MOS 3321 - Consumer Behaviour Ch 1 - 8 MIDTERM ONE TEXTBOOK NOTES .docx

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Western University
Management and Organizational Studies
Management and Organizational Studies 1021A/B
Kevin Thompson

Consumer Behavior 3321 Chapter 1: An Introduction to Consumer Behavior Consumer Behavior: People in the Marketplace  Market segmentation: Categorize people in terms of demographics, psychographics, to define and decide on techniques  Purchase decisions influences by opinions and behaviors of those around us. Consumption Commodities: online, members share views and product recommendations  Large societies share certain cultural values / beliefs about the way the world should be structured. Other values shared by subcultures.  Brands often have clearly defined images/personalities created by product advertising, packaging, branding, and other marketing strategies that focus on positioning in a certain way  When satisfying consumers needs/desires, rewarded with many years of brand loyalty which is difficult for competitors to break  Consumers‟ evaluations affected by appearance, taste, texture, and small. Judgments reflect how society feels ppl should define themselves  Opinions and desires increasingly shaped by input from around the world. What is consumer behavior? Consumer Behavior: the study of the processes involved when individuals or groups select, purchase, user, or dispose of products, services, ideas, or experiences to satisfy needs and desires. Ex. Identifying opportunities, Defining markets, Segmentation, Building relationships, Product, Place, Price, Promotion Consumer behavior is a process:  Used to be called buyer behavior, which reflected emphasis on interaction between consumers and producers at the time of purchase. Now its an ongoing process.  Exchange: which 2 or more orgs or ppl give and receive something of value. Is integral part of marketing?  Expanded view of CB emphasizes entire process, which influences the consumer before, during, and after purchase. Consumer Behavior involves many different actors:  Consumer: person who identifies need/desire purchases and then disposes of product in the 3 stages of consumption  Different people may be involved in process  Purchaser, user, or influencer  Organizations or groups purchasing where one person can be making decisions for many. Decisions can also be made by large group of ppl  Organization ex: Family. Each member plays a pivotal role Consumers’ Impact on Marketing Strategy: Firms exist to satisfy cons needs. Which can only be satisfied to the extent that they understand people or organization buying products, and understand better than competitors. Define mkt and identify threats and opps. Nothing is forever. Continue to appeal to core mkt, and predict the future. Segmenting Consumers:  Marketing segmentation: identifies groups of consumers who are similar to one another in one of more ways then devises mktg strategies that appeal to one or more groups.  Important because our culture is evolving from a mass culture to a diverse one. So have to differentiate between people and what they like.  Demographics: stats measuring observable aspects of a population. Use data to locate and predict size of markets. o Typical Canadian consumer: Woman 39.5 years old, approximately 30.4 hours of work a week, with income of $810/wk, spending - $13643 on shelter, $1167 on personal care, 2948 on clothing, 4330 on childcare, $1932 on healthcare, $3976 on recreation, and watched 19.6 hours of TV a week. o Age: Consumers of certain age groups share set of values and common cultural experiences that they carry through life. o Gender: starts at early age o Family structure: Has big effect on spending priorities. o Social Class and income: in same social classes people are approximately of equal incomes, and social standing on community, with similar occupations, tastes, share ides and value. Distribution of wealth shows marketers who has greatest buying power and market potential. o Ethnicity: Multicultural Canada o Geography: climate changes are drastic from province to province, and diff cultural pockets within regions  Psychographics: differences in consumers‟ personalities and tastes that cant be objectively measured o Ex: Personality, Lifestyles, Patterns of living as expressed by AIO dimensions, Cultures, Subcultures, Ethnic Identity, Organized Religion, Roles, Values, Attitudes, Intentions, Cognitions, Perceptions, Emotions, Abilities, Intelligence. o Lifestyles: people live very different lifestyles. Relationship Marketing: Building bonds with consumers  Relationship Marketing: making an effort to interact with customers on a regular basis, giving them reasons to maintain a bond with the company over time  Database marketing: involved tracking consumers‟ buying habits closely and crafting products and messages tailored precisely to peoples W & N. Combining and constantly updating information from public records and marketing research surveys with data volunteered by consumers themselves. To create complex DBs to fine tune knowledge Marketing’s impact on consumers: marketers filter much of what we learn about world. We are at the mercy of marketers, since we rely on them to sell us products that are safe and perform as promised, tell us the truth, and price and distribute fairly. Marketing and culture:  Popular culture: music, movies, sports, books, celebrities, and other forms of entertainment consumer by the mass market, both a product and inspiration for marketers  Cultural influence hard to overlook  Consumer generated content: everyday people voice opinions about products, brands, and companies on blogs, podcasts, and social networking sites. Ex. Youtube and super bowl Doritos ads  Web 2.0: rebirth of internet as interactive medium from original roots as a one-way transmission  Difficult to separate popular culture and marketing efforts  We are not just consumers of culture, but also producers of culture Meaning of consumption: people buy products not for what they do but for what they mean. Choose the brand that has an image (personality) consistent with her or her underlying needs. Our allegiances help us define our place in modern society, and form bonds with others with similar preferences.  