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MKT 400 Midterm: MKT400 Midterm Notes

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MKT 400
Steven Chuang

MKT400 Midterm Notes Sahel Manochehry #500687622 Consumer Behaviour: The set of value-seeking activities that take place as people go about addressing their needs - Two perspectives o Human thought and actions o A field of study (human inquiry) that is developing an accumulated body of knowledge Basic Consumption Process - Consumption: Process by which goods, services, or ideas are used and transformed - Need – Want – Exchange – Costs and Benefits – Reaction – Value – repeat - Want: A specific desire that spells out a way a consumer can go about addressing a recognized need - Exchange: The acting out of a decision to give something up in return for something of greater value - Costs are the negative results of consumption o Costs include price, time wasted, physical effort Business Orientations - Guides a firms market segmentation practices - Product Orientation o Production process must be as efficient and economic as possible o Emphasis is on serving customers while incurring minimum costs - Undifferentiated Marketing o Same basic product is sold to all consumers o Serve large segments which consumers do not have specific desires - Differentiated Marketing o Multiple market segments with a unique product offering to each o Match a product with a segment - One-to-One Marketing o Unique product to an individual consumer o Customized - Niche Marketing o One product targeted to one specific segment – only for that segment o Serves one market segment with particularly unique demand characteristics Marketing Research - Interpretive Research o Explains inner meanings and motivations associated with specific consumption experiences o Researchers interpret meaning rather than analyze data o Qualitative Research Tools – Case analysis, interviews, focus groups, small samples - Quantitative Research o Approach that addresses questions about consumer behaviour using numerical measurement and analysis tools o Quantitative Research Tools - Research questions, measure and test, large samples MKT400 Midterm Notes Sahel Manochehry #500687622 - Primary Market Research: Research and information you gather for yourself o Exploratory Research: Open-ended, helps you define a specific problem and usually involves detailed, unstructured interviews in which lengthy answers are solicited from a small group of respondents o Specific Research: Precise, used to solve a problem that exploratory research has identified - Secondary Market Research: Market research that is already compiled and organized for you Affect: Feelings that are experienced during consumption activities or that are associated with specific objects - Ex. Child continues to receive negative information about smoking, the belief about its being bad for you may result in feelings of disgust PAD: Pleasure-Arousal-Dominance - Self report measure that asks respondents to rate feelings using semantic differential items - Theory is that pleasure is the evaluative dimension of emotion and is bipolar o Bipolar: Situation wherein if one feels joy, they cannot also experience sadness - Arousal is the degree to which one feels energized, excited, or interested - Dominance is the degree to which one feels in control of a situation PANAS: Positive-Affect-Negative-Affect Scale - Allows respondents to self-report the extent to which they feel one of 20 emotional adjectives - Assesses a person’s emotional state at a given point in time - Meant for highly complex situations, allowing researchers to capture both positive and negative dimensions of the emotional experience Types of Value - Personal Shopping Value: Overall subjective worth of a shopping activity considering all associated costs and benefits - Utilitarian Shopping Value: The worth obtained because some shopping task or job is completed - Hedonic Shopping Value: The worth of an activity because the time spent during the activity itself is personally gratifying Market Segmentation: The breaking down of the market into smaller groups with the intention of promoting your product or service differently to each of them Target Marketing: The overall term for directing your marketing endeavors toward a group of people Schemas - Schema: Cognitive representation of a phenomenon that provides meaning to that entity - Brand Schema: The smaller part within one’s total associative network responsible for defining a particular marketing entity - Exemplar: Concept within a schema that is the single best representative of some category – schema for something that really exists MKT400 Midterm Notes Sahel Manochehry #500687622 - Prototypes: Schema is the best representation of some category but that is not represented by an existing entity - Script: Schema representing an event - Episodic Memory: Memory for past events in one’s life o Scripts and episodic memories can both include knowledge necessary for consumers to use products - Social Schema: Cognitive representation that gives a specific type of person meaning (aka. Stereotype) Perceptual Map: Tool used to depict graphically the positioning of competing products - Used to assess choice criteria, identify competitors, identify opportunities for doing more business, and diagnose potential problems in the marketing mix - Links differences in consumer behaviour to changes in marketing strategy