do business in foreign countries to undertake cross-cultural consumer research. a. It is hard to conduct Western-style market research in the Islamic countries of the Middle East. b. In many countries there is a limited amount of information regarding consumer and market statistics. c. Scales of measurement are not adequate. d. Research facilities may not be available. e. Cultural differences may make “standard” research methodologies inappropriate. .

8. Marketers want to know how consumers in two or more societies are similar and how they are different.

9. The greater the similarity between nations, the more feasible it is to use relatively similar marketing strategies in each nation. *****Use Review and Discussion Question #13.3 Here; Use Hands-on Assignment #13.15 Here ***** Localization versus Standardization 1. A global marketing strategy consists of selling the same product using the same positioning approach and communications globally.

2. A local marketing strategy consists of customizing both the product and the communications program for each unique market.

3. Marketers can customize their offerings in other nations or market them the same way they do at home (e.g. Oakley, Mattel, Home Depot). global marketing strategy, local *****Use Learning Objective #13.3 Here; Use Key Terms marketing strategy Here ***** 4 .

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Some companies have failed by assuming the needs of another culture would be the same as the needs in their original market.

Promotional appeals must reflect the local culture’s values and priorities. a. Countries differ in responses to humorous appeals and sexual appeals. b. Countries differ in responses to individualistic and collectivistic ad appeals. c. Comparative advertising has been used more in the United States than in other countries, but comparative ad persuasiveness hinges on: ii.i. Self-construal (how individuals perceive, comprehend, and interpret the world around them) Need for cognition *****Use Key Termself-construal Here; Use Review and Discussion Questions #13.5 and #13.6 Here *****

6. Sometimes, local laws force American marketers to alter their offerings.

Global Marketing Prospects 1. Firms are increasingly selling their products worldwide, for a variety of reasons. a. There has been an ongoing buildup of “multinational fever.” b. The general attractiveness of multinational markets, products, or services originating in one country means that they are increasingly being sought out by consumers in countries in other parts of the world

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c. Many firms have learned that overseas markets represent an important opportunity for their future growth when their home markets reach maturity. d. Consumers around the globe are eager to try “foreign” products that are popular in different and far-off places.

2. Global markets are dynamic and new marketing opportunities emerge continuously.

3. The most important criterion for identifying global marketing opportunities is a country’s consumer spending and its growth prospects. *****Use Learning Objective #13.4 Here; Use Figures #13.3, #13.4 and #13.5A-E Here; Use Review and Discussion Questions #13.1 and #13.7 Here***** 4. Brands continuously monitor their brand shares in domestic and foreign markets.

5. Local brands can sometimes overtake well-established U.S. offerings. *****Use Table #13.1 Here; Use Review and Discussion Question #13.2 Here ***** Targeting Global Consumers 1. Global Millennials make up one-fourth of the planet’s population – 1.7 billion people. a. Millennials have grown up amid growing media fragmentation, multitasking, and full immersion in their digital and physical lives. b. They want more balanced and healthier lives, seek information about companies and products, expect products to do more for the community.

2. Global teens appear to have similar interests and desires, regardless of where they live. a. Their “sameness” allows marketers to launch similar styles and/or use global advertising in some cases. b. Less highly developed nations are different from high developed nations with respect to teen fashion consciousness. c. The coolest teens, Creatives, represent 30% of all teenagers and were found in all studied countries, with a high concentration in Western Europe.

3. The global middle class is expected to grow. a. By 2025, China will have the world’s largest middle class. b. By 2025, India’s middle class will be 10 times larger than it currently is. c. Although a growing middle class provides a market opportunity, it should always be remembered that the same product may have different meanings in different countries.

4. Some countries require different lifestyle segmentation. a. In Japan, businesses use the Japan-VALS framework to monitor Japan’s consumer environment; generate new product ideas; segment Japanese consumers into potential target markets; differentiate brands; and develop effective pricing, distribution, and promotional strategies.

5. The Japan-VALS segments stem from consumers’ primary motivations and degree of innovativeness, where innovativeness is measured as attitudes toward social change. Primary motivations include tradition, achievement, and self-expression.

6. Roper Starch Worldwide interviewed 35,000 consumers in 35 countries in order to identify shared values, irrespective of national borders. .

a. The research sought to uncover the bedrock values in peoples’ lives so as to understand the motivations that drive both attitudes and behavior. b. After completing the interviews in North and South America, Asia, and Europe, six global value groups were uncovered: i. Strivers—ambitious and materialistic. ii. Devouts—responsible, respectful, and conservative. iii. Altruists—unselfish in their concern for others, society, and the future. iv. Intimates—focus on social relationships and family. v. Fun Seekers—young in age and outlook, value adventure and good times. vi. Creatives—seek knowledge and insight, and have a keen interest in books and new media. *****Use Learning Objective #13.5 Here; Use Figure #13.7 Here*****

REVIEW AND DISCUSSION QUESTIONS 13.1 With all the problems facing companies that go global, why are so many companies choosing to expand internationally? What are the advantages of expanding beyond the domestic market?

American companies are increasingly deriving the majority of their sales and profits from overseas operations. The reasons for companies expanding internationally include: taking advantage of emerging markets; escaping recessions in the United States; keeping up with or escaping competition; taking advantage of liberal tax laws; disposing of inventories of older products; extending the life cycles of products which had reached their peaks in the United States; and trying to establish a global image.

Some companies may choose to “go global” because they would like to keep up with technology or test their products in foreign markets first. Individual, Moderate, 10-15 minutes Learning Objective 13.1: To understand how cultural values and customs impact the buying patterns of consumers in other countries. AACSB: Reflective thinking

13.2 In terms of consumer behavior, are the world’s countries and their cultures becoming more similar or more different? Discuss.

This question provides a vehicle for an interesting class discussion. Marketers are arguing both sides of the issue. Some see an increase in people’s distinctive tastes and standards based on nationalism, regionalism, or culture. Others see the influence of media and pop culture as blending cultures and blurring national boundaries. The comparisons of France, Germany, the United States, and the United Kingdom may be relevant in this discussion. Figures 13.5A-E might also yield some interesting discussions. .

Individual, Moderate, 10-15 minutes Learning Objective 13.1: To understand how cultural values and customs impact the buying patterns of consumers in other countries.

AACSB: Reflective thinking 13.3What is cross-cultural consumer analysis? How can a multinational company use crosscultural research to design each factor in its marketing mix? Illustrate your answer with examples.

Cross-cultural consumer analysis is defined as the effort to determine to what extent the consumers of two or more nations are similar or different. Such an analysis provides marketers with an understanding of the differences and similarities in psychological, social, cultural, and environmental factors, and permits the design of effective marketing strategies for each of the specific countries involved. Individual, Moderate, 10-15 minutes Learning Objective 13.2: To understand how to research the cultures of consumers in other countries. AACSB: Reflective thinking

13.4

What are the advantages and disadvantages of global promotional strategies?

The major advantage of a global promotional strategy is cost savings across the board in designing and implementing a marketing mix. Thus, the manufacturer of Aramis, a well- established brand of men’s fragrance sold in more than 120 countries, has been running a worldwide advertising campaign depicting a blurred form of a hurrying businessman that prevents the viewer from fully identifying the model’s ethnic group. Gillette uses a global approach (i.e., the same ads running in different countries/languages) for its Sensor Shaving System. Although local marketing strategies are clearly more expensive and complex than global ones, in many cases, differences between the needs and wants of consumers in different countries are strong enough to preclude the use of global promotional approaches. Thus, McDonald’s localizes its advertising to consumers in different countries, and Procter & Gamble and Colgate-Palmolive create different versions of their products as well as localized promotions in targeting world-wide consumers. Individual, Moderate, 5-7 minutes Learning Objective 13.3: To understand localization and standardization of products and promotions. AACSB: Reflective thinking

13.5

What are the advantages and disadvantages of localized promotional strategies?

A local marketing strategy consists of customizing both the product and the communications program for each unique market. One advantage is it can help companies meet the needs of a given market. Another advantage is communications can be fine-tuned based on language .

and other cultural ideals, including sources that would be perceived as most credible in each market. One disadvantage is it may create confusion for people who are exposed to the brand’s communications in multiple markets. In addition, there is a higher cost associated with unique promotional strategies in different countries.

Individual, Moderate, 5-7 minutes Learning Objective 13.3: To understand localization and standardization of products and promotions.

AACSB: Reflective thinking 13.6Give three examples of linguistic problems that companies have faced during marketing in global markets and describe how these problems could have been avoided.

1. The slogan “Chevy Runs Deep” did not translate well in some languages. The company replaced it with the slogan “Find New Roads” because the car represents different things to different people, a theme that resonates with consumers around the world.

2. When General Motors introduced the Chevy Nova in South America, it was apparently unaware that “no va” means “it won’t go.” After the company figured out why it was not selling any of these cars, it renamed the car in its Spanish markets as the Caribe.

3. When Parker Pen marketed a ballpoint pen in Mexico, its ads were supposed to say “It won’t leak in your pocket and embarrass you.” However, the company mistakenly thought the Spanish word “embarazar” meant “embarrass.” Instead the ads said that “It won’t leak in your pocket and make you pregnant.”

4. When Vicks first introduced its cough drops on the German market, it was chagrined to learn that the German pronunciation of “v” is f—making its name in German the guttural equivalent of “sexual penetration.”

5. In Taiwan, the translation of the Pepsi slogan “Come alive with the Pepsi Generation” came out as “Pepsi will bring your ancestors back from the dead.”

The rapidly growing Chinese market represents an enormously difficult cultural and linguistic challenge. The name Coca-Cola in China was first rendered as Ke-kou-ke-la.

Unfortunately, the Coke company did not discover until after thousands of signs had been printed that the phrase means “bite the wax tadpole” or “female horse stuffed with wax” (depending on the dialect). Coke then researched 40,000 Chinese characters and found a close phonetic equivalent, ko-kou-ko-le, which can be loosely translated as “happiness in the mouth.”

Companies can avoid these challenges by working with someone who is acculturated to the region and understands the language and/or by conducting market research prior to market entry.

Individual, Moderate, 15-20 minutes Learning Objective 13.3: To understand localization and standardization of products and promotions.

AACSB: Application of knowledge .

13.7Give three examples of product problems that companies have faced during marketing in global markets and describe how these problems could have been avoided.

Mattel shut its Barbie stores in China after learning that Chinese parents wanted their girls to model themselves after studious children, not flirts. Consequently, Mattel decided to market mostly educational toys in China. Home Depot Inc. closed about half its stores in China, finding scant interest among Chinese for do-it-yourself renovation, and decided to come up with a new strategy for the Chinese market. Many Britons consider the Starbucks version too watery, so baristas in Britain recently began adding a free extra shot of espresso. Sixty percent of French people like espresso, but many complained that Starbucks’ espresso tasted charred. In response, Starbucks introduced a lighter “blonde” espresso roast in Paris. Germans thought the greeters at Walmart were creepy. Ikea packaging and bed sizes were not compatible in all markets. Students may have their own examples. Acculturation to the market prior to product launch and research with the market can help companies avoid these problems.

Individual, Moderate, 10-15 minutes Learning Objective 13.3: To understand localization and standardization of products and promotions.

AACSB: Application of knowledge 13.8 An American company is considering introducing yogurt in Japan. What cultural aspects should the company study before deciding whether or not to do so?

The American company should consider legal barriers; linguistic barriers (including acknowledging the Japanese language does not include the R sound, if that is relevant); the local culture’s values, priorities, customs, and beliefs; existing attitudes toward yogurt; local tastes (e.g. green tea; very low consumption of cheese and eggs); economic factors (low end forecasted growth in consumer expenditures); Japan-VALS (wherein Japanese consumers are segmented by attitudes toward social change and primary motivations including tradition, achievement and self-expression); 50% of Japanese women work outside the home; and other environmental characteristics that might affect the usage or potential usage of the products.

Individual, Moderate, 15-20 minutes Learning Objective 13.1: To understand how cultural values and customs impact the buying patterns of consumers in other countries.

AACSB: Application of knowledge 13.9Coca-Cola is considering introducing very small bottles of its product in Brazil. These would cost less than bottled water. Discuss whether or not the company should do so.

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Brazil is among the world’s heaviest buyers of bottled water because clean, fresh water is very scarce. Brazil has low spending power but consumer expenditures are expected to grow in the next 15 years. Brazilians eat much more fruit than vegetables because growing vegetables is much more expensive than growing fruit. Based on this information, students may suggest there is an opportunity for a soft drink that costs less than water. However, since Coca-Cola is bottled locally, the students may also raise scarce water as a deterrent to market entry. Students may also raise concerns about the ethics of marketing soda as an alternative to water.

Individual, Moderate, 15-20 minutes Learning Objective 13.4: To understand how to evaluate global marketing prospects.

AACSB: Application of knowledge 13.10 As shown earlier, Hong Kong’s Chinese spend more on clothing than any other nation. Research Hong Kong’s culture and geographic location and explain why they do so.

Clothing is a major expenditure Hong Kong’s Chinese. It has big shopping centers and low import taxes, and benefits from its use as a gateway/shipping port. The culture is materialistic and is influenced by its time as a British colony. The culture is also focused on celebrities, which may increase knowledge of and desire for fashion brands. Designer fashions are popular among all classes, but the latest styles are symbols of wealth/upper class stratifications. It has a celebrated fashion week, and although it dropped in the ranks of fashion cities in recent years, it is still in the top 15.