Role theory: view that much of consumer behavior resembles actions in a play. People play different roles and their consumption behaviors may differ, depending on the particular role they are playing  Trademark of marketing today is to build a relationship with the customer, which evolves over time. o Self-concept attachment: product helps establish users identity o Nostalgic attachment: product serves as a link with past self o Interdependence: product is a part of users daily routine o Love (Love mark): product elicits emotional bonds of warmth, passion, or other strong emotions. The Global Consumer: Majority of people live in Urban centers. By-product of sophisticated mktg strategies is movement towards a global consumer culture. Owe much of interconnectedness to new developments in tech that allow us to link with companies and each other.  U-commerce: use of ubiquitous networks that will slowly but surely become a part of us, whether in form of wearable computers or customized ads beamed to us on cell phones  RFID Tags: containing computer chip and tiny antenna let chip communicate with network  All this increases pressure to understand how consumers in other countries are the same as or different from customers in the host country.  Cultural homogenization  Virtual consumption: electronic marketing has increase convenience by breaking down time and location barriers o Not all about B2C, its also C2C now. o Created new virtual brand communities, and chat rooms. o Will this bring us together or drive us apart? o Extroverts make more friends on web, introverts feel more cut off Blurred boundaries: Marketing and reality: Marketers and consumers coexist in a complicated two-way relationship. Where does the line separating fabricated world from reality begin and end? To what degree do marketers shape popular culture? Marketing Ethics and Public Policy: managing conflict between need to success and need to provide consumers with safe, effective, and honest products and services.  Business ethics: rules of conduct that guide actions in the marketplace. What‟s right, wrong, good, bad. Include honesty, trustworthiness, fairness, respect, justice, integrity, concern for others, accountability, and loyalty. Ethical business is good business. Effected by cultural differences.  Prescribing ethical standards of conduct: devise a code of ethics for members. Disclose risks associated with P/S. Identify added features that are increasing cost. Avoidance false or misleading ads. Rejection of high pressure or misleading sales tactics. Prohibition of selling or fundraising under the guise of conducting market research. o Illegal: bait and switch. Needs and Wants: Do Marketers Manipulate Consumers: Do marketers give people what they want or, do they tell people what they should want? Welcome to Consumer Space: Who controls market: Consumers or Companies?  Marketer space: where companies called shots and decided what consumers want.  Consumerspace: People are now empowered and have choice. Nomads. Must attract them. Consumers are empowered of how, when and what time they make their consumer decisions. Shopping on your own terms. Do Marketers create artificial needs? Objective of marketing: Create awareness that needs exist …not to create needs  One argument: Ads contribute to moral breakdown of society by presenting images of hedonistic pleasure, thus encouraging the pursuit of secular humanism.  Another: Same deceitful promises of material pleasure function to buy off people who would otherwise be revolutionaries working to change the system.  Need: A basic biological motive  Want: One way that society has taught us how our needs can be satisfied Are advertising and marketing necessary? Goods linked to desirable social attributes. We don‟t value goods for their utilitarian function, but focus on irrational value of goods for what they symbolize. We also buy because we can. Ads help communicate products availability and provide consumer information. Do Marketers promise miracles? Advertising provides simple, anxiety reducing answers to complex problems. They don‟t know enough about people to manipulate. Product failure rate for new products is 40% to 80% Public Policy and Consumerism: Main thrust of regulation is to protect consumer from unfair business practices and to protect broad interests of society. Consumers depend on governments to regulate safety and environmental standards.  Consumer activism: o Culture jamming: aims to disrupt efforts by corporate world to dominate cultural landscape. o Green marketing: choose to protect/enhance natural environment o Social marketing: using marketing techniques normally employed to sell beer or detergent to encourage positive behaviors such as increased literacy or to discourage negative activities. Dark Side of Consumer Behaviour: Consumers depicted as rational but often needs desires, and choices can lead to negative consequences.  Consumer addiction: physiological or psychological dependency on products or services  Compulsive consumptions: repetitive shopping, excessive, done as an antidote to tension, anxiety, depression, or boredom.  Impulse buying is a temporary feeling for specific product in that moment  Products can control consumer so behavior is not done by choice, gratification is short lives, and strong feelings of regret or guilt after words.  Consumer theft: advanced fee fraud artist – counter scammers  Shrinkage: inventory and cash losses from shoplifting and employee theft. Cost is passed onto consumers. Often done by middle-high income who shoplift for thrill. Abuse of exchange/return policies  Anticonsumption: P&S are deliberately defaced or mutilated. Consumer Behavior is a field of study:  Consumer researchers can be found anywhere consumers are  Many types of topics  Interdisciplinary influences on the study of consumer behavior: consumer behavior is being influence by many different perspectives. Similar consumer phenomenon can be studied in many different ways. Individual (Micro) to larger groups of people (macro) research!  Perspectives on consumer research: Fundamental assumptions on what they are studying and why a Paradigm o Positivism (modernism): human reason is supreme and there is a single, objective truth that can be discovered by science. Regard world as rational, ordered place with a clearly defined past, present, future. o Interpretive (postmodernism): too much emphasis on science and technology in our society and that this ordered, rational view of consumers denies the complex social and cultural world in which we live. Meaning is in mind of person. Construct meaning in based on unique and shared cultural experiences (pastiche) Chapter 2: Perception Introduction: We live in a world overflowing with sensations. We cope with this clutter of sensations by paying attention to some stimuli while ignoring others. What we pay attention to we interpret from our unique experiences, biases, and desires. Put out spin on things. Sensation: immediate response of our sensory receptors to basic stimuli such as light, colour, and sound. Perception: Process by which these sensations are selected, organized, and interpreted. Consumers don‟t passively process whatever information happens to be present. Sensory Systems  External Stimuli (Sensory inputs): Raw data that generate many types of responses. Can generate internal sensory experiences. Helps differentiate from competitors if unique.  