or tactics Consumer Lifetime Value (CLV): The approximate worth of a customer to a company in economic terms or the overall long-term profitability of an individual consumer Learning: A change in behaviour resulting in the interaction between a person and a stimulus - Consumer’s awareness and interpretation of reality - Intentional Learning: o Marketing related information o Consumers set out to specifically learn information devoted to a certain subject - Unintentional Learning: o Simply being exposed to stimuli and forming some sort of response to it o Consumers sense or react/respond to the environment Making Associations with meaning as Key Way to Learn - Four mental processes to help consumers - Repetition: Simple mechanism in which a thought is kept alive in short term memory by mentally repeating the thought o Cognitive Interference: Notion that everything else that the consumer is exposed to while trying to remember something is also competing for processing capacity and thus interfering with memory and comprehension - Dual Coding: Coding that occurs when two different sensory traces are available to remember something - Meaningful Encoding: Coding that occurs when information from long-term memory is placed on the workbench and attached to the information on the workbench in a way that the information can be recalled and used later - Chunking: Process of grouping stimuli by meaning so that multiple stimuli can become one memory unit o Response Generation: Reconstruction of memory traces into a formed recollection of information MKT400 Midterm Notes Sahel Manochehry #500687622 Shaping: A socialization process by which consumer’s behaviours slowly adapt to a culture through a series of rewards and sanctions Consumer Perception Process - Perception: A consumer’s awareness and interpretation of reality - Sensing - Organizing – Reacting - Sensing o A consumer senses stimuli to which they are exposed o An immediate response to stimuli that have come into contact with one of the consumer's five senses (sight, smell, touch, taste, sound) - Organizing o Cognitive Organization: Process by which the human brain assembles sensory evidence into something recognizable o Begin to comprehend what the stimulus is which provides an initial cognitive and affective meaning o Three possible reactions of categorizing stimulus ▪ Assimilation: State that results when a stimulus has characteristics such as that consumers readily recognize it as belonging to some specific category ▪ Accommodation: State that results when a stimulus shares some, but not all of the characteristics that would lead it to fit neatly in an existing category, and consumers must process exceptions to rules about the category ▪ Contrast: State that results when a stimulus does not share enough in common with existing categories to allow categorization • People do not tend to like things that are unknown, therefore contrast is usually associated with negative feelings - Reacting o Can include both physical and mental response to the stimuli encountered Selective Perception - Selective Exposure: Process of screening out certain stimuli and purposely exposing oneself to other stimuli - Selective Attention: Process of paying attention to only certain stimuli - Selective Distortion: Process by which consumers interpret information in ways that are biased by their previous held beliefs - conscious or unconscious - Exposure occurs when some stimulus is brought within the proximity of a consumer so that it can be sensed o A first step to learning o Vital component of both intentional and unintentional learning Habituation - Habituation: The process by which continuous exposure to a stimulus affects the comprehension of, and response to, the stimulus - Familiarity can lower a consumer’s motivation to process a message MKT400 Midterm Notes Sahel Manochehry #500687622 - Some degree of familiarity may improve consumer attitude but high levels of familiarity may reduce comprehension - Adaptation Level: Level of a stimulus to which a consumer has become accustomed - Dostats: Russian word that can be roughly translated as “acquiring things with great difficulty” Cognitive Dissonance: Lingering doubts about a decision that has already been made - Consumers experience dissonance, which literally means “lack of agreement”, between the thought that they are a good decision maker and that they made a bad decision - Dissonance is sometimes known as buyer’s regret - Consumers are more likely to experience dissonance when o The consumer is aware that there are many attractive alternatives that may offer comparable value relative to the product/brand purchased o The decision is difficult to reverse o The decision is important and involves risk o The consumer has low self confidence Memory: The psychological process of which knowledge is recorded - Explicit Memory: Memory that develops when a person is exposed to, attends, and tires to remember information - Implicit Memory: Memory for things that a person did not try to remember o Pre-Attentive Effects: Learning that occurs without attention – created by implicit memory o Implicit memory creates more favourable attitudes toward the brand that increase the likelihood that a consumer would consider buying something associated with the brand o Becomes stronger the more distracted one is from attending to this stimulus Multiple Store Theory of Memory - Sensory Memory: Area in memory where a consumer