Individual, Moderate, 60-90 minutes Learning Objective 13.4: To understand how to evaluate global marketing prospects.

AACSB: Application of knowledge 13.11 Looking at the charts presented earlier in this chapter, select a product that members of a particular nation consume heavily. Research the country’s culture and geographic location and describe why they are heavy consumers of the product selected.

Student responses will vary. For example, students may choose to further India, where large populations and low incomes result in heavy fruit consumption. The data in Figure 13.5D shows that India is the world’s top consumer of breads and cereals. Consumers in India start the day with daily breads called chapatti, parantas, and dosas. The Indian breakfast is heavy and there is a feeling of fullness at the end.

Individual, Moderate, 60-90 minutes Learning Objective 13.4: To understand how to evaluate global marketing prospects.

AACSB: Application of knowledge

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13.12 Looking at the charts presented earlier in this chapter, select a product that members of a particular nation consume very lightly. Research the country’s culture and geographic location and describe why they are light users of the product selected.

Student responses may vary. For example, Singapore consumes very little fruit. Most fruit is imported, Singaporeans prefer fresh to processed fruit, and consumers are price sensitive when it comes to fruit. Singapore’s geographical position connects it to major air and sea They are transport routes so it can import food ingredients from around the world. passionate about food, but prefer to spend on meat and seafood. Therefore, consumers eat more vegetables, which are less expensive than fruit. In addition, the most popular fruit is banned in many public places because it smells strong.

Individual, Moderate, 25-30 minutes Learning Objective 13.4: To understand how to evaluate global marketing prospects.

AACSB: Application of knowledge HANDS-ON ASSIGNMENTS 13.13 Have you ever traveled outside the United States? If you have, please identify some differences in values, behavior, and consumption patterns that you noted between people in a country you visited and Americans.

Instructor’s Discussion Responses to this exercise will vary based on the sophistication of your students. Its purpose is to lead the students to conduct small-scale, firsthand crosscultural analysis. Help students to think and not make stereotypical, superficial observations. You can also rent a current foreign film on video, watch it, and note places where these behaviors are demonstrated. Then show selected clips of the film and have the students notice the differences depicted in the film. Individual, Moderate, 15-20 minutes Learning Objective 13.1: To understand how cultural values and customs impact the buying patterns of consumers in other countries. AACSB: Reflective thinking

13.14Interview a student from another culture about his or her use of (a) credit cards, (b) fast-food restaurants, (c) shampoo, and (d) sneakers. Compare your consumption behavior to that of the person you interviewed and discuss any similarities and differences you discovered.

Instructor’s Discussion Prepare students with a caution. Some international students will be offended by this kind of questioning. A variation on this exercise would be for you to bring into class and interview selected international students or faculty and have the students take notes. This exercise is designed to illustrate to students the importance of cross-cultural consumer analysis and the

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need to adapt marketing programs to the values, customs, and needs of consumers in various countries.

Individual, Moderate, 60-90 minutes Learning Objective 13.1: To understand how cultural values and customs impact the buying patterns of consumers in other countries.

AACSB: Application of knowledge 13.15 Select one of the following countries: Mexico, Brazil, Germany, Italy, Israel, Kuwait, Japan, or Australia. Assume that a significant number of people in the country you chose would like to visit the United States and have the financial means to do so. Now, imagine you are a consultant for your state’s tourism agency and you have been charged with developing a promotional strategy to attract tourists from the country you chose. Conduct a computerized literature search of the databases in your school’s library and select and read several articles about the lifestyles, customs, and consumption behavior of people in the country you chose.

Prepare an analysis of the articles and, on the basis of what you read, develop a promotional strategy designed to persuade tourists from that country to visit your state.

Instructor’s Discussion This exercise utilizes the analysis of secondary data in studying the values and lifestyles of consumers in another culture.

Individual or Group, Moderate, 90-120 minutes Learning Objective 13.5: To understand the applications of psychographics in targeting consumers in other countries.

AACSB: Application of knowledge S.T.A.R. PROJECTS

Ethical Issues in Consumer Behavior S.T.A.R. Project #1 Assume that you are the marketing manager for a food products company that has just developed a new frozen “French fry” product. This new “French fry” product comes in small microwavable pouches and is noted for its crispiness. The product has been test marketed in New England and has shown favorable results. Your task is to attempt to sell the product idea to Canadian consumers. This might be a difficult task because of Canadian resistance to some United States products. The decision, however, has been made to go forward. Write a short position and strategy paper that outlines how you would attempt to introduce the product into Canada.

Remember that English and French speaking Canadians might receive the product differently. Be sure to identify in your paper any cultural or ethical issues that must be addressed by such an introduction. Lastly, evaluate the likelihood of success of the product in the Canadian market.

Explain your conclusions. .

Instructor’s Discussion Description of the product was kept to a minimum on purpose. In this way students can create their own product by making assumptions. Encourage them to do so. Students can research the Canadian market by using the library or the Internet. Students should certainly comment on Canadian resistance to becoming Americanized. Students should also see that a product such as this might not be popular in the French Canadian markets because the descriptor “French fry” might be offensive. How could the company overcome this difficulty? In the English speaking Canadian market, “French fries” might also be referred to as “chips.” Would this be a problem?

What stigma might be associated with a microwavable product (i.e., would it be limp or soggy)?

This project is a good one to use for discussion with respect to product introductions.

Small Group Projects S.T.A.R. Project #2 Your group should research two to three companies that are reportedly doing an excellent job of recognizing the various cross-cultural similarities and differences among the consumers of different societies. Your group should focus on company marketing strategies. What marketing strategies have these companies employed in order to meet the needs of the consumers in these foreign cultures? How do these marketing strategies differ from the marketing strategies used for the American culture? Select at least one company that has been unsuccessful at recognizing cross-cultural similarities and differences. What did this company do wrong? What could this company have done better in order to be successful in its attempt? (Note: Coca Cola could qualify for both categories. Their early attempts at cross-cultural marketing were disastrous, especially in Asia. Now they are one of the premier international marketers.)

Instructor’s Discussion As an instructor, you can select the companies for the students or allow them to be creative with their own selection. Remember to have them explain or justify their picks. The focus of this assignment is on how companies recognize and deal with cross-cultural similarities and differences. Students should reference the material in the chapter before beginning this assignment. If students have a difficult time getting started, recommend that the section on Marketing Mistakes be read.

S.T.A.R. Project #3 How would you like to plan your own cruise to an exotic foreign port or island paradise?

Carnival Cruise Line (see www.carnival.com) is betting that just such a dream is one that you would like to realize. Carnival, a leader in the foreign travel and cruise industry, has constructed a Web site that allows the aspiring traveler to become his or her own travel agent. Your assignment is to plan and tentatively book your own cruise. You will be able to do so without commitment. As you plan your cruise make note of the consumer decisions that you must reach, the ease or difficulty in doing this, and choices that are allowed. Once you have completed the process, write a short report that summarizes your experience. Was the Web site an aid to your booking objective? What were the Web site’s strong and weak points? How could it be improved? What did you learn about booking travel online? As a consumer, would you use this method if you were doing it for real?

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Instructor’s Discussion Nothing is quite as much fun as booking a dream vacation (especially if money is no object).

Students will be exposed to a consumer-friendly Web site that has been evaluated as one of the best. To extend this project, the instructor might select some of the other cruise Web sites and create a comparison for Carnival. Or, the instructor might invite a travel agent to speak to the class about the advantages of using a travel agent over self-booking or Web site booking.

S.T.A.R. Project #4 At any given time the world is in turmoil somewhere. This turmoil often impacts global business and commerce. If business and commerce are affected, consumers are also affected. Your assignment is to use the Internet to research how global events impact global consumers. A good place to start your Internet search is to review the latest stories and headlines found on either CNN (see www.cnn.com) or U. S. News and World Report (see www.usnews.com). Other sources can be used, however, these two news-oriented Web sites do an adequate job of reporting global events and consumer issues that are impacted by world events. For example, does war in the Middle-East impact gasoline prices or automobile sales? Does disagreement among members of the United Nations (especially the powerful members) hurt trade and consumer purchasing? Are American consumers welcomed around the world if antiAmericanism is high? Write a summary report about your findings and conclusions.

Instructor’s Discussion Students are free to be creative with this assignment. As was indicated in the assignment, world events are constantly changing and these events impact consumers and consumption. Each student should create his or her own illustrations. These illustrations should be supported by world events and secondary material. Have a discussion that involves not only contemporary news stories but the human side as well. International students can usually provide good insight into this area. The only real danger of this assignment is that it might degrade to a political discussion rather than one that centers on consumers and consumption. Watch this danger and keep students focused and on track.

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CHAPTER 14 Consumer Decision-Making and Diffusion of Innovations LEARNING OBJECTIVES 14.1 14.2 14.3

To understand the consumer decision-making process and consumer decision journey.

To understand the dynamics of buying gifts.

To understand how new products gain acceptance and how individuals decide whether or not to adopt them.

CHAPTER SUMMARY Learning Objective 14.1: To understand the consumer decision making process and consumer decision journey.

Not all consumer decision-making situations require the same degree of information research.

Extensive problem solving occurs when consumers have no established criteria for evaluating an item within a product category. Limited problem solving occurs when consumers have established the basic criteria for evaluating the product category, but need more information to decide among the brands and product models available. Routinized response behavior occurs when consumers have experience with the product category and the brands offered and buy items often and almost instinctively. In addition, the level of involvement in the decision, a model of consumer decision making ties together the consumption behavior discussed throughout this book. It includes three components: input, process, and output.

The degree of personal relevance that the product or purchase holds for the consumer is referred to as consumer involvement. High-involvement purchases are very important to the consumer (e.g., in terms of perceived risk) and thus provoke extensive problem solving and information processing. Under this scenario, both automobiles and dandruff shampoo can represent highinvolvement purchases: The automobile because of its high perceived financial risk (to most people), and the shampoo because of high perceived social risk (to some people). Lowinvolvement purchases are not very important, hold little relevance, have little perceived risk, and provoke limited information processing. The consumer decision making journey is different for high involvement as compared to low involvement situations.

Learning Objective 14.2: To understand the dynamics of buying gifts.

Gifts represent more than ordinary, everyday purchases, because they are symbolic, and mostly associated with important events. Gifting behavior is a gift exchange that takes place between a giver and a recipient. The definition is broad in nature and embraces gifts given voluntarily, as well as gifts that are an obligation. It includes gifts given to (and received from) others and gifts to oneself (self-gifts). Moreover, the majority of products that we refer to as “gifts” are in fact items that we purchase for ourselves.

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Learning Objective 14.3: To understand how new products gain acceptance and how individuals decide whether or not to adopt them.

Diffusion of innovations is the macro process by which the acceptance of an innovation (i.e., a new product, service, idea, or practice) takes place among members of a social system (or market segments) over time. This process includes four elements: (1) The innovation (new product, model, service); (2) the channels of communication (informal or formal, impersonal or personal groups); (3) the social system (a market segment); and (4) time. In contrast, the innovation adoption process is a micro process that focuses on the stages through which an individual consumer passes when deciding to accept or reject a new product.

CHAPTER OUTLINE Introduction

1. This chapter integrates the concepts discussed in previous chapters into a framework that

illustrates how consumers make buying decisions. a) The input into decision what to buy comprises the marketer’s offering, the influence of reference groups, word-of-mouth, and information from social media and advertising. b) Psychology processes the input. c) Outcomes are functions of learning and forming attitudes.

2. The consumer journey is another approach for understanding consumers’ decisions. a) Output stage includes consumption, which is assumed in the decision-making model, but not stated. b) It expands decision-making to include engaged/interacts and actively advocates. *****Use Key Term consumer journeyHere; Use Figure #14.1 Here ***** Consumer Decision-Making Model 1. Consumer decision-making includes three components: input, process, and output.

2. Consumer journey can also be placed in stages of input, process, and output. *****Use Learning Objective #14.1 Here***** 1. The consumer decision-making model includes three components: input, process and output. a) The input component include three types of external influences:

i) The marketing mix. ii) The sociocultural influences. iii) Communications, which are the mechanisms that deliver the marketing mix and sociocultural influences to consumers. b) The process component of the model is concerned with how consumers make decisions. i) Internal influences (motivation, perception, learning, personality, and attitudes) affect consumers’ decision-making processes. ii) The first of the three stages in the process part of the model is need recognition, which occurs when a consumer is faced with a “problem.” .

a) b)

Some needs are actual state types, who perceive that they have a problem when a product fails to perform satisfactorily.

Some needs are desired state types, for whom the desire for something new may trigger the decision process. iii) Three types of problem solving are introduced: a) Extensive problem solving applies when the purchase is infrequent, and the consumer has no established criteria for evaluating a high involvement product. Routinized response behavior applies when consumers have experience and do not need to establish criteria to b) evaluate a low risk product. Limited problem solving applies when c) consumers purchase updated versions of products they have bought before, which often have additional features.

*****Use Key Termsextensive problem solving; routinized response behavior; limited problem solving Here; Use Figures #14.2 and #14.3 Here ***** d)

Consumer involvement is the degree of personal relevance that the product or purchase holds for the consumer.

(1) High-involvement purchases are very important to the consumer, have a high degree of perceived risk, and result in extensive problem solving. Low-involvement purchases are not very important, hold little relevance, have little perceived risk, and are (2) routinized response behavior.