Hedonic Consumption: multisensory, fantasy, and emotional aspects of consumers‟ interactions with products. Hedonic Consumption and the Design Economy:  Consumers increasingly want to buy what will give hedonic value. Prefer additional experiences rather than additional possessions as incomes rise. Form is function. Ex. Adam Lowry and Eric Ryan made scented cleaners and the experience is what sold.  Demand for derived pleasure over and above functionality of the product  Design is substance  In good old days design was an after thought. Marketing meant appealing in terms of efficiency rather than aesthetics. Now focus on “first moment of truth. Sensory Marketing: Harnessing Perception for a competitive advantage Sensory Marketing: pay extra attention to impact of sensation on our product experiences. Vision: Advertising, store design, and packaging. Meaning communicated through size, styling, brightness, and distinctiveness from competitor.  Colour: Colors can influence emotions more directly, are rich in symbolic value and critical meaning. Some reactions to color come from learned association, and some are due to biological differences (Women to bright, because they see color better than men do). o Cognitions (associations) o Provokes emotion (affect) o Reactions to color: biological & cultural o Trend toward brighter and more complex color reflects increasing cultural makeup of Canada o Perceptions depend on wave length and how mind responds. o Plays dominant role in web page design. o Trade dress: When colors become so strongly associated with a brand or corporation. May be granted exclusive use of color.  Size: o We tend to eat more, when  …food container is larger  …our plate still contains food  …we see assortment of foods o Use eyes, not stomach to tell us we‟re full o We focus on height rather than width when pouring liquid into a glass Smell:  Odors can stir emotions and create a calming feeling = mood and memory (process in limbic system = experience immediate emotions)  Not just physiological response. Labels can help identify them and how we perceive them. Women are better at identifying smells. Reactions depend on cultural background.  Scented marketing  Cadillac‟s “Nuance” scent = expensive upholstery  Most recognized smells: J&J Baby Powder, chocolate and coconut  Fragrances Hearing: Buy millions worth of sounds, jingles, moods.  Aspects of sound affect our feelings and behaviors and create a certain mood  Brand names are sounds called phonemes, which have their own feelings. “I” brands are lighter than “a” brands  Muzak holdings create functional music, to relax or stimulate customers.  Culture/language & sounds  Aging ear. Adults cant hear a certain frequency  Pronunciation  Mistranslations: “Bite the wax tadpole” (Coke) or “Eat your fingers off” (KFC) Touch: little research done. Moods relaxed of stimulate on basis of sensation of the skin.  Haptic (touch) sense moderate relationships btwn product experience and judgment confidence, confirming the common sense notion that we‟re more sure about what we perceive when we can touch it. o Product judgments by individuals who do not normal process a compulsion to touch products (low autotelics) are influences by the “feel” of a package, while those who don‟t have a compulsion to touch (high autotelics) do not rely on this cue to infer quality.  Kansai engineering: philosophy that translates customer feelings into design elements. Ex. Command Seating. Fragrance and Cosmetic containers.  Fabric textures and other products associated with underlying product qualities. Taste: People form strong preferences for certain flavors. Changes in our culture also determine the tastes we find desirable. Taste & Experience. Developing new concoctions for consumer palates. Culture & learning from exposure helps shape desirable tastes (i.e.Thai Food) Exposure Degree to which people notice a stimulus that is within range of their sensory receptors. Consumers concentrate on some stimuli, are unaware of others, and even go out of their way to ignore some messages. Sensory Thresholds: Some stimuli that people simply are not capable or perceiving. o Psychophysics: study of how the physical world makes it to our brain. How physical environment is integrated into our personal, subjective world. o Absolute threshold: minimum amount of stimulation that can be detected on a sensory channel. Ex Dog whistle. Billboard with too small print – we choose to ignore it. Any ad with too much verbage on it – IGNORE!! Copy we find offensive when we DECODE it! o Differential Threshold: refers to ability of sensory system to detect changes in a stimulus of differences between two stimuli. o JND: Just noticeable difference o Ernst Webers Law: Differences are relative. Amount of necessary change is systematically related to original intensity of stimulus.  K = ∆ I / I K = constant increase or decrease necessary for stimulus to be notice ∆ I = minimal change in intensity required to be JND I = intensity of stimulus before change occurs o Why? So that reductions are not readily discernible to the public, and so the public perceives the product improvements. o Many studies have shown that our sensory detection abilities decline, as we grow older. o What are the implications of the absolute threshold for marketers? o When do we want/not want consumers to notice? Subliminal Perception: when stimulus is below level of consumer‟s awareness. (Limen = another word for threshold). No proof that it actually works. If you can see/hear it is not subliminal. Controversy has shaped public beliefs on advertising and subliminal messaging. Expressed fears that social scientists would team up with advertisers to invade privacy and control. James Vicary‟s infamous experiments (claimed) at a New Jersey Drive-In movie (1957) was a failure and he lied about the results.  