stores things exposed to one of the five senses o Has unlimited capacity, can store everything that it is exposed to o Iconic Storage: Storage of visual information in sensory memory and the idea that things are stored with a one-to-one representation of reality o Echoic Storage: Storage of auditory information in sensory memory o Perishable, lasts only a very short time – begins to fade immediately after the sensation is recorded - Workbench (Short-Term) Memory: Storage area in the memory system where information is stored while it is being processed and encoded for later recall o Works closely with long term memory o Encoding: Process by which information is transferred from workbench memory to long-term memory for permanent storage MKT400 Midterm Notes Sahel Manochehry #500687622 o Retrieval: Process by which information is transferred back into workbench memory for additional processing when needed o Short term, limited duration, but with unlimited capacity o Capacity of workbench expands and contracts based on the level of consumer involvement ▪ When involvement is low, workbench memory capacity contracts to a minimum - Long-Term Memory: Repository for all information that a person has encountered o Unlimited capacity, unlimited duration o Semantic Coding: Type of coding wherein stimuli are converted to meaning that can be expressed verbally o Spreading Activation: Where cognitive activation spreads from one concept (or node) to another o Mental Tagging: Helps consumers to retrieve knowledge o Rumination: Unintentional but recurrent memories of long-ago events that are spontaneously triggered ▪ How a consumer remembers a memory – positively/negatively o Nostalgia: A mental yearning to relive the past associated with emotions related to longing Attention: Purposeful allocation on information processing capacity toward developing an understanding of some stimulus - Consumers simply cannot pay attention to all the stimuli to which they are exposed - Consumers are selective in the information to which they pay attention Consumer Comprehension - Comprehension: The way people cognitively assign meaning to things they encounter - Internal factors within the consumer powerfully influence the comprehension process - Comprehension includes both cognitive and affective elements (thoughts and feelings) Factors Affecting Consumer Comprehension - Characteristics of the Message o Physical Characteristics ▪ Tangible elements or the parts of a message that can be sensed o Simplicity-Complexity ▪ The simpler the message, the more likely a consumer develops meaningful comprehension o Message Congruity ▪ Extent to which a message is internally consistent and fits surrounding information ▪ Incongruity motivates deeper processing than when everything in a message is highly congruent ▪ Consumers will comprehend and remember more from an ad that is presented with incongruent material surrounding it MKT400 Midterm Notes Sahel Manochehry #500687622 o Figure and Ground ▪ Every message is presented with background, although some backgrounds become the actual message ▪ Figure: Object that is intended to capture a person’s attention; the focal point of any message ▪ Ground: Background in a message ▪ Figure-Ground Distinction: Notion that each message can be separated into the figure and the ground o Message Source ▪ Source influences comprehension to varying degrees based upon characteristics such as • Likeability: A likeable source can change interpretations of a stimulus • Attractiveness • Expertise: Amount of knowledge that a source is perceived to have about a subject • Trustworthiness: How honest and unbiased the source is perceived to be • Expertise and trustworthiness are associated with credibility o Credibility: Extent to which a source if considered to be both an expert in a given area and trustworthy o Like likeability, credible sources tend to lower the changes that consumers will develop counterarguments - Characteristics of the Message Receiver o Intelligence/Ability ▪ Marketers should communicate information pertaining to product warnings, usage instructions, or assembly directions as simply as possible o Prior Knowledge ▪ Pre-existing knowledge provides resources or a way which other stimuli can be comprehended o Involvement ▪ Consumers receiving the exact same message may come away with very different levels of knowledge and understanding depending on how involved they are in the topic domain o Familiarity/Habituation ▪ Familiarity can lower a consumer's motivation to process a message • While it can improve consumer attitude, high levels of familiarity may actually reduce comprehension o Expectations: Beliefs of what will happen in some future situation MKT400 Midterm Notes Sahel Manochehry #500687622 ▪ What consumers expect to experience has an impact on their comprehension to the environment o Physical Limits ▪ Physical limitations of a person will affect their ability to behave in the consumer market and comprehend the aspects of the message appropriately o Brain Dominance ▪ The phenomenon of hemispheric lateralization ▪ Left brain vs. right brain, while one side tends to favour images and communication, the other tends to favour words and logistics - Characteristics of the Environment (Information Processing Situation) o Information Intensity: Amount of information available for a consumer to process within a given environment o
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