*****Use Key Termconsumer involvement Here ***** iv) Pre-purchase search begins when a consumer perceives a need that might be satisfied by the purchase and consumption of a product. a) Sometimes recalling past purchases provides the consumer with adequate b) information to make the present choice. When the consumer has had no prior experience, he or she may have to engage in an extensive search of the outside environment for useful information on which to base a choice.

*****Use Key Termpre-purchase search Here; Use Figure #14.4 Here***** v) The three major contextual factors that have been researched for their effects on pre-purchase search are: a) Task Complexity – the number of alternatives and amount of information b) available for each alternative. c) Information Organization – the presentation, format, and content.

Time Constraint – the amount of time the consumer has to decide. .

vi) Within the context of consumer decision-making, the evoked set (consideration set) refers to the specific brands (or models) a consumer considers in making a purchase within a particular product category a) An inept set consists of brands (or models) that the consumer excludes from purchase consideration because they are unacceptable (or they are seen as inferior). An inert set consists of brands (or models) the consumer is indifferent toward because they are perceived as not having any b) particular advantages. *****Use Key Termsevoked set, inert set, inept set Here; Use Figure #14.5 Here***** vii) Excluded products include: a) Unknown brands or models (selective exposure, selective perception) b) Unacceptable brands (poor quality, inappropriate positioning, missing c) features) d) Brands that do not have any special benefits e) Overlooked brands that were not clearly positioned Brands that do not satisfy perceived needs viii) Companies sometimes advertise in a way that recommends the criteria consumers should use to assess product or service options. ix) White space and choice of typeface can influence the consumer’s image of the product. x) Three factors that affect a brand’s credibility are: a) the perceived quality of the brand b) the perceived risk associated with the brand c) the information costs saved with that brand (due to the time and effort saved by not having to shop around) xi) Trustworthiness is more important than expertise when it comes to making a choice. xii) Decision rules are procedures that consumers use to facilitate brand (or other consumption-related) choices. a) These rules reduce the burden of making complex decisions by providing b) guidelines or routines that make the process less taxing. Compensatory decision rules come into play when a consumer evaluates brand or model options in terms of each relevant attribute and computes a weighted or summated score for each brand - the assumption is that the consumer will select the brand that scores highest among the alternatives evaluated.

Noncompensatory decision rules do not allow consumers to balance positive evaluations of a brand on one attribute against a negative c) evaluation on some other attribute, and include: (1) (2)

conjunctive decision rule lexicographic decision rule

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*****Use Key Termscompensatory decision rules, noncompensatory decision rules, conjunctive decision rule, lexicographic decision rule Here; Use Table #14.1 Here; Use Review and Discussion Question #14.3 Here *****

c)

xiii) The consumer segment and the specific shopping rules that these segments employ are: a) Practical Loyalists—those who look for ways to save on the brands and b) products they would buy anyway. c) Bottom-Line Price Shoppers—those who buy the lowest-priced item with d) little or no regard for brand.

Opportunistic Switchers—those who use coupons or sales to decide among brands and products that fall within their evoked set.

Deal Hunters—those who look for the best bargain and are not brand loyal. xiv) Consumers may also use the affect referral decision rule, in which the consumer selects the brand with the highest perceived overall rating (the simplest of all rules). xv) Some decision rules do not evaluate each of the attributes; they take into account different factors that influence purchase or use of a product. a) Recognition heuristic b) Majority vote heuristic xvi) Missing information may result from advertisements or packaging that mention only certain attributes, the consumer’s own imperfect memory of attributes for no present alternatives, or because some attributes are experiential and can only be evaluated after product use. a) Consumers may delay the decision until missing information is obtained. b) Consumers may ignore missing information and decide to continue with the c) current decision rule using the available attribute information. d) Consumers may change the customarily used decision strategy to one that better accommodates missing information.

Consumers may infer (“construct”) the missing information. xvii) Consumers may consider retail and payment options.

Consumers make three types of outputs/purchases. i) When a consumer purchases a product (or brand) for the first time and buys a smaller quantity than usual, the purchase is a trial. ii) A trial is the exploratory phase of purchase behavior in which consumers attempt to evaluate a product through direct use. iii) When a new brand in an established product category is found by trial to be more satisfactory or better than other brands, consumers are likely to repeat the purchase. iv) Repeat purchase behavior represents brand loyalty, which most firms try to encourage because it contributes to greater stability in the marketplace. v) Post-purchase evaluation occurs after consumers have used the product, and in the context of their expectations. a) When a product’s performance matches expectations, consumers feel b) neutral.

Positive disconfirmation of expectations occurs when the product’s performance exceeds expectations and the consumer is satisfied. .

c)

Negative disconfirmation of expectations occurs when performance is below expectations and the consumer is dissatisfied. vi) Cognitive dissonance occurs when tension arises after a purchase decision. a) Consumers try to reassure themselves that they made wise choices to resolve the tension. b) In doing so, they may (1) rationalize the decision as being wise (2) seek advertisements that support their choice and avoid those of (3) competitive brands (4) attempt to persuade friends or neighbors to buy the same brand (and thereby confirm their own choice) turn to other satisfied purchasers for reassurance. *****Use Key Terms positive disconfirmation of expectations, negative disconfirmation of expectations, brand loyalty, cognitive dissonance Here; Use Review and Discussion Questions #14.4 and #14.5 Here; Use Hands-on Assignment #14.9 Here***** vii) Cabinet castaways are often bought for a specific purpose or situation that does not materialize. viii) Liberal store return policies can bring consumers into the stores; consumers may end up buying products they will use.

Consumer Gifting Behavior 1. Gifting behavior is the process of gift exchange that takes place between a giver and

receiver. a) It includes gifts given to (and received from) others and gifts to oneself, or self-gifts. b) Gifting is symbolic communication with implicit and explicit meanings.

2. One of the models of gifting reveals the following five gifting subdivisions: a) Intergroup gifting occurs when one group exchanges gifts with another. b) Intercategory gifting is an individual giving a group a gift, or a group giving an c) individual a gift. d) An intragroup gift is a gift that a group gives itself. e) Interpersonal gifts occur between two individuals.

An intrapersonal gift occurs when the giver and the receiver are the same individual (a self-gift). *****Use Key Learning Objective 14.2 Here; Use Key Term gifting behavior Here ***** 3. One study of gifts purchased online found that variety seeking extends to gifting; subjects

with this trait considered a wider range of product categories.

4. Consumers complain when they receive gifts that threaten their self-concepts, are interpreted as aggressive, allow the giver to brag.

Diffusion and Adoption of Innovations .

1. Consumer acceptance of new products and services is studied from the macro research

perspective known as the diffusion of innovations.

2. The process includes four elements: a) The innovation b) The channels of communication c) The social system d) Time 3. The innovation adoption process is a micro process that focuses on the stages through which an individual consumer passes when deciding to accept or reject a new product. diffusion of innovations and ***** Use Learning Objective #14.3 Here; Use Key Terms adoption process Here***** 4 There is no universally accepted definition of the terms product innovation or new product. . Many marketers classify new products into three categories reflecting the extent to which 5 they require consumers to change existing consumption or buying patterns: . a) Continuous innovation, which is the least disruptive to consumer patterns. b) Dynamically continuous innovation, which, although not altering established behavior c) patterns, is somewhat more disruptive.

Discontinuous innovation, which requires consumers to adopt new behavior patterns. *****Use Key Termsinnovation, continuous innovation, dynamically continuous innovation, and discontinuous innovation Here; Use Figure #14.2 Here; Use Review and Discussion Question #14.6 Here***** 6. Researchers have identified five product characteristics that seem to influence consumer

acceptance of new products: a) Relative advantage—degree to which potential customers perceive a new product as superior to existing substitutes. b) Compatibility—degree to which the customer feels the new product is consistent with their present needs, values, and practices. c) Complexity—degree to which a new product is difficult to understand or use.

Complexity is especially important in dealing with technological fear. d) Trialability—degree to which a new product is capable of being tried on a limited basis. e) Observability—ease with which a product’s benefits or attributes can be observed, imagined, or described to potential consumers. *****Use Discussion Question #1 Here; Use Review and Discussion Question #14.7 Here; Use Hands-on Assignment #14.8 Here***** 7. The focus of the adoption process is the stages through which an individual consumer

passes in arriving at a decision: to try or not to try; to continue using or to discontinue using a new product.

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8. It is often assumed that the consumer moves through five stages in the adoption process in

arriving at a decision to purchase or reject a new product: a) Awareness: The consumer first becomes aware that an innovation exists. b) Interest: The consumer becomes interested in the innovative product or service. c) Evaluation: The consumer undertakes a “mental trial” of the innovation. d) Trial: The consumer tries the innovation. e) Adoption: If satisfied, the consumer decides to regularly use the innovation or not use it again.

9. The adoption process described is an oversimplification of the actual process. a) The process does not adequately acknowledge that quite often, consumers face a need or problem-recognition stage before acquiring an awareness of potential options or solutions (a need recognition preceding the awareness stage). The adoption process b) model does not adequately provide for the possibility of evaluation and rejection of a new product or service after each stage, especially after trial (i.e., a consumer may reject the product after trial or never use the product on a continuous basis). It does not explicitly include post-adoption or post-purchase evaluation, which can lead to a c) strengthened commitment or to a decision to discontinue use.

*****Use Discussion Question #1 Here***** REVIEW AND DISCUSSION QUESTIONS 14.1 What kinds of marketing and sociocultural inputs would influence the purchase of: (a) HDTV set; (b) a concentrated liquid laundry detergent; and (c) fat-free ice cream?

Explain your answers.

Students’ answers will vary. Students should see marketing inputs as the firm’s marketing efforts to reach, inform, and persuade consumers to buy and use its products. These inputs take the form of specific marketing-mix strategies that consist of the product itself (including its package, size, and guarantees); mass-media advertising, direct marketing, personal selling, and other promotional efforts; pricing policy; and the selection of distribution channels to move the product from the manufacturer to the consumer. Sociocultural inputs consist of a wide range of noncommercial influences, such as the comments of a friend, an editorial in the newspaper, or usage by a family member or an article in Consumer Reports. The influences of social class, culture, and subculture, though less tangible, are important input factors that are internalized and affect how consumers evaluate and ultimately adopt (or reject) products. Unlike the firm’s marketing efforts, sociocultural inputs do not necessarily support the purchase or consumption of a specific product, but may influence consumers to avoid a product.

Individual, Moderate, 15-20 minutes Learning Objective 14.1: To understand the consumer decision-making process and consumer decision journey.

AACSB: Application of knowledge .

14.2Marketers must ensure that their products become a part of a consumer’s evoked set if they are to be considered. What are some of the factors that increase pre-purchase information search? Which products do not?

Within the context of consumer decision-making, the evoked set (consideration set) refers to the specific brands (or models) a consumer considers in making a purchase within a particular product category. Factors that increase pre-purchase information search include product factors, situational factors, and consumer factors (See Figure 14.4).

Excluded products include unknown brands or models; unacceptable brands with poor quality, lacking specific features or attributes, or positioned inappropriately in either advertising or product characteristics; brands that are perceived as not having any special benefits; overlooked brands that have not been clearly positioned, and brands that are not selected because they do not satisfy perceived needs. Individual, Moderate, 25-30 minutes Learning Objective 14.1: To understand the consumer’s decision-making process.

AACSB: Reflective thinking; Application of knowledge

14.3Consumers purchase products to satisfy their needs; these could be luxury items or necessities. Many large consumer purchases require in-depth comparisons in terms of price, quality, and brand. Suppose you are looking to purchase a product that involves research and comparison. What influences your decision to purchase one product over another?

High involvement products tend to require more thinking and decision-making time. If consumers are less concerned about the style and brand of the product they want to buy, they will focus more on deals and base their decisions on external elements of the product, which in turn takes less time. If consumers are more focused on the brand, color, or the image of the product than other external factors, they will take more time to search for, test, and purchase the product.

Individual, Moderate, 20-25 minutes Learning Objective 14.1: To understand the consumer’s decision-making process.

AACSB: Application of knowledge 14.4 How can Apple use its knowledge of customers’ expectations in designing a marketing strategy for a new iPad? The marketer should be aware of what the consumer expects from the laptop computer, because if the product fails to operate as the consumer expects it to, he or she might return it, not buy products under that brand name again, and spread unfavorable word-of-mouth about the company. The promotion for the computer must not build up unrealistic expectations about the product by promising, for example, an easy-to-use product (because virtually all personal computers are complex products and users must spend a considerable amount of time learning how to operate them properly). The positioning approach used must be .

designed to deliver benefits that are congruent with those consumer needs and expectations uncovered by research studies.

Individual, Moderate, 15-20 minutes Learning Objective 14.1: To understand the consumer decision-making process and consumer decision journey.

AACSB: Application of knowledge

14.5How do consumers reduce post-purchase dissonance? How can marketers provide positive reinforcement to consumers after the purchase in order to reduce their dissonance?

Marketing strategies to reduce postpurchase dissonance include: (a) ads which reassure buyers that they made the right choice; (b) reassuring messages and text within the instruction manuals; (c) extensive warranties, guarantees, and service; (d) a mechanism to obtain further information about the product (e.g., an 800 number, a corporate service center); (e) postpurchase contacts with buyers by mail or phone (e.g., a “welcome back” postcard mailed by a travel agent to a client returning from a vacation that was arranged by the same travel agent). Individual, Moderate, 5-7 minutes Learning Objective 14.1: To understand the consumer decision-making process and consumer decision journey.