Techniques: Embeds: tiny figures inserted into magazine ads by using high speed photography or airbrushing. Hidden sound on recordings. Not possible.  People can be influenced under very specific conditions. Tailored specifically to that one individual as as close the threshold as possible.  Why doesn‟t it work? o Wide differences in thresholds btwn individuals o Lack control over distance and position from screen o Consumer must be paying attention o Operated only at very general level. Ex basic drives like thirst Attention: extent to which the brains processing activity is devoted to a particular stimulus. We experience Sensory Overload due to 3,500 ad info pieces per day. Have developed the ability to multitask and process information from many mediums at same time. Marketers need to break through the clutter. (Content wraps, rich media, teaser ads.)  Perceptual Selectivity: Consumers attend to only a small portion of the stimuli to which they are exposed. Pick and choose to avoid being overwhelmed.  Personal Selection Factors: Experience is the result of acquiring stimulation, how much exposure to a stimulus a person accepts. Perceptual filters based on consumers past experiences influence what they decide to process. Perceptual vigilance is a factor in selective exposure, aware of what relates to current needs. Perceptual defense – if you don‟t want to see something you don‟t. o Adaptation: degree to which consumers continue to notice a stimulus over time. Intensity, duration, discrimination, exposure, and relevance.  Stimulus Selection factors: characteristics of the stimulus itself plan an important role in determining what gets noticed and what gets ignored. Contrast can be created by size, color, position, and novelty of the stimulus. Interpretation: refers to the meanings that people assign to sensory stimuli. Consumers assign meaning to stimuli based on the schema, or set of beliefs to which a stimulus is assigned. Certain properties of a stimulus evoke more schema than others (priming_)  Stimulus Organization: people don‟t perceive a single stimulus in isolation. Brains relate incoming sensations to others already in memory based on some fundamental organizational principles. o Gestalt psychology: school of thought maintaining that people derive meaning from a totality of a set stimuli rather than from any individual stimulus. „Whole greater than sum of its parts” Interpretations of stimuli affected by aesthetic, symbolic, or sensory qualities. o Principle of closure: implies that consumers tend to perceive an incomplete picture as complete o Principle of similarity: consumers tend to group together objects that share similar physical characteristics. o Figure-ground principle: one part of a stimulus will dominate (the figure) while other parts recede into the background. The eye of the beholder: Interpretation biases: stimuli we perceive are often ambiguous. Up to us to determine the meaning based on our past experiences, expectations and needs. Consumers tend to project their own desired or assumptions onto products and advertisements.  Semiotics: The symbols around us: interpret meanings in light of associations we have with images. Meaning we take away is influenced by what we make of symbolism we perceive. Understanding how consumers interpret meanings of symbols – semiotics is important. o Consumers use products to express social identities and products have learned meanings o Object: product that is focus of message o Sign: sensory imagery that represents the intended meanings of the object o Interpretant: is the meaning derived o Signs related to objects in one of three ways:  Resemble objects (Icon)  Connected to them (Index)  Conventionally tied to them (Symbol) o Hyperreality: refers to becoming real of what is initially simulation of “hype” Artificial associations with symbols and real world may take on lives of their own.  Perceptual Positioning: Product stimulus interpreted in light of what we already know about a product category and the characteristics of existing brands. Functional, and symbolic attributes. This meaning constitutes the products market position and it may have more to do with our expectations of product performance as communicated by its attributes. o Positioning strategy: fundamental part of company‟s marketing efforts as it uses elements of the marketing mix to influence consumer‟s interpretation of its meaning. Functional attribute is only a component of product evaluation. (New coke example) People are also buying intangibles such as brand image o Positioning dimensions: Price leadership, Attributes, Product class, Occasions, Users and Quality. Chapter 3: Learning and Memory The Learning Process: long standing learned connections between products and memories are a potent way to build and keep brand loyalty Learning: relatively permanent change in behavior that is caused by experience. Direct, vicariously, incidental. Learn vicariously by observing. Casual, unintentional acquisition of knowledge is known as incidental learning. Learning is an ongoing process. Revised, updated, feedback  modified behavior Several theories advanced to explain learning process Behavioral theories vs Cognitive Theories (Main Differences?) Products as reminders of life experiences: Products + memory = brand equity/loyalty Behavioural Learning Theories: assume that learning takes place as a result of responses to external events.  Things go into the box, and things come out of the box. Stimuli  reactions  People‟s experiences are shaped by the feedback they receive as they go through life. Actions they take result in rewards and punishments, and these feedback influences the way they will respond in similar situations in the future. Classical Conditioning: when a stimulus that elicits a response is paired with another stimulus that initially does not create a response on its own. Over time second stimulus causes a similar response because it is associated with the first. Pavlovs Dogs.  Unconditioned stimulus: naturally capable of causing response  Conditioned stimulus: learned to associate with unconditioned  Conditioned response: Cause my conditioned stimulus  Applies to responses controlled by autonomic and nervous systems.  Repetition: effects more likely to occur after the conditioned and unconditioned stimuli have been paired a number of times. Prevents decay of these associated in memory. Combination of spaced exposures that alternate in terms of media that are more or less involving. Lack of association may be extinction, which occurs when the effects of prior conditioning are reduced and finally disappear. Can also be overexposed. Lose effect.  Stimulus Generalization: refers to tendency of stimuli similar to a CS to evoke similar conditioned responses. “Piggy backing strategy” Masked branding: deliberately hiding a products true origin.  Stimulus discrimination: occurs when a stimulus similar to a CS is not followed by a USC, reactions are weakened and will soon disappear. Marketing Applications of Classical Conditioning: Nonsense syllables are paired with such evaluative words as beauty or success the meaning is transferred to the nonsense syllables.  Brand Equity: brand has strong positive associations in a consumers memory and commands a lot of loyalty as a result  Repetition is needed to ensure consumer is actually exposed to, and processes, the ad at least three times. Too much of a good thing can be bad, because no longer pay attention to it. Advertising wear out can be lessened by varying way in which it is presented  Conditioning Product Associations: pair a product with a positive stimulus – music, humor, or imagery. Unconditioned Stimulus should be presented prior to conditioned stimulus. Backward conditioning does not work. Product associations can be extinguished.  Applications of Stimulus Generalization: Central to branding and packaging decisions that attempt to capitalize on consumers‟ positive associations with an existing brand or company name. o Family branding: variety of products capitalize on the reputation of a company name o Product line extensions: related products are added to an established brand o Licensing: well known names are rented by others o Look-alike packaging: distinctive packaging designs create strong associations with a particular brand. (If too alike Law suits) o Careful of brand names that are used way too widely and of fake products.  Brand Names as Conditioned Stimuli: Music, humor, imagery: Can affect conditioning o Unconditioned: Focus on visual/olfactory cues that induce hunger, thirst, or sexual arousal. o Pair these cues with conditioned stimuli (brand names) o Customers may learn to feel hungry, thirsty, aroused when exposed to brand names/cues. Instrumental Conditioning: (operant conditioning) occurs as the individual learns to perform behaviors that produce positive outcomes and to avoid those that yield negative outcomes. B.F. Skinner. Respond deliberately to obtain a goal.  Intermediate actions rewarded in a process called shaping, which teached behaviour over time.  Close pairing of two stimuli. By rewarding following the action of the desired behavior.  Positive Reinforcement: response strengthened and appropriate behaviour is learned. When no longer received extinction can occur. (Rewards)  Negative reinforcement: strengthens response so that appropriate behaviour is learned. When someone avoids a negative outcome. (Fear, discontentment)  Both pos and neg reinf strengthen the link and the stimulus which is weakened under extinction and punishment.  Punishment: when a response is followed by unpleasant events (Riducle/loss)  Extinction ie obsolescence of reward  Need an effective reinforcement schedule o Fixed interval reinforcement: after specified time has passed the first response that is made brings the reward o Variable interval reinforcement: time that must pass before reinforcement is delivered varies around an average. So constantly consistent behaviour. o Fixed-Ratio reinforcement: reinforcement occurs only after a fixed number of responses. o Variable ratio reinforcement: reinforced after a certain number of response, but he or she does not know how many responses are required.  Instrumental learning: the response is performed because it is instrumental to gaining a reward or avoiding a punishment Applications of Instrumental Conditioning Principles  Reinforcement of Consumption: many ways to reinforce behaviour of consumers, ranging from a simple thank you after a purchase to rebates and follow up phone calls  Frequency Marketing: reinforces behaviour of regular purchasers by giving them prizes with values that increase along with the amount purchased. EXAMPLES OF CLASSICAL AND INSTRUMENTAL CONDITIONING A package of Marlboro cigarettes is presented on a billboard, with a scenic picture of the Grand Canyon forming the backdrop. (classic) Drivers on the 401 are exposed to large billboards detailing the consequences (fines, demerits, and/or vehicle seizure) of exceeding the speed limit at various rates. (Instrumental) During Thanksgiving weekend, a speed trap on the 401 near Brockville nets hundreds of speeders and $1000’s in fines. (Instrumental) Coca-Cola pairs a positive phrase (“Have a Coke and a Smile”) and photo with its brand name in order to have consumers develop an association between coke and fun. (Classic) Every Fall, McDonald’s runs the “McDonald’s Monopoly” sales promotion technique. (Instrumental) An antidrug advertisement shows a closeup of a woman’s face, as she is putting the barrel of a revolver to one nostril, with the caption (in large lettering): “COCAINE” (Instrumental) McDonald’s famously used the Big Mac Jingle (“two all-beef patties, special sauce, lettuce,….”)to promote its flagship product. (Classic) Patrons in a Starbucks store are given free samples of their signature breakfast sandwiches as they wait in line to make their orders. (Classic) Cognitive Learning Theory: Stresses importance of internal mental processes. Views people as problem solvers who actively use info from the world around them to master our environment. Is Learning Conscious or not? Whether, and when people are aware of learning? Simple effects are based on cognitive factors. Conditioning occurs because subjects develop conscious hypothesis and then act on them. There is some evidence for the existence of unconscious procedural knowledge. We process some information in an automatic, passive way. Trigger feature: some stimulus that cues us toward a particular pattern. We often make snap judgments that result in superior decisions compared to those we think about a lot because we rely on our adaptive unconsciousness to guide us. Many modern theorists are beginning to regard some instances of conditioning as cognitive responses. Observational Learning: When people watch others and note reinforcements they receive for behaviors; learning occurs as a result of vicarious rather than direct experience. (Vicarious learning – see others, duplicate or avoid.) Complex process