AACSB: Reflective thinking

14.6Amazon Alexa is a virtual assistant developed by Amazon. It was first used in Amazon Echo Dot smart speaker. Alexa can perform many functions like voice interaction, music playback, setting up of alarms, provide weather updates, etc. It is also capable of controlling smart devices using itself as a home automation system. a. Who is Amazon Alexa’s target market?

Innovators will be the target market for Alexa. These consumers are venturesome, open to new ideas, eager to try new products, perceive less risk in adopting new offerings, and are more socially integrated than other consumers. In terms of personality traits, these individuals are open-minded, inner-directed, and like exciting and new concepts (i.e., high optimum stimulation level). You will want to share the characteristics of innovators with students prior to assigning the question. b.Not all new products are equally likely to be adopted by consumers. Explore the product characteristics that would influence consumer acceptance of Alexa.

Students’ answers will vary. They will have to consider product characteristics that determine consumer acceptance of new products such as relative advantage, compatibility, complexity, trial-ability, and observability (communicability).

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c. Is Alexa a continuous, dynamically continuous, or discontinuous innovation?

Explain your answer.

Most students should identify Alexa as a dynamically continuous innovation, as it does not require a change in established behavior from the consumer but does involve the creation of a new product or modification of an existing product. Individual, Moderate, 25-30 minutes Learning Objective 14.3: To understand how innovative offerings gain acceptance within market segments and how individual consumers adopt or reject new products and services. AACSB: Application of knowledge

14.7 Describe how Sony can use the five product features that affect adoption in order to speed up the diffusion of its new TV model. a)

Relative advantage—degree to which potential customers perceive a new product as superior to existing substitutes. Sony can emphasize features that differentiate the TV from existing offerings. If consumers do not feel that the additional pixels justify the $10,000 price tag, Sony can consider redesigning the TV to include attributes that consumers feel are more valuable or lower the price. b) Compatibility—degree to which the customer feels the new product is consistent with their present needs, values, and practices. Sony can emphasize the use of the new product for needs and values that are important to consumers, such as social needs or ego needs, in its communications. c) Complexity—degree to which a new product is difficult to understand or use.

Complexity is especially important in dealing with technological fear. Sony can emphasize that, in spite of its functionality, it is as easy to use as any other television. d) Trialability—degree to which a new product is capable of being tried on a limited basis.

Sony can work with retailers and/or run events where consumers can try the product. e) Observability—ease with which a product’s benefits or attributes can be observed, imagined, or described to potential consumers. Sony might identify opinion leaders in affluent neighborhoods and have them host parties around television-based events (e.g. the Super Bowl; the Academy Awards) so consumers can try the product.

Individual, Moderate, 15-20 minutes Learning Objective 14.3: To understand how new products gain acceptance and how individuals decide whether or not to adopt them.

AACSB: Application of knowledge HANDS-ON ASSIGNMENTS 14.8 Identify a product, service, or style that was recently adopted by you and/or some of your friends. Identify what type of innovation it is and describe its diffusion process up to this point in time. What are the characteristics of people who adopted it first? What types of people did not adopt it? What features of the product, service, or style are likely to determine its eventual success or failure? .

Instructor’s Discussion The objective of this exercise is to demonstrate that the concepts discussed in this chapter are highly applicable to the student’s own behavior and immediate social system. Some of the information (characteristics of people who adopted it) should be introduced in advance, but the features should be related to the factors that affect the rate of diffusion of innovations. Individual or Group, Moderate, 45-60 minutes Learning Objective 14.3: To understand how new products gain acceptance and how individuals decide whether or not to adopt them. AACSB: Application of knowledge

14.9It is difficult to find a global definition for the term “innovation,” as it takes many forms. Organizations such as Google and the Virgin Group have succeeded in highly competitive industries due to their ability to provide some form of innovation. This could be obvious innovations of products or services, such as the move from black-andwhite televisions to today’s flat screens. Innovation could also be in improved customer service and manufacturing. Toyota led the way in improving its production of automobiles, an innovation that has been adapted by many manufacturing organizations globally. It has been argued that there are four key approaches to defining a new product innovation. Discuss the importance of each of the approaches identified below, with examples. a. Firm-oriented b. Product-oriented c. Market-oriented d. Consumer-oriented Instructor’s Discussion Students must begin by stating the definitions of each of the approaches to product innovation. Below is a brief description of each approach.

Firm-OrientedThis approach treats the launch of new products based on the needs of the organization.

Example of such a product can be the savings accounts within the banking sector, where funds from customers’ savings tend to go toward providing mortgage loans to customers.

Product-OrientedThis approach looks at products itself and how product features affect consumer behavior. The soft drinks industry is a classic example of such products: a company launches a new flavor in the market thereby modifying the current product.

Market-OrientedThis approach is to launch a new product based on the market’s needs . and conditions. This will always involve the need to have maximized exposure to a market.

Examples could include seasonal products such as Christmas trees. The winter months experience a surge in demand for trees, usually spruce, pine or fir, due to the festive period.

Consumer-OrientedThe focus here is on the needs of the potential consumer who will be purchasing the products. This tends to be the most favorable, as understanding consumer requirements tends to improve the chances of a product being successful. An example of such a product is the smartphone. Previously, mobile telephones tended to focus on just making calls and texting, but consumer needs influenced changes to include emails and social networking.

Individual, Moderate, 30-40 minutes Learning Objective 14.3: To understand how innovative offerings gain acceptance within market segments and how individual consumers adopt or reject new products and services.

AACSB: Application of knowledge 14.10 Describe the need recognition process that took place before you purchased your last can of soft drink. How did it differ from the process that preceded the purchase of a new pair of sneakers? What role, if any, did advertising play in your need recognition?

Instructor’s Discussion Students should be able to recognize a difference in consumer involvement between the soft drink purchase and the sneakers. Students may recognize more research or risk associated with the sneaker purchase, and may have been more perceptually vigilant and aware of advertising for sneakers when they were looking. On the other hand, they may have felt thirsty and purchased the soft drink as an impulse item.

Advertising also may have shifted the difference between the students’ actual states and their ideal states. Individual, Moderate, 10-15 minutes Learning Objective 14.1: To understand the consumer decision-making process and consumer decision journey.

AACSB: Application of knowledge

14.11 List three colleges that you considered when choosing which college or university to attend and the criteria that you used to evaluate them. Describe how you acquired information on the different colleges along the different attributes that were important Be sure to specify whether you used to you and how you made your decision. compensatory or non-compensatory decision rules.

Instructor’s Discussion This exercise gives students a great chance to converse about something important to them while gaining a deeper understanding of decision rules.

Examples that indicate some people allow features or attributes to make up for each other should be compared to examples where one thing may have been the most important, as appropriate.

Individual, Moderate, 10-15 minutes Learning Objective 14.1: To understand the consumer decision-making process and consumer decision journey. .

AACSB: Application of knowledge 14.12 The key characteristics that influence buyer behavior toward new products are perceived risk, media influence, social characteristics, and demographic characteristics.

Suppose that you are planning to purchase a brand-new luxury motor vehicle. Explain how each of these factors would affect your purchasing decision. Use examples to support your responses.

Instructor’s Discussion Luxury vehicles are high-cost, high-involvement purchases.

Multiple factors must be considered before deciding which one to purchase. To help students do this, ask them to consider the four characteristics above. Students should, for each of the characteristics, state what it means and how it applies to the example of a luxury motor vehicle.

Perceived RiskThis will look at the risks associated with purchasing a product, which could be the risk of social influence, wherein friends and family agree or disagree with the purchase of a high value product; the risk of finance, which relates to the expense of a purchase, and the risk of time, which relates to how long the product will take to be manufactured and delivered to the customer.

Media InfluenceMedia generally comprises social media, TV, radio, and newspapers. To what extent does media affect the selection of a luxury product? Does the media promote a particular color, brand, and style of luxury car? Other issues may arise, such as the fuel efficiency of vehicles and their impact on the environment.

Social CharacteristicsDoes society agree with the purchase of the product? Is the consumer an innovator (one of the firsts) or a follower of trends (a non-innovator)?

Demographic CharacteristicsKey demographic characteristics are age (younger consumers tend to be innovators and older consumers tend to be non-innovators), income (household income has a major influence on the purchasing power of a family), and location (consumers who live in affluent areas have more purchasing power than consumers who do not).

Individual, Moderate, 30-40 minutes Learning Objective 14.1: To understand the consumer’s decision-making process.

AACSB: Application of knowledge 14.13 Consider items you have in closets and cabinets that might be considered cabinet castaways. What are these products? Why didn’t you use them? What could be a marketer’s role to ensure that you use it or discard it and buy it again?

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Instructor’s Discussion Student examples will vary. Ask them to consider how marketers emphasize attributes that may help differentiate or position their offerings. They may also mention the use of fonts and white space, which were mentioned in the context of product evaluations in the chapter. Individual, Moderate, 10-15 minutes Learning Objective 14.1: To understand the consumer decision-making process and consumer decision journey.

AACSB: Application of knowledge

14.14 Keep a consumer journal for three days. On each day, briefly describe each of your consumer journeys and decisions. Apply the concepts and terms in this chapter to analyze your consumer behavior.

Instructor’s Discussion Some students may focus on the purchase behavior as the main output. If so, ask them to consider the consumption of the product, and how they choose whether or not to advocate on Include positive and negative disconfirmation of behalf of the brand after purchase. expectations and ideas like involvement and task complexity in the discussion.

Individual, Moderate, 10-15 minutes Learning Objective 14.1: To understand the consumer decision-making process and consumer decision journey.

AACSB: Application of knowledge

S.TA.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 As a consumer behavior expert for a nationwide clothing manufacturer you have been asked to address a consortium of Better Business Bureaus via a nationwide interactive TV/Satellite hookup. When you arrive at the TV studio where the broadcast will occur you learn that the sponsors have also invited a speaker from Ralph Nader’s consumer organization to address the same audience. This speaker will contend that consumers should use an economic view in consumption decisions. Your presentation was to assert that consumers primarily use a cognitive view in making their decisions. As the unannounced “debate” begins, your fellow speaker labels your company as being one that dupes consumers through mass media advertising and plays on the consumers’ emotions and passivity (addiction to mass media for information) to sell products. Considering the response and the ethics of what was just done, formulate a response to support your position with respect to the cognitive view of consumer decision making. How could you ethically come out of this “debate” on top?

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Instructor’s Discussion This scenario asks students to consider their actions when placed in a difficult role. First, the debate was unannounced and, therefore, preparation for a debate would be minimal. Second, the speaker that students would be matched against has an aggressive agenda. Lead students through a response format. Should they attack, be submissive, be explanatory, take the high road, or refuse to participate? This might be good training for the unexpected encounter.

Individual Star Projects S.T.A.R. Project #2 Your task is to go on a pre-purchase search via the Internet. The product category is up to you.

You can either search for a product via the Internet that you will eventually purchase in a store or the search can be for a product that would be purchased online. Once you have completed your pre-purchase search, list the factors that impacted your search. Is the Internet a good way to search for products? Comment. Lastly, write a summary report about your experience and whether you thought it was beneficial or not. Be sure to describe your successes and failures encountered during the search process.

Instructor’s Discussion This assignment asks students to use the Internet to do a pre-purchase search and then to comment on their experiences. The assignment also affords students the opportunity to review the situational factors described in the chapter. Pick a few students to discuss their experiences while on their search. Try picking one student who has never searched for products via the Internet (yes, there will be some) and one student who is an experienced Internet searcher and shopper. Contrast the information provided by these two students.

S.T.A.R. Project #3 Consumer decision rules, even though you use them every day, are often difficult to understand.

Before beginning this assignment, review the consumer decision rules found in the chapter. Your assignment is to design your own new BMW (see the design feature at www.bmw.com). As you design your new car, consider the decision rules that are impacting and formulating your decisions. Once you have designed your new car, download a picture of the car and list all the features you have included in your ideal car (another download feature of the Web site). Write a short summary report that describes what you did, what decision rules you used, and how these rules influenced your overall decision process. Discuss your efforts with the class. Show your new car.

Instructor’s Discussion This assignment lets students have some fun designing their own luxury car and at the same time learn about decision rules. As students complete the assignment be sure to have them show their new car, explain what decision rules were used, and how the rules influenced their decisionmaking process. The results are often surprising.

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S.T.A.R. Project #4 Gillette (see www.gillette.com) has a policy that 40 percent of sales must come from products introduced within the past five years. Wouldn’t it be great if all companies followed a similar doctrine and objective? Gillette has been considered to be an innovative company for almost a century. Following the policy above is one of the reasons that it has an innovative reputation.

Your assignment is to go to the Gillette Web site, pick a product from the Gillette inventory, and trace how the product either has or should be diffused through our market system. Use any of the tools, ideas, or suggestions provided by the chapter to carry out your assignment. Write a short report that summarizes your attempt and findings.

Instructor’s Discussion This project is left wide-open deliberately. It should be a good gauge of what students have learned about innovation and diffusion. You may modify in any way you see fit. There is ample information on the Gillette Web site to pursue the development of any one of several products.

Small Group Project S.T.A.R. Project #5 Your group’s assignment is to pick a product category such as personal computers, clothing, cars, or recreation. Using your chosen category, chart, outline, or diagram how consumers make purchase decisions in the chosen area. Focus on need recognition, prepurchase search, and evaluation of alternatives. Lastly, your group should pick a “reporter” to summarize your group’s findings for the entire class.