often called modeling. Tendencies to imitate the behaviour of others can have negative effect such as violence after watching TV shows. For observational learning to occur four conditions must be met: 1. Attention must be directed toward appropriate model (attractive, competent, status, or similarity) 2. Consumer must remember what model does or says 3. Consumer must convert this info into actions 4. Consumers must be motivated to perform these actions Applications of Cognitive Learning Principles: Makes the lives of marketers much easier. People do not have to be reinforced directly for their actions. Show what happens to models. (Perfume ad where woman receives positive reinforcement for using the product). Celebrity image depends on their social “attractiveness” which includes Physical appearance, Expertise, and Similarity to the influencer (model or example). Role of Memory in learning: Memory: process of acquiring information and storing it over time so that it will be available when needed. Data input, processed, and output for later use in revised form. THE MEMORY PROCESS  Encoding: the way we encode information can help us retain it later  Storage: knowledge integrated with what is already in memory and warehoused until needed.  Retrieval: mind accesses the desired info  During consumer decision-making process internal memory combined with external memory.  Post experience advertising is more likely to alter actual memories when it is very similar to or activates memories about the actual experience. Encoding of Information for Later Retrieval: The way information is encoded, or mentally programmed, helps to determine how it will be represented in memory. No evidence that descriptive names for high involvement products, such as cars, are remembered any better than non-descriptive names.  Types of meaning: process a stimulus simply in terms of its sensory meaning (impact on any of our senses = short term), such as its color of shape. Meaning may be activated when the person sees a picture of the stimulus. Semantic meaning (words or symbols associations)  Personal relevance: Episodic memories are those that relate to events that are personally relevant. Different and unique for them and are called flashbulb memories and they‟re triggered by little things. Brands are more likely positively evaluated and purchased when they connect to a consumer through narrative. Memory Systems:  Sensory memory: permits storage of information we receive from our senses. Temporary. Passes through attentional gate and is transferred to short-term memory.  Short Term memory: also stores information for a limited period of time, and its capacity is limited. Regarded as working memory; currently processing. Acoustically in how it sounds, vs semantically in terms of meaning.  Chunking: combining small pieces into larger ones  Long-Term memory: system that allows us to retain information for a long period of time.  Elaborative rehearsal is required to put information into long term memory. FIGURE 3-5 ON PAGE 83 Storing Information in Memory: multiple store assumes that STM and LTM are separate systems. Interdependence of the systems. Depending on nature, different levels of processing occur that activate some aspects of memory rather than others called activation models of memory  Associative networks: incoming piece of information. An associative network contains many bits of related information organized according to some set of relationships. o Knowledge structures: can be thought of as complex spider webs filled with pieces of data. Placed into nodes, which are connected by associative links. Hierarchical processing model – messages are processes in a bottom up fashion. Beginning at the most basic level. o Group constitutes that persons evoked set. Cues that facilitate placement in the appropriate category  Spreading Activation: meaning can be activated indirectly. This process allows customers to shift back and forth between levels of meaning. The memory trace for an ad could be stored in one or more of the following ways. o Brand-specific: in terms of claims made for the brand o Ad-specific: in terms of the medium or content of the ad itself o Bran identification: in terms of the brand name o Product category: in terms of how the product works, where it should be used, or experiences with the product o Evaluative reactions: in terms of whether that looks like fun  Levels of Knowledge: meaning concepts are individual nodes are individual nodes, into a larger unit, called a proposition. Propositions are, in turn, integrated to produce a complex unit knows as a schema. Schema is a cognitive framework that is developed through experience. Script: a sequence of procedures that is expected by an individual. Retrieving Information for Purchase Decisions: Retrieval is the process of accessing information from long-term memory.  Factors Influencing Retrieval: Physiological. Situational, relating to the environment in which message is delivered. Pioneering brand is more easily retrieved from memory than follower brands because the product‟s introduction is likely to be distinctive and, descriptive brand names are more likely. Viewing environment of a marketing message can also affect recall. Post experience advertising effects underscore how powerful marketing communications can be in shaping our daily experiences. o State dependant Retrieval: people are better able to access information if their internal state is the same as the time of recall as it was when the information was learned. (Mood congruence effect) o Familiarity and recall: Prior familiarity with an item enhances its recall. Extreme familiarity can result in inferior learning and recall. Radio Replay. o Salience and recall: Salience of a brand refers to its prominence or level of activation in memory. Any techniques that increase the novelty of a stimulus also improve recall (von restorff effect). Mystery ads. We recall mixed emotions differently than unipolar emotions. Latter become even more polarized over time. o Pictoral vs Verbal cues: Some evidence for the superiority of visual memory over verbal memory. Unclear because it is difficult to measure recall of pictures. Pic ads enhance recall, and don‟t really improve comprehension.  