Instructor’s Discussion This assignment is a good summary for the group experience and the basic substance of the course and text. Add product categories for a large class to ensure that every group has a separate discussion area. Use this as a basis for discussion on how the product and its importance to the consumer effects the way they make decisions.

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CHAPTER 15 Marketers’ Ethics and Social Responsibility

LEARNING OBJECTIVES 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9

To understand the importance of marketing ethics and social responsibility.

To understand the wide-ranging abuse of consumers’ privacy.

To understand how marketers exploit and manipulate children and others.

To understand the harm caused by misleading labels.

To understand how marketers disguise advertisements.

To understand the damage of false and misleading advertising.

To understand offensive communications.

To understand promoting socially beneficial causes.

To understand consumers’ ethical obligations.

CHAPTER SUMMARY Learning Objective 15.1: To understand the importance of marketing ethics and social responsibility.

The marketing concept is sometimes incompatible with society’s best interests. The societal marketing concept requires that all marketers adhere to principles of social responsibility in the marketing of their goods and services. Since all companies prosper when society prospers, companies must integrate social responsibility into all marketing decisions, and many have adopted the societal marketing concept. A serious deterrent to more widespread implementation of the societal marketing concept is the short-term orientation of most business executives and corporate boards in their drive to quickly increase market share and profits.

Learning Objective 15.2: To understand the wide-ranging abuse of consumers’ privacy.

Consumers’ loss of privacy is an increasingly problematic ethical issue as marketers identify and reach out to increasingly smaller audiences through innovative media and more sophisticated tracking. The collection and dissemination of this information raises many privacy issues and various governmental bodies have proposed measures to ensure consumers’ privacy. “Do not track” and opt-out mechanisms, regulation of data brokers and harvesters, and increased consumer access to the information collected about them are options for combatting the invisible tracking that is being done via internet, cell phone, and coupon use. Given the vast flow of information that consumers entrust to the internet every day, it is hard to believe there is no general law to protect people’s privacy online. Companies harvest data about people as they “surf the ‘Net,” assemble it into detailed profiles, and sell it to advertisers or others without ever asking permission.

Because there are no uniform international laws to deal with violations of online privacy,

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and because no one specifically monitors for potential violations of consumers’ rights to privacy online, there is no consensus as to whether government regulation or voluntary measures could alleviate this concern.

Learning Objective 15.3: To understand how marketers exploit and manipulate children and others.

The study of consumer behavior allows marketers to understand why and how consumers make their purchase decisions, but it also enables unethical marketers to exploit human vulnerabilities in the marketplace and engage in other unethical marketing practices. Such practices include targeting vulnerable consumers such as children, teenagers, the elderly, and less-educated consumers who may not have the knowledge or experience to evaluate the products or services being promoted and the potential negative consequences of using them. A major concern is that food marketers “teach” children to overeat, leading to surging obesity and health problems among young consumers. Over the past few years, lawmakers have called for legislation regulating food advertising to children; presumably to avoid such regulation, several companies have voluntarily modified their marketing practices. Online, marketers routinely violate laws and self-regulatory guidelines regarding targeting children. Another form of encouraging irresponsible consumption is banks’ targeting of teenagers and college students and providing them with too much easy credit, which puts them into financial difficulties for years.

Learning Objective 15.4: To understand the harm caused by misleading labels.

Nutritional labels are placed on all packaged food items sold in the United States.

Nevertheless, many critiques have pointed out that the current format of such labels is unclear and somewhat manipulative. For example, the labels list information on a “perserving” basis. However, the Food and Drug Administration regulations allow manufacturers some discretion in setting serving sizes. Consumers want deeper transparency into how food is made and have been pushing, and will continue to push, food companies to label ingredients made from genetically engineered crops.

Learning Objective 15.5: To understand how marketers disguise advertisements.

Marketers can manipulate consumers’ interpretations of marketing stimuli through the context in which those stimuli are featured. Covert marketing consists of marketing messages and promotional materials that appear to come from independent parties but are, in fact, sent by marketers. Native advertising (sometimes called branded content) is designed to blend within the content in which they are “planted,” such as articles, entertainment, and news, by resembling the content and disguising advertising—their true identity. Also, federal regulators told Google, Yahoo, and Microsoft to more clearly highlight the ads in their search-engine results in order to avoid deceiving consumers.

Some maintain that covert marketing strategies often violate the FTC’s definition of deceptive advertising, endorsement guidelines, and other regulations of marketing, and believe that the FTC should establish clearer rules to reduce the use of masked advertising.

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Learning Objective 15.6: To understand the damage of false and misleading advertising.

The FTC has developed guidelines as to what constitutes deceptive advertising, and it holds marketers responsible for determining their ads’ potential to mislead consumers.

Although the FTC is responsible for stopping false or misleading ads, and the agency encourages and investigates complaints by consumers and companies regarding false or misleading ads, it cannot locate and stop all misleading ads. The FTC can also require companies that have misled consumers through their advertising to run corrective advertising.

Learning Objective 15.7: To understand offensive communications.

Too many marketing messages convey socially undesirable stereotypes and images, some of which tend to encourage risky or illegal behavior or create unrealistic perceptions.

Many studies have focused on the use of objectionable themes in advertising and discovered that negative portrayals of certain people or objects affect consumers’ perceptions.

Learning Objective 15.8: To understand promoting socially beneficial causes.

Many not-for-profit organizations, including consumer advocacy groups, exist primarily to promote socially beneficial behaviors. Many companies try to increase their credibility by being “good corporate citizens” and integrating socially desirable practices into their operations. Some firms engage in cause-related marketing, where they contribute a portion of the revenues they receive from selling certain products to causes that are socially desirable and supported by the U.S. public. A good fit between the company and the cause appears to be crucial to the effectiveness of these campaigns.

Learning Objective 15.9: To understand consumers’ ethical obligations.

Another facet of marketing ethics is buyers’ dishonest behavior in the marketplace. For example, many stores started charging restocking fees, limiting return policies, and tracking abnormal return patterns because of buyers who bought items, used them, and then returned them for a refund (some stores encountered shoplifters who tried to return stolen merchandise). Also, in the digital world, software piracy is a major problem.

CHAPTER OUTLINE INTRODUCTIO N Marketing ethics are moral principles that govern marketers’ behavior.

1. 2.Ethics express the differences between right and wrong behavior and the goodness or badness of human character.

3. Not all that is allowed (by law) is in the best interest of society or marketers’ goals.

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4. Marketing practices that overtly contradict societal interests end up in embarrassment, decreased profits, and diminished consumer confidence in promotional messages and products. *****Use Figure #15.1 Here; Use Key Term marketing ethics Here***** Socially Responsible Marketing 1. Fulfilling the needs of target consumer markets more effectively than competitors may be at odds with society’s best interests.

2. The cumulative persuasive impact of advertising may have negative implications for consumer behavior (e.g. materialism and unrealistic ideal body images).

3. The societal marketing concept calls upon all marketers to satisfy the needs and wants of their target markets in ways that preserve and enhance the well-being of consumers and society as a whole, while also fulfilling the profit objectives of their organizations. societal marketing concept *****Use Learning Objective #15.1 Here; Use Key Term Here***** 4. Many trade associations representing marketers of consumer goods have developed industry-wide codes of ethics. a. Industry-wide self-regulation deters governments from imposing its own regulations on industries. b. Companies recognize that socially responsible activities improve their image among consumers, stockholders, the financial community and relevant publics. c. Perceptions of a company’s lack of social responsibility or unethical marketing can negatively impact consumer purchase decisions. *****Use Key Termmarketing ethics Here***** Disregard for Consumers’ Privacy 1. Consumers’ loss of privacy is an increasingly problematic ethical issue as marketers use more sophisticated tracking to help them reach the right consumers.

2. Senators proposed a Commercial Privacy Bill of Rights. *****Use Learning Objective #15.2 Here ***** 3. Questionable practices exist related to consumer privacy. a. Retailers have been tracking customers’ movements using Wi-Fi signals from customers’ smartphones, using video surveillance, and using data from check out and coupons that include a lot of identification information.

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b. Marketers who monitor cell phones can learn about consumers, what they purchase, and where they are. c. SmartTVs can track website visits, television viewing behavior, and can enable targeting of ads to other devices based on what people watched on TV. d. Facebook has most likely been the worst abuser of privacy, with dubious practices including emotional contagion experiments, manipulation of news feeds, and notifications about purchases. e. Acxiom has a database of 500 million active consumers and 1,500 data points per person based on survey data and information from public records. f. Billboards partnered with cell phone providers to collect data analytics about who the billboards reached. g. Free anti-spam software was owned by a market research firm that sold consumer data. h. Museums used cell signals to track where people came from and where they went in the museum. i. E-readers give data about reading habits to authors; facial recognition, and escores are other examples of questionable data collection practices.

4. Privacy laws and ad blocking software are being discussed. Tools that block tracking are also available.

Exploiting Children and Others 1. There are many targetable segments that can be exploited because they are more vulnerable than most other consumers (less educated, older, low income, no political power), but targeting children and encouraging overeating and irresponsible buying are the focus of this section. a. Consumer socialization is the processes by which young people acquire skills, knowledge and attitudes relevant to their functioning as consumers in the marketplace. The three stages are: i. The perceptual stage (3-7 years old) ii. The analytical stage (7-11 years old) iii. The reflective stage (11-16 years old) b. Children become brand aware as they age. c. Overall, the older the child, the more influence he or she has on a parent’s purchase behavior. d. Children are consuming more media, which increases opportunities to target children with marketing messages designed to influence their purchase behavior. e. There are many ethical concerns regarding advertising to children. f. A major concern regarding the impact of marketing on children’s behavior is whether food marketers “teach” children to eat more than they should and cause obesity and other health problems. g. Regarding advertising to children, there is a consensus that even if children understand the purpose of promotional messages, marketers must take special care in advertising to them because of the amount of time they spend viewing TV and online. .

*****Use Learning Objective #15.3 Here; Use Key Term consumer socialization Here***** 2. Marketers studied situational factors surrounding buying decisions to learn how to convince consumers to adopt a product or induce consumption.

3. Packaging and presentation can encourage overeating. a. Both children and adults consume more juice when the product is presented in short, wide glasses than in tall slender glasses. b. Candies placed in clear jars were eaten much quicker than those presented in opaque jars. c. Sandwiches in transparent wrap generated more consumption than those in opaque wraps. d. The visibility and aroma of tempting foods generated greater consumption. e. Presenting foods in an organized manner, such as mixed assortments in bowls (or “grab bags”), buffets, potlucks, or dinner-table settings leads to more eating. f. Assortment size or duplication, in forms such as multiple product tastings, multiple offerings of party snacks, duplicate buffet lines, and family dinners with multiple dishes, stimulate eating. g. Minimal variations in the size of serving bowls whenever multiple options and sizes are present lead to eating more. h. People generally do not keep track of how much food they consume. When told, they are often surprised at how much they have consumed. i. Large inventories of foods at home increase the quantity believed to be appropriate for a given meal. j. Small packages do not necessarily decrease consumption and can sometimes actually increase it. Responsible companies should sell small packages individually, rather than bundling them together in a larger container, because the availability of multiple small packages leads to overconsumption. ***** Use Figures #15.4 and #15.5 Here ***** k. Advertising to children is subject to self-regulation according to guidelines developed by the Children’s Advertising Review Unit (CARU) of the Council of Better Business Bureaus. l. The guidelines direct marketers to abandon product presentations or claims that: i. Mislead children about the product’s performance or benefits ii. Exploit the child’s imagination or create unrealistic expectations iii. Show products in unsafe situations iv. Encourage behavior that is inappropriate for children m. The guidelines also direct marketers to avoid ads that: i. Encourage children to pressure their parents to buy the products advertised. .

ii. Compel children to feel that ownership of a given product will make them more accepted by peers. iii. Make claims that mislead children, exploit their imagination or crate unrealistic expectation. n. Marketers routinely violate practices that are forbidden under federal or safe regulation, even though the U.S. is less regulated than Europe. i. Marketing foods of low nutritional quality with misleading claims. ii. Embedding food ads in games. iii. Creating buzz about products and encouraging children to send ads to their friends. iv. Offering children brand-related items. v. Not including “ad breaks” and reminders that the content watched is advertising. vi. Offering young children prizes for registering at websites. o. Although the FTC regulations do not allow information gathering by apps and online services directed at children under 13 without parental knowledge, the FTC does not have a definition of this regulation. *****Use Review and Discussion Question #15.2 Here ***** 4. Marketing is a form of persuasion. Marketers use situational factors to persuade consumers. a. People are hungrier in cold environments; it is always cold in supermarkets. b. The longer consumers stay in the store, the more they buy. Marketers move displays systematically, so people have to wander to look for them. c. Online retailers send email offerings to consumers who are drinking alcohol and have fewer inhibitions. d. Banks target teenagers and college students and provide them with easy credit.

5. Direct-to-consumer pharmaceutical advertising has increased the consumption of numerous categories of medications since 1997. a. The pharmaceutical industry has developed voluntary restrictions regarding direct-to-consumer advertising because they recognized it was too aggressive. b. The Senate majority leader has called for a temporary moratorium on advertising new drugs to consumers c. One major pharmaceutical company has volunteered not to advertise new drugs to consumers during their first year on the market. d. Online search engines further complicate the direct selling of medications to consumers. i. The FDA urged pharmaceutical companies to include risk information about drugs in the companies’ search advertisements (the short text that appears besides the results of one’s Google search) ii. Because Google limits such ads to 95 characters, it is unclear how this can be done. e. Because they can market products directly to consumers, pharmaceutical companies are more eager than ever to “extend the life” of products that have

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become consumer favorites, as the dates for patent expiration and the availability of generic versions of these products near. *****Use Review and Discussion Question #15.4 Here ***** Misleading Labels 1. Nutritional labels are placed on all packaged food items sold in the United States.