Factors influencing forgetting: o Interference: as additional info is learned it displaces earlier info o Stimulus-response associations will be forgotten if consumers subsequently learn new responses to the same or similar stimuli in a process known as retroactive interference. Prior learning can interfere with new learning, a process called proactive interference. o Organize attribute information by brand o Part-list cueing effect: allows marketers to use the interference process strategically Products as Memory Makers: Products and ads can themselves serve as powerful retrieval cues. To call forth memories of the past. Autobiographical memories on buying behaviors. Memories are one way those advertisements create emotional response Our possessions often have mnemonic qualities that serve as a form of external memory y prompting consumers to retrieve episodic memories.  Nostalgia: bittersweet emotion, where the past is viewed with both sadness and longing. Stimulus is at times able to evoke a weakened response much later, an effect known as spontaneous recovery  Retro brand: is an updated version of a brand from a prior historical period.  Nostalgia index indicates that peoples tastes in such products as movies and clothing are influences by what was popular during certain critical periods of their youth. Measuring memory for marketing stimuli: Whether people will actually remember these messages at a later point in time. May be more likely to remember companies that we don‟t like because of strong negative emotions they evoke.  Recognition vs Recall: o In typical recognition test subjects are shown ads one at a time and asked whether they have seen them before. o Free recall tests ask consumers to think independently of what they have seen, without being prompted for this information first. o Recognition scores tend to be more reliable and do not deay over time the way recall scores do.  Problems with memory measure: o Response biases: results not caused by what is measured rather something else about instrument or responder o Memory lapses: omitting (leaving out facts), averaging (tendency to normalize things and not report extreme cases), and telescoping (inaccurate recall of time). o Memory for facts vs feelings: Is recall necessary for advertising to have an effect. Do not adequately tap the impact of feeling ads. Effective strategies rely on long-term build up of feeling rather than on a one-shot attempt to convince consumers to buy the product. Not clear that recall translates into preference. ACTIVITY: The way the brain buys. Emerging marketing research on buyer behavior:  Time needed to “gear-up” for shopping (decompression zone), Bargain bins hint at deals o Tracking customer traffic/flow with cellphone signals o Smells and behavior E.g., fresh baked bread, free samples o Affects subconscious o People buy more when hungry. o Fresh laundry smell in laundry-items aisles o Suntan lotion and coconut: reminds people of past holidays.  “Emotion is rational” for decision-making  MRI to study brain activities of consumers o Part of brain associated with pleasure “lights up” o Slogans, brand-names, positioning, etc.  Prime selling shelf: eye-level o For kids products? Lower down! o Cheaper alternatives placed above/below prime areas. o Slotting fees, End-caps  Side of aisle: o Most consumers right-handed, eyes tend to drift rightwards  Video-mining technology: o Image-recognition software to identify moods/attention of consumers (from security camera footage)  Customer conversion rates (ratio of visits/sales) o 20% dept. stores, 80% supermarkets o Fitting rooms: increase “commitment” increase sales  RFID: the future of retailing research o Ethics, privacy concerns o Ability to scan peoples‟ purchases…from outside their homes! Do you believe that marketers have the right to use any or all public spaces to deliver product messages? Where would you draw the line in terms of places and products that should be restricted? Chapter 4: Motivation and Values Introduction: People are not even fully aware of the forces that drive them toward some products and away from others. Choices are influences by persons values – his or her priorities and beliefs about the world. The Motivation process: Motivation: internal state that activates goal-oriented behaviour.  Need that the consumer wishes to satisfy is aroused, creating a state of tension that drives consumer to attempt to reduce or eliminate the need.  May be utilitarian, or hedonic.  Desired state is the consumers end goal.  Discrepancy between present and ideal state.  Magnitude of tension determines urgency -> the degree of this arousal is called drive  The path to satisfaction influences by unique set of experiences and values  Wants are manifestations of needs Motivational Strength: Degree to which a person is willing to expend energy to reach one goal as opposed to another  Biological vs Learned needs: early work on motivation ascribed behaviour to instinct. Instinct is inferred from behaviour it is supposed to explain  Drive Theory: focuses on biological needs that produce unpleasant states of arousal o Homeostasis: balances state of being o Behaviors‟ that are successful in reducing the drive by eliminating the underlying need are strengthened and tend to be repeated. o People may also delay gratification  Expectancy Theory: behaviour is largely pulled by expectations of achieving desirable outcomes (positive incentives) rather than pushed from within. Motivational Direction: Motives are goal oriented. Objective of marketers is to convince customers that alternative they offer provides best chance to attain the goal.  Needs versus Wants: particular form of consumption used to satisfy a need is termed a want  Types of Needs: o Biogenic (necessary to maintain life) o Psychogenic (acquired in process of becoming member of culture). Status, Power, and affiliation. Effect will vary in different environments. o Utilitarian o Hedonic  Motivational conflicts: Goal has valence, meaning it can be positive or negative. If positive we direct behaviour toward goal and attempt to approach goal. If negative we want to avoid the outcome. Each person has different motives, positive and negative conflicts. o Approach-Approach conflict: choose between 2 desirable alternatives  Theory of cognitive dissonance (When psychological inconsistency btwn two or more beliefs/behaviours) based on theory that people need order and consistency in their lives and that state of tension is created when beliefs or behaviours conflict with one another. o Approach – Advance conflict: negative consequence attached to desire. o Avoidance – Avoidance conflict: 2 undesirable alternatives.  