2. Current label formats are unclear and somewhat manipulative (e.g. per-serving basis).

3. Manipulating service size escapes consumer attention and may reduce consumptionrelated “guilt”.

4. America’s food labels are decades old and revising them has been difficult.

5. We have very flexible guidelines regarding the use of the word natural because it has no clear meaning.

6. Food can be marketed as healthy if it meets five criteria: fat, saturated fat, sodium, cholesterol, and beneficial nutrients (e.g. Vitamin C). Amounts allowed vary by category.

7. There is an ongoing debate about labels for genetically modified organism ingredients.

8. Smart phones may be used to scan labels and flag unhealthy products. *****Use Learning Objective #15.4 Here; Use Figure #15.2 Here ***** Camouflaged Advertising 1. Marketers can manipulate consumer’s interpretations of marketing stimuli.

2. Because advertisers do not want to be associated with news broadcasts or programs that cover serious issues, media companies may choose to shorten coverage of serious or disagreeable topics. *****Use Learning Objective #15.5 Here; Use Review and Discussion Question #15.3 Here ***** 3. Marketers may reduce the amount of products in packaging but leave prices unchanged.

4. Native advertising (a.k.a. branded content) is promotional messages designed to blend with the content around them. a. Different models of sponsored content may be confusing to consumers. b. Advertisers and marketers did not want to label an advertisement as an ad.

5. Search engines with organic results and sponsored links may also confuse consumers. 6. Covert marketing (also known as masked or stealth marketing) consists of marketing messages and promotional materials that appear to come from independent parties, although, in fact, they are sent by marketers. a. Some maintain that covert marketing strategies often violate the FTC’s definition of deceptive advertising, endorsement guidelines, and other .

regulations pertaining to marketing, and believe the FTC should have clearer rules. b. Others argue that the widespread use of stealth marketing abuses consumers’ efforts to avoid advertising and will result in increased consumers’ distrust of product information. c. Popular methods of covert marketing include: i. Actors posing as customers to tell people about a product’s benefits and give people a chance to examine or try the product. ii. Paying bartenders for praising brands of alcoholic beverages and recommending them to customers. iii. Employees posing as customers online and spreading positive wordof-mouth about the product. iv. Emails disguised as urgent messages or personal thank you notes. v. Inserting advertising messages into the content of programs and disguising advertising messages as entertainment. *****Use Key Termsnative advertising (branded content); covert marketing (masked or stealth marketing) Here***** 7. Marketers increasingly use techniques that blur the distinctions between figure and ground and make it more difficult for consumers to distinguish advertising from entertainment content (e.g.product placements , positioning a TV commercial so close to the storyline of a program consumers are unaware they are watching an advertisement,advertorials ,infomercials ).

False and Misleading Advertising 1. False or misleading advertising is also an issue. a. Regarding accuracy, a toothpaste ad stating that “brand A is the best” is considered an acceptable form of advertising “puffery” because consumers generally understand that there is no credible way to determine what “best” means. b. Truth-in-advertising laws protect consumers from false advertisements. c. Over time, the FTC has developed guidelines as to what constitutes deceptive advertising, and it holds marketers responsible for determining their ads’ potential to mislead consumers. *****Use Learning Objective #15.6 Here; Use Review and Discussion Question #15.3 Here ***** d. The FTC encourages and investigates complaints by consumers and companies regarding false or misleading ads. The FTC can also require companies that have misled consumers through their advertising to run corrective advertising. In addition to the FTC, there is the National e. Advertising Review Council (NARC), a self-regulatory group that monitors complaints from companies .

and consumers regarding truth in advertising and often determines what ads can or cannot state. f. A large number of promotional violations occur in the marketing of drugs.

One study identified the three major categories of such violations: i. Unsubstantiated effectiveness claims: Representing the drug as more effective than the evidence available suggests; representing the drug as useful in a broader scope than the research evidence indicates. ii. Omitted risk information: Failure to reveal risks resulting from using the drug correctly; failure to present information on side effects; stating the risks in unclear language. iii. Unsubstantiated superiority claims: Presenting the drug as more effective or safer than others in spite of the fact that there is no evidence supporting such a claim. *****Use Key Terms product placements, advertorials, infomercials,truth-inadvertising laws, deceptive advertising and corrective advertising Here; Use Handson Assignment Question #15.8 Here***** Offensive Communications 1. Many studies have focused on the use of objectionable themes in advertising, 2. Neuromarketing is being used to see how different parts of the brain react to commercials.

3. Although marketers continuously sponsor ads portraying values or behaviors that some (or many) consumers find distasteful or wrong, the importance of public scrutiny must not be underestimated. *****Use Learning Objective #15.7 Here; Use Key Term neuromarketing Here; Use Table 15.4 Here***** Promoting Social Causes 1. Many not-for-profit organizations, including consumer advocacy groups, exist primarily to promote socially beneficial behaviors such as contributing to charity, using energy responsibly, and reducing such negative behaviors as using drugs, discrimination, and drunk driving.

2. Many companies try to increase their credibility by being “good corporate citizens” and integrating socially desirable practices into their operations. a. A societal marketing program can create positive consumer attitudes toward companies. b. Perceptual fit between the sponsoring organization and the promoted cause(s) enhances consumer involvement in the cause(s) and their purchase intentions. *****Use Learning Objective #15.8 Here; Use Figure #15.3 Here *****

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3. The primary objective of many not-for-profit organizations is to promote socially covetable behavior and discourage ones that produce negative outcomes.

4. Sometimes even government organizations try to induce public behavior that they see fit.

5. Marketers who implement ethical strategies do so in order “to do the right thing,” to improve their image in the eyes of their constituencies, reduce scrutiny, and as an alternative to the likelihood of government regulation.

Cause-related marketing is a process by which a firm donates a portion of its 6. revenues from selling certain products to supporting needy groups. *****Use Key Termcause-related marketing Here; Use Figures #15.4,#15.5, and #15.6 Here ***** Consumer Ethics 1. Another facet of marketing ethics is buyers’ dishonest behavior in the marketplace. a. Many stores charge restocking fees, limit return policies, and track abnormal return patterns because of buyers who bought items, used them, and returned them for a refund. b. Software piracy is a major problem.

2. Airlines enable and inadvertently encourage creative, and possibly unethical, customer behavior around checked bags, flight compensations, and claims of damage. *****Use Learning Objective #15.9 Here*****

REVIEW AND DISCUSSION QUESTIONS 15.1 Societal marketing advocates balancing society’s interests with the needs of consumers and marketers. In accordance with this, marketers should not advertise foods to young people and other vulnerable consumers in ways that encourage irresponsible buying. However, many marketers are short-termoriented and are not particularly discerning about who the products are sold to.

What is your opinion on this practice?

Student answers will vary. Young people spend a significant amount of time on the Internet using electronic technology. In the case of children, less than half of recently published studies reported the imposition of strict parental rules on media viewing. More media consumption provides marketers with increased opportunities to target children, and marketing messages are designed to influence their purchasing behavior. As a result, some children see themselves as having more influence over purchases, particularly with regard to food items, than their parents. Individual, Moderate, 15-20 minutes

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Learning Objective 15.2: To understand how marketers can exploit consumers by ways of targeting children and encouraging overeating and other forms of irresponsible buying. AACSB: Application of knowledge; Ethical understanding and reasoning 15.2 A soft drink company distributed cell phones to preadolescents in lowincome areas. The phones routinely received advertising messages for the drink.

Following criticism, the company said that the benefits to the disadvantaged children from having the cell phones (e.g., safety) outweighed any “exploitive targeting” considerations. Do you agree or disagree with the company’s position?

Explain your answer.

A lively conversation regarding intent and credibility should result from this question. Answers might also relate to the societal marketing concept. It appears that the soft drink company believes that the phones may enhance the well-being of the pre- adolescents in the low-income areas. The question should be asked, “At what expense?” Students need to consider if this is a form of overaggressive marketing. Individual, Moderate, 15-20 minutes Learning Objective 15.3: To understand how marketers exploit and manipulate children and others. AACSB: Application of knowledge; Ethical understanding and reasoning

15.3 At a time when many consumers can avoid advertising messages via timeshifting devices, marketers increasingly use product placements (also known as branded entertainment). In your view, is this a wise strategy or not? Explain your answer.

Product placement results in the line between television shows and ads becoming virtually non-existent. Students need to consider if this is an appropriate use or misuse of advertising. Are consumer’s being manipulated in any way? Individual, Moderate, 10-15 minutes Learning Objective 15.5: To understand how marketers disguise advertisements. AACSB: Reflective thinking; Ethical understanding and reasoning

15.4 Is it right to advertise prescription medications or why not?

directly to consumers? Why

As students read the text they will realize that consumers say they obtain most of the information about medications from TV commercials. However, the pharmaceutical industry has developed voluntary restrictions on selling pharmaceuticals directly to consumers. The Senate majority leader has called for a two-year moratorium on advertising new drugs to consumers and a pharmaceutical company has volunteered not to advertise new drugs to consumers during their first year on the market. Do they believe these restrictions and call for a moratorium are necessary? .

Individual, Moderate, 10-15 minutes Learning Objective 15.3: To understand how marketers exploit and manipulate children and others.

AACSB: Reflective thinking; Ethical understanding and reasoning 15.5

Why is it important to study consumer ethics?

The purpose of studying consumer behavior is to understand why and how consumers make their purchase decisions. Some critics are concerned that an indepth understanding of consumer behavior makes it possible for unethical marketers to exploit human vulnerabilities in the marketplace and engage in other unethical marketing practices in order to achieve individual business objectives.

Studying consumer ethics helps prevent this exploitation. Individual, Moderate, 57 minutes Learning Objective 15.1: To understand the importance of marketing ethics and social responsibility. AACSB: Reflective thinking; Ethical understanding and reasoning

15.6 What are the privacy implications of companies’ increasingly widespread monitoring of online consumers?

Loss of privacy is increasingly problematic. Individual profiles are developed allowing for sophisticated analysis and the development of highly targeted and persuasive messages. Should marketers be allowed to “track” your behavior? At what point does information and privacy clash? Where does the “right” of the advertiser conflict with the right for consumer privacy? Should marketers be responsible for disclosure to consumers regarding information captured and the use of the information? Individual, Moderate, 15-20 minutes Learning Objective 15.2: To understand the wide-ranging abuse of consumers’ privacy. AACSB: Reflective thinking

HANDS-ON ASSIGNMENTS 15.7

Find, and discuss ads that depict each of the following: a. Exploitive targeting of children b. Overaggressive advertising c. Direct-to-consumer advertising of pharmaceuticals d. Cause-related marketing e. Societal marketing by a not-for-profit group f. Societal marketing by a for-profit company g. Socially-undesirable representation .

Instructor’s Discussion This exercise allows students to find examples of advertising related to ethical issues and societal marketing. You may want to have students vote for the best example in each category. Individual, Moderate, 30-45 minutes Learning Objective 15.3: To understand how marketers exploit and manipulate children and others. AACSB: Application of knowledge; Ethical understanding and reasoning

15.8 Online, find three examples of advertising embedded within entertainment content and discuss them.

Instructor’s Discussion Ask students to vote on the best example. Be sure to ask students to defend why the ad brought to class represents covert advertising.

Individual, Moderate, 60-90 minutes Learning Objective 15.5: To understand how marketers disguise advertisements.

AACSB: Application of knowledge; Ethical understanding and reasoning

15.9 Compile a list of consumption behaviors that you consider unethical. For each behavior listed, explain why you view it as wrong. Also, for each behavior listed, discuss the possible reasons a person engaging in that practice may use to justify doing so Instructor’s Discussion This exercise should provoke a lively discussion. Typically, students disagree on what is and is not unethical. Encourage students to thoroughly explain their reasoning for believing a behavior is wrong. Individual or Group, Moderate, 20-30 minutes Learning Objective 15.1: To understand the importance of marketing ethics and social responsibility. AACSB: Analytical thinking; Ethical understanding and reasoning

15.10 Visit the news section at www.caru.org. Select three of the press releases featured there (other than those discussed in the chapter) and illustrate how they depict the unethical applications of learning or perception in targeting children.

Instructor’s Discussion The website lists quite a number of press releases. Students easily should be able to find three that they are interested in. Many cases mention legal precedents for decisions. Students may find this historical perspective fascinating. .

Individual, Moderate, 15-20 minutes Learning Objective 15.3: To understand how marketers exploit and manipulate children and others.

AACSB: Application of knowledge; Ethical understanding and reasoning

S.T.A.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 As a student at a large university, you have been asked by a state senator to attend a meeting to discuss youth and obesity. When you arrive at the meeting, you discover the real purpose of the invitation. The state senator is considering sending a bill to the legislature requiring that all colleges and universities in the state be required to use only organic food in all residence halls. In addition, the senator wants to require a reduction in sugars, fats and starches served and an increase in nutrients. The senator believes strongly in the societal marketing concept and feels that it is the social responsibility of all colleges and universities to. The reason students have been invited is to sign a petition supporting this bill. Consider this issue from two perspectives. Given the senator’s agenda was not clearly stated, was the invitation ethical? Is the senator’s bill truly societal marketing? Why or why not?

Instructor’s Discussion This scenario asks students to evaluate an ethical issue from different perspectives. The reason for the meeting was not clear. Does this make a difference in how students perceive the senator’s actual cause? Should students continue with the meeting?

Societal marketing requires that all marketers adhere to the principles of social responsibility in the marketing of their goods and services. Yet, they should endeavor to satisfy the needs and wants of their target markets in ways that preserve and enhance the well-being of consumers and society as a whole. Lead students through their responses.

Does organic food meet the qualifications of societal marketing? Will organic food coupled with lower sugars, fats and starches reduce obesity? And, importantly, will students be amenable to these changes and will the colleges and universities still be able to operate profitably, given these requirements?

S.T.A.R. Project #2 Online advertisers are able to track your behavior. As you move through the internet, advertisers track where you click, how frequently you visit a site and how long you spend on a site. This knowledge enables advertisers to then tailor offers directly to you.

Your assignment is to consider tracking from your personal perspective and the perspective of advertisers. Should your exploration through the internet be private or public? Who is to decide? What rights do advertisers have?

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After you have considered these questions (and others you consider relevant), visit the Federal Trade Commission web site and read their recommendations on self-regulation principles for online behavioral advertising. Do you agree or disagree with their position?

Instructor’s Discussion This assignment is a good way for students to think about their own opinions and weigh them against the desires of advertisers. They can then compare both to the Federal Trade Commission’s report on tracking, targeting and technology.

Small Group Project S.T.A.R. Project #3 Your group’s assignment is to find advertisements that members feel are unethical. Each group member must bring at least three examples to the discussion. Debate among members the ethical/unethical nature of the ads. Why might some members feel an ad is ethical while others might disagree? Vote on each ad. Are some product categories more susceptible to unethical advertising? Why or why not?

Instructor’s Discussion This discussion makes the point regarding the sometimes difficulty of agreeing on ethical or unethical advertising. You can guide the conversations by asking who should decide on ethics policy and how ethics policies are created.

S.T.A.R. Project #4 Your assignment is to watch either two hours of television or a movie. While watching, you are to record every incidence of product placement. Also record whether the product placement was overt (the brand was named or pointed to) or less obvious. Which placement was more effective? Why? Did or will the placement cause you to purchase the product? How do you feel about the newly formed consumer advocacy group, Commercial Alert, which is asking for legislation requiring upfront disclosure of ad designed as product placements?

An interesting twist would be to assign this project to students in pairs. However, the members, making up the pair, cannot watch the shows together. After the members have recorded their data, compare to see if both recognized the same number of product placements and the same incidences of product placements.

Instructor’s Discussion This project will aid the students in recognizing product placements. Lead them through the following questions. Because their awareness is heightened, do they believe they see more product placements? When they are more passively watching television, do they believe they see less? Have the students explain their answers. Is one situation more ethical than another? Why or why not? How do the students feel about Commercial Alert’s call for legislation?

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CHAPTER 16 Consumer Research LEARNING OBJECTIVES 16.1 To understand how to conduct exploratory research and review secondary data.

16.2 To understand the purpose and tools of qualitative research.

16.3 To understand the purpose and tools of quantitative research.

16.4 To understand how to combine qualitative and quantitative research, sampling, and data analysis.

CHAPTER SUMMARY Learning Objective 16.1: To understand how to conduct exploratory research and review secondary data.

Secondary data is existing information that was originally gathered for a research purpose other than the present research. The rationale for secondary data searches is simply that it makes good sense to investigate whether currently available information will answer—in part or even in full—the research question at hand. It seems unwise to expend the effort and money, and rush into collecting new information before determining if there is any available information that would provide at least a good starting point.

The first source of secondary data is previously collected in-house information that was originally used for some other purpose. It might have originally been gathered as part of a sales audit, or from past customer service calls, or letters of inquiry from customers, or collected via warranty cards.

The second source of secondary data is information from sources outside the firm or organization. This type of data takes many different forms. Some information is free and can be found in a public library, other information is available for only a nominal fee, and still other data or information are quite expensive to secure. The major sources of external secondary data are the government; articles from popular, professional, and academic publications; and syndicated commercial sources.

Learning Objective 16.2: To understand the purpose and tools of qualitative research.

If the purpose of a study is to come up with new ideas for products or promotional themes, the researchers use qualitative research. Qualitative studies consist of focus groups, depth interviews, and projective techniques.

Learning Objective 16.3: To understand the purpose and tools of quantitative research.

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If the purpose of the study is to find out how many consumers match the demographics or psychographics of the target market or the characteristics of consumers who buy given brands and whether or not they are brand loyal, marketers conduct quantitative research. Quantitative research includes observation, experiments, and surveys.

Learning Objective 16.4: To understand how to combine qualitative and quantitative research, sampling, and data analysis.

Marketers frequently conduct research projects that combine both a qualitative component (often composed of focus groups and/or depth interviews) and a quantitative component (often consisting of a survey research). For example, marketers use qualitative research findings to discover new ideas and develop promotional strategies, and quantitative research findings to estimate the extent or amount of consumers who react in a particular way (i.e., positive or negative) to various promotional inputs. Frequently, ideas stemming from qualitative research are tested empirically through quantitative studies. The predictions made possible by quantitative research and the understanding provided by qualitative research together produce a richer and more robust profile of consumer behavior than either research approach used alone.

In qualitative research, the moderator-researcher usually analyzes the responses received. In quantitative research, the responses are coded and analyzed statistically. In both qualitative and quantitative research, the research report includes an executive summary of the findings, description of the methodology used, and recommendations for marketing actions.

CHAPTER OUTLINE Introduction 1. Disney’s Sofia the First, a modern princess which is an “anti-Cinderella,” was the product of consumer research including interviews, observations, and focus groups. The research included parents and children.

2. The preparation, use, and wide scale availability of large amounts of consumer research is a critical force in advancing the discipline of consumer behavior. a) Exploratory research is an examination of resources and materials that have already been collected. b) Primary research includes qualitative research and quantitative research . *****Use Figure #16.1 Here; Use Key Terms consumer research, exploratory research, qualitative research, and quantitative research Here *****

Exploratory Research and Secondary Data 1. The first and most difficult step in the consumer research process is to accurately define the objectives of the research.

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a) It is important for the marketing manager and the research manager to agree at the outset as to the specific purposes and objectives of the proposed consumer study. b) A carefully thought-out statement of research objectives helps to insure that the information needed is secured and costly errors are avoided.

2. Qualitative research (focus groups, depth interviews) is used if the purpose of a study is to come up with new ideas for product or promotional themes.

3. Qualitative research is also used before conducting large quantitative studies to help marketers more precisely define research objectives. *****Use Learning Objective #16.1 Here***** 4. The second step in the consumer research process is to search for secondary data. a) Secondary data is already existing information that was originally gathered for a research purpose other than the present research. b) In secondary data can in part or full answer the question, primary research can either be cut back or avoided. c) Internal secondary data can come from sales audits, customer service calls, customer inquiries – and can be used to calculate customer lifetime value profiles. d) External secondary data come from sources outside the firm, and include government secondary data, periodicals and articles, syndicated research company data, and data from consumer panels. ***** Use Key Terms customer lifetime value profiles and consumer panels Here***** Qualitative Research 1. Current qualitative research grew out of the rejection of the belief that consumer marketing was simply applied economics, that consumers were rational decision makers.

2. Those rejecting this view included member of an early school of qualitative consumer researchers known as motivational research.

3. The central tenet of this orientation was that consumers were not always consciously aware of why they made decisions or weren’t willing to reveal the reasons to themselves or others.

4. Dr. Ernest Dichter was an early leader of this movement. *****Use Learning Objective #16.2 Here; Use Key Term motivational research Here***** 5. Sample sizes are necessarily often small, so findings cannot be generalized to larger populations.

6. Most forms of qualitative research questioning have their roots in open-ended and freeresponse types of questioning.

7. The key types of interviews conducted for qualitative studies are depth interviews and/or focus group sessions. a)Depth interviews

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i) A depth interview, also referred to as a “one-on-one” interview is a somewhat lengthy non-structured interview between a single respondent and a highly trained researcher. ii) The interviewer speaks little, giving the consumer time to express thoughts and behaviors and to respond to verbal and visual materials. iii) The research must establish an atmosphere to encourage the consumer to open up. iv) The researcher probes for responses. v) Depth interview studies provide marketers with ideas about product design, or redesign, and provide insights for positioning or repositioning products. *****Use Key Termdepth interview Here***** b) Focus groups. i) A “discussion group” or focus group often consists of 8 to 10 participants who meet with a moderator-researcher-analyst to explore a particular product or product category. ii) Participants are encouraged to discuss their reactions to product and service concepts, or new advertising or marketing communications campaigns. iii) Respondents are recruited on the basis of a carefully drawn consumer profile. iv) Some marketers prefer focus groups because they feel that the dynamic interaction between participants that takes place in focus groups tends to yield a greater number of new ideas and insights than depth interview. v) It takes less time to complete a series of focus groups than a project of individual depth interviews. *****Use Review and Discussion Question #16.5 Here; Use Key Terms focus groups Here***** c) Discussion guides i) A discussion guide is a step-by-step outline that sets out the line of questioning that the researcher needs to cover with the respondent in a depth interview, or a group of respondents in the case of a focus group session. ii) Some moderators prefer to closely follow the guide while others “go with the flow.” iii) Some researchers will finish with often more information that anticipated. ***** Use Key Termdiscussion guide Here; Use Figure 16.4 Here; Use Hands-on Assignment 16.9 Here ***** d) Projective techniques i) Projective techniques are a useful tool, adapted for studying the unconscious associations of consumers who may be concealing or suppressing some of their thoughts or reactions. ii) Projective exercises consist of a variety of disguised “tests.” .

iii) Some of the well established exercise used to “tease-out” true consumer-related feelings and reflections are: (1) Word associations.

(2) Sentence completions.

(3) Photo/visuals for storytelling.

(4) Role playing. ***** Use Key Termprojective techniques Here***** e) Online focus groups i) Over the past 5 to 10 years, there has been a substantial amount of interest in, trial of, and acceptance of online focus groups and depth interviews. ii) What is being called an “online focus group,” can vary greatly.

Quantitative Research 1. The broad category of quantitative research includes experimentation, survey techniques, and observational research. a) The findings are descriptive, empirical, and, if collected randomly, can be generalized to larger populations. b) They lend themselves to sophisticated statistical analysis

*****Use Learning Objective #16.3 Here***** 2. A study is said to have validity if it collects the appropriate data needed to answer the questions or objectives stated in the first stage of the research process.

3. A study is said to have reliability if the same questions, asked of a similar sample, produce the same findings. ***** Use Key Terms validity and reliability Here***** 4. Observational research is an important research tool because marketers recognize that often the best way to gain an in-depth understanding of the relationship between people and products is by watching them in the process of buying and/or using the products. It provides greater insight into the bond between people and products that is the essence of brand loyalty. i) It is also important in uncovering issues or problems with a product. ii) Consumers are generally either watched by researchers or mechanical or electronic devices such as counting or video recording devices are used to capture customers’ behaviors or responses to a particular marketing stimulus. iii) Marketers also use physiological observation devices that monitor respondents’ patterns of information processing.

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*****Use Discussion Question #16.7 Here; Use Key Terms physiological observation Here*****

observational research and

5.Experiments (causal research) a) There are a variety of different experimental designs that a researcher needs to select from in formulating a particular consumer-related experiment. b) In the simplest form of experiments (causal research), only one variable is manipulated (called the independent variable) while all other elements are kept constant. c) A controlled experiment of this type ensures that any difference in the outcome (the dependent variable) is due to different treatments of the variable under study and not to extraneous factors. d) A major application of causal research is test marketing, a logical next step after conducting depth interviews, focus groups, and survey research and prior to committing to a full-scale marketing rollout. ***** Use Key Termsexperiment (causal research) and test marketing Here***** 6. Survey research a) Following is a list of types of survey research (Table 16.1 lists advantages and disadvantages of each): i) Personal interview surveys (face-to-face) ii) Telephone interview surveys iii) Mail surveys iv) E-mail surveys: There has been a rapid increase in the number of consumers who are interested in participating in Internet surveys. *****Use Table #16.1 Here; Use Key Terms personal interview surveys, telephone interview surveys, mail surveys, e-mail surveys, Internet surveys Here***** b) Questionnaires are the primary data collection instrument for quantitative research. i) The questionnaire can be sent through the mail or online to selected respondents for self-administration or can be administered by field interviewers in person or by telephone. ii) The questionnaire can be disguised or undisguised as to its true purpose. iii) Questions can be open-ended or closed-ended. iv) Wording the questions represents the biggest challenge in constructing questionnaires.

(1) Avoid leading questions (2) Avoid two questions in one (3) Questions must be clear (4) Use words that consumers routinely use (5) Ensure that respondents are able to answer the question (6) Make sure that respondents are willing to answer the question (7) Questions’ sequence is important .

***** Use Table 16.3 Here; Use Figure 16.5 Here; Use Key Termsopen-ended question, closed-ended question Here***** c) The most frequently used attitude scales are Likert scales, semantic differential scales, behavior intention scales, and rank-order scales.

(1) The Likert scale is the most popular form of attitude scale because it is easy for researchers to prepare and interpret, and simple for consumers to answer. The scale consists of an equal number of agreement/disagreement choices on either side of a neutral choice.

(2) The semantic differential scale consists of a series of bipolar adjectives anchored at the ends of an odd-numbered continuum. Respondents are asked to evaluate a concept on the basis of each attribute by checking the point on the continuum that best reflects their feelings or beliefs.

(3) The behavior intention scale measures the likelihood that consumers will act in a certain way in the future.

(4) With rank-order scales, subjects are asked to rank items such as products in order of preference in terms of some criterion. *****Use Exercises #16.10 and #16.11 Here; Use Figure #16.6 Here; Use Key Terms attitude scales, Likert scale, semantic differential scale, behavior intention scale, and rank-order scales Here***** d) Customer satisfaction measurement includes quantitative and qualitative measures as well as a variety of contact methods with customers. i) Customer satisfaction surveys measure how satisfied the customers are with relevant attributes of the product or service, and the relative importance of these attributes.

(1) Customers who are very satisfied are much more profitable and loyal than customers who are satisfied.

(2) Some marketers posit that customers’ satisfaction/dissatisfaction is a function of the difference between expected performance (adequate, desired) and actual performance. ii) Mystery shoppers are professional observers who pose as customers in order to interact with and provide unbiased evaluations of the company’s service personnel in order to identify opportunities for improving productivity and efficiency. iii) Analyzing customer complaints is crucial for improving products and customer service. A good complaint analysis system should: (1) encourage customers to complain about an unsatisfactory product or service (2) encourage customers to provide suggestions for improvements (3) establish “listening posts” such as hotlines where specially designated employees either listen to customers’ comments or actively solicit input from them. ***** Use Key Termscustomer satisfaction surveys, mystery shoppers Here***** .

Sampling and Data Collected and Analysis 1. A sample is a subset of the population that researchers use to estimate the characteristics of the entire population because it is almost impossible to obtain information from every member of the population or universe. i) The sample must be representative of the universe under study. ii) An integral component of a research design is the sampling plan, which includes: whom to survey (sampling unit), how many to survey (sample size) and how to select them (sampling procedure). ***** Use Learning Objective 16.4 Here***** iii) There are two types of samples.

(1) In a probability sample , respondents are selected in such a way that every member of the population studies has a known, nonzero chance of being selected. (a) Simple Random Sample (b) Systematic Random Sample (c) Stratified Random Sample (d)aCluster (Area) Sample nonprobability sample, the population under study has been predetermined (2) In in a nonrandom fashion on the basis of the researcher’s judgment or decision to select a given number of respondents from a particular group. (a) Convenience Sample (b) Judgment Sample (c) Quota Sample iv) Data collection followssampling plan . The process depends on the tactics. v) Data collation follows the sample selection.

*****Use Review and Discussion Question #16.6 Here; Use Table #16.4 Here; Use Key Terms sample, probability sample and nonprobability sample Here***** 1 .

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Some marketers use a combination of quantitative and qualitative research. They use qualitative research findings to discover new ideas and to develop promotional strategy, and quantitative research findings to estimate the extent or amount of consumers who react in a particular way. Sometimes, ideas stemming from qualitative research are tested empirically through quantitative studies.

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REVIEW AND DISCUSSION QUESTIONS 16.1 LEGO, a famous manufacturer of construction toys, did global market research with 3,500 girls and their mothers over the span of four years. What, in your opinion, justifies this effort and expenditure? Discuss the functions and purposes that market research could fulfil in this example.

Market research fulfils several important functions for a business: • Identifying new target markets, understanding existing customer base, detecting trends • Providing a database for informed decision-making, developing effective strategies • Providing a control function for marketing activities • More generally, lowering risk in decision-making This exercise is meant to give students an understanding of the motives for market research and develop an appreciation for this business function. In the case of LEGO, girls were previously believed to not be primary users of their plastic construction bricks. Therefore, LEGO embarked on a major market research project to evaluate this segment and establish data to help them decide how to deal with it in the future, lowering the company’s risk in decision-making. Individual, Moderate, 5 minutes Objective 16.1: Understand how to conduct exploratory research and review secondary data. AACSB: Reflective thinking

16.2 What is the difference between primary and secondary research? Under what circumstances might the availability of secondary data make primary research unnecessary? What are some major sources of secondary data?

Secondary data is any data originally generated for some purpose other than the present research objectives. It includes findings based on research done by outside organizations, data generated in-house for earlier studies, and even customer information collected by the firm’s sales or credit departments. Locating secondary data is called secondary research. Such data sometimes provides sufficient insight into the problem at hand to eliminate the need for primary research. Most often, it provides clues and direction for the design of primary research.

Primary research is original research performed by individual researchers or organizations to meet specific objectives. If detailed information on purchasing patterns or product usage is needed or if psychological or sociocultural consumer information is sought, then primary data must be collected. Research to secure such information is more costly and more time consuming than secondary research but is likely to yield a more accurate picture than studies based on secondary data alone.

Individual, Easy, 5 minutes .

Learning Objective 16.1: To understand how to conduct exploratory research and review secondary data.

AACSB: Reflective thinking 16.3 What are the advantages and limitations of secondary data?

Obtaining secondary data before engaging in primary research offers several advantages.

First, secondary data may provide a solution to the research problem and eliminate the need for primary research altogether. Secondary research may help to clarify and redefine the objectives of the primary study and provide ideas for the methods to be used and the difficulties that are likely to occur during the full-scale study.

Although secondary information can be obtained more cheaply and quickly than primary data, it has some limitations. First, information may be categorized in units that are different from those that the researcher seeks. Some secondary data may not be accurate because of errors in gathering or analyzing the data for the original study or because the data was collected in a biased fashion in order to support a particular point of view. Also, care must be taken not to use secondary data that may be outdated.

Individual, Moderate, 5 minutes Learning Objective 16.1: To understand how to conduct exploratory research and review secondary data.

AACSB: Reflective thinking 16.4 A manufacturer of agricultural machinery is planning to launch a new robot lawnmower model that, besides mowing, can also collect leaves. The company would like to know what consumers think of this new product. Would you advise the manufacturer to use consumer observations or a personal, telephone, or (e)mail survey?

Explain your choice.

Quantitative consumer research can be done by using surveys (in person, by telephone, by mail, or online) or in an observational setting. Each of the methods features different advantages and disadvantages. Students should make distinctions between the different types of research based on • • • • • • •

associated costs. time required for the task. interactivity. possibility for the product to be tested in person. possibility for the use of demonstration material, videos, and pictures. possibility for complex questioning. interviewer bias.

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If the aim of the manufacturer is to get an in-depth understanding of how consumers use the new lawnmower and what they think of it, an observational setting (i.e., watching consumers mowing and grooming their lawn) would be the most suitable tool.

Individual, Moderate, 5-10 minutes Objective 16.3: Understand the purpose and tools of quantitative research. AACSB: Application of knowledge

16.5 Why might a researcher prefer to use focus groups rather than depth interviews?

When might depth interviews be preferable?

Focus groups consist of eight to ten respondents who meet with a moderator/analyst for a group discussion. Respondents are encouraged to discuss their interests, attitudes, reactions, motives, lifestyles, feelings about the product, usage experience, etc. A researcher can easily conduct two or three focus groups in one day. Some marketers prefer focus groups because it takes them less time overall to complete the study, and the group concept yields a greater number of new ideas and insights. A depth interview is a lengthy, non-structured interview between a respondent and a highly trained interviewer.

Respondents are encouraged to talk freely about their activities, attitudes, and interests, in addition to the product category or brand under study. Some marketers prefer the individual depth interview because they feel that respondents are free of group pressure, are less likely to give socially acceptable responses, are more likely to remain attentive, and reveal private thoughts. Individual, Moderate, 5 minutes Learning Objective 16.3: To understand the purpose and tools of qualitative research. AACSB: Application of knowledge

16.6 How would the interpretation of survey results change if the researcher used a probability sample rather than a nonprobability sample? Explain your answer.

In general, if the researcher wants the findings to be projectable/generalizable to the total population of interest, then a probability sample should be chosen. If it is sufficient to have the findings “representative” of the population, then a nonprobability sample can be selected.

Individual, Easy, 3-5 minutes Learning Objective 16.3: To understand the purpose and tools of quantitative research.

AACSB: Reflective thinking

16.7 Why is observation becoming a more important component of consumer research?

Describe two new technologies that can be used to observe consumption behavior and explain why they are better to use than questioning consumers about the same behavior.

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Observational research is an important method of consumer research because marketers recognize that one can gain an in-depth understanding of the relationship between people and products is by watching them in the process of buying and using products.

Observation of consumer behavior via electronic means has grown significantly. Students can choose to describe a number of different technologies. Observational research is very powerful because it enables researchers to track actual behavior. In the current technological environment, the behavior can be used to model purchase relationships or to personalize communications to make them more effective.

Individual, Moderate, 5 minutes Learning Objective 16.4: To understand how to combine qualitative and quantitative research, sampling, and data analysis.

AACSB: Reflective thinking HANDS-ON ASSIGNMENTS 16.8 A manufacturer of domestic appliances is looking to present an innovation in its product range of refrigerators—a “smart” fridge. In which stages of product development might (a) qualitative and (b) quantitative research be useful to the company? Formulate interview and survey questions for each of the two types of research.

Instructor’s Discussion A good place to begin this assignment is to have students review exactly what qualitative and quantitative research designs are. Students should have a clear understanding of the distinction between the two: • Qualitative research is about researching the “why”—comprehending the reasoning for things or understanding behavior.

• Quantitative research is about researching “how much” or “how many”—measuring things or quantifying a problem.

Qualitative research in this sense precedes quantitative research in product development, as insights into the motivations of customers have to be discovered and understood before a product can be designed and customer acceptance gauged. Instructor should make sure that this is reflected in the questions students formulate. Students can be divided into small groups for this exercise. Individual or Group, Moderate, 20-30 minutes Objective 16.2: Understand the purpose and tools of qualitative research.

Objective 16.3: Understand the purpose and tools of quantitative research. AACSB: Application of knowledge

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16.9 Based on the discussion of focus groups and depth interviews, develop a discussion guide for studying college students’ reactions to their brand and model of cell phone.

Instructor’s Discussion Before beginning this exercise, have students reread the section in the chapter on focus groups and depth interviews. Next, ask the students to list categories of questions most important to their use and reaction to their brand of cell phone. From these categories ask the students to drill down, creating specific questions (probes) pertinent to each category. Individual or Group, Moderate, 20-25 minutes, Outside of Class Learning Objective 16.2: To understand qualitative research methods. AACSB: Application of knowledge

16.10 Your local zoo wants to assess its customers’ attitudes toward its facilities. Develop a questionnaire for this measurement using each of the attitude scales below twice in the survey: a. A likert scale b. A semantic differential scale c. A behavior intention scale d. A rank-order scale Adhere to the guidelines for wording a good question.

Instructor’s Discussion Students’ answers may vary. Make sure students understand how the attitude scales differ from each other and how questions are framed using each attitude scale. Discuss the number of choices in each question (e.g., what is the difference between a five- or seven-point scale in terms of the level of detail presented to and asked of the interviewee?). Draw attention to the different aspects of the zoo that can be assessed with these scales (e.g., attitude toward the choice of animals in the zoo, restaurant quality, waiting hours, information provided for each animal, the medium used to present the information, etc).

Individual or Group, Moderate, 15-25 minutes, Outside of Class Objective 16.3: Understand the purpose and tools of quantitative research.

AACSB: Application of knowledge

S.T.A.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project Acme Steel has employed you as a statistical analyst for almost ten years. In your job, you tracked steel prices, created customer profiles, maintained data on contract negotiations, provided data necessary for labor negotiations, researched information on new markets and joint .

ventures, and developed a unique system for cataloging competitors’ strengths and weaknesses.

Your skill in obtaining primary and secondary research is not only known in Acme but in the steel industry as a whole. The U.S. steel industry, however, is not doing well in the highly competitive global marketplace. A German steel firm is expanding into the United States and is currently negotiating to buy Bethlehem Steel. A recruiting firm has contacted you with a very attractive offer—the German firm wants you. Simply put, you could double your salary, receive a secure retirement and stock option package, and have a substantial position with a global industry leader that has not had a layoff in ten years. The offer sounds very attractive when you consider the situation at your own company and in the U.S. market in general. There is one catch, however. You must be willing to bring all your knowledge of Acme and its processes to your new firm. Though bringing actual data would be irresponsible, probably illegal, and very difficult, your new firm does expect you to bring your models, ability to analyze data, and knowledge of Acme customers, labor situations, and company weaknesses with you. Acme would most certainly ask you to sign a nondisclosure document, however, this would be difficult if not impossible to enforce. How should you meet your opportunity? a. Considering the descriptions in the first part of this story, what type of information would you feel comfortable in taking with you to the new firm? Explain. b. From an ethics standpoint, how can companies control or be secure with employees that are in a position to gather and obtain information such as that described in the story? c. How do you feel about the dilemma created in this story? Comment.

Instructor’s Discussion There is nothing easy about the dilemma posed in this exercise. Students should see the opportunity and security that the new position might bring. Students should, however, also see the responsibility that is owed to the company that has been the source of livelihood for several years. A good direction to go to with respect to giving guidance on the thorny path that lies ahead is to have students review the American Marketing Association’s Web site at www.marketingpower.com where marketing research ethics and general ethics in marketing are explored.

Have a lively discussion with the class on the responsibility of those that collect information and how those individuals must be ever vigilant in their responsibility.

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