Classifying Consumer needs: Henry Murray delineates a set of psychogenic needs that result in specific behaviours (Autonomy, defendance, and play). Basis for number of tests. Such as Thematic Apperception test (TAT – shown ambiguous pictures and asked to write answers to four directing questions. What is happening? What has led to this situation? What is being thought? What will happen? People will freely project unconscious thought on ambiguous pictures), and Edwards Personal Preference Schedule (EPPS) o Specific Needs and Buying behaviour:  High need for achievement = personal accomplishment  Need for affiliation: alleviate loneliness and products consumed by groups of people  Need for power  Need for uniqueness o Maslow‟s Hierarchy: Order of development fixed, certain level must be attained before next, make way up hierarchy, but can work on few at same time.  Physiological, Safety, belongingness, Ego, and Self Actualization  Higher order needs are driving force behind human behaviour.  Dissatisfaction motivates us.  No measurement tool to test empirically. Order may be different among different cultures. Different needs at different stages of lives. Consumer Involvement: a person‟s perceived relevance of the object based on their inherent needs, values, and interests. Motivational construct that can be triggered by Person Factors, Object or Stimulus Factors, and Situational Factors! (PG 109) If there‟s a perceived link btwn consumers needs, goals, or values, and product knowledge the consumer will be motivated to pay attention.  Levels of Involvement (Inertia to passion): o Simple processing: basic feature of msg considered o Elaboration: incoming info linked to pre existing knowledge systems o Inertia: decisions made out of habit bc consumer lacks motivation to consider alternatives o Flow state: truly involved with a product, an ad, or a website. Optimal experience characterized by following:  Playfulness  Feeling of being in control  Concentration and highly focused attention  Mental enjoyment of the activity for its own sake  Distorted sense of time  Match between the challenge at hand and ones skills o May be emotionally or affectively involved with object, or rationally or cognitively involved with product or purchase situation. o Cult product: command fierce consumer loyalty, devotion, and maybe even worship by consumers who are very highly involved with a brand.  The Many Faces of Involvement: involvement is a fuzzy concept bc it overlaps and means different things to different people. o Product Involvement: related to customers level of interest in a particular product. Mass – customization (personalization of P&S for individual consumers at mass production price) o Message-Response Involvement: TV: Low involvement, while print media is high involvement.  Reader is actively involved in processing the information and is able to pause and reflect on what he or she has read before moving on.  Create spectacles or performances where messages is entertainment  Marketing performances: turn public places into ad stages  Interactive mobile marketing: consumers participate in real-time promotional campaigns via cell phones, usually by text messaging entries to on-air TV contests o Purchase Situation Involvement: refers to differences that may occur when buying the same object for different contexts. Great deal of social risk or none at all.  Measuring Involvement: important for many mktg applications. Context free scale is widely used.  Teasing out the Dimensions of Involvement: Development of involvement profile containing 5 components 1. Personal interest a consumer has in a product category 2. Perceived importance of the potential negative consequences associated with a poor choice of the product (risk importance) 3. Probability of making a bad purchase 4. Pleasure value of the product category 5. Sign value of the product category Results indicate that no single component captures consumer involvement, since this quality can occur for different reasons.  Segmenting by Involvement levels: capture diversity of involvement construct and allows involvement to be used as a basis for market segmentation.  Strategies to increase involvement: increase likelihood that messages will get through. o Appeal to hedonic needs o Use novel stimuli o Use prominent stimuli o Include celebrity endorsers to generate higher interest (careful) o Build a bond with consumers with a ongoing relationship o Let them make messages. Consumer generated content. (RISKS) Values: Beliefs that some conditions are preferable to an opposite. Play very important role in consumption activities. Two people can believe in same behaviour, but underlying belief systems may be quite different (ex. Vegetarianism. Health vs animal activism) Believers tend to be exposed to information that supports their beliefs.  Core values: Different cultures emphasize varying belief systems that define what it means to be female, feminine, or appealing – and what is considered appropriate in print for these matters. o Every culture has a set of values it imparts on its members. o Cultures values change over time o Some values are universal – health, wisdom, or world peace. Set apart by relative importance. Set ranking constitutes a value system. o Possible to identify a general ser of core values that uniquely define a culture. Socialization agents teach beliefs. o Process of learning beliefs and behaviour endorsed by own culture is enculturation o Process of learning value systems and behaviour of anther culture is acculturation.  How Values Link to Consumer Behaviour: convenient to distinguish among broad based cultural values like security or happiness, such consumption specific values as convenient shopping or prompt service, and such product-specific values as easer of use or durability. Some aspects of brand image like sophistication tend to be common across cultures, but others are more likely to be relevant in specific places. Virtually all consumer research is ultimately related to identifying and measuring values. o Hofstede’s cultural dimensions: widely used measure of cross-cultural values. Scores a country based on it‟s standing on 5 dimensions so that users can compare and contract values.  Power distance: extent to which less powerful members of org accept and expect that power is distributed unequally.  Individualism: degree to which individuals are integrated into groups  Masculinity: distribution of roles between the genders  Uncertainty avoidance: societies tolerance for uncertainty and ambiguity  Long term orientation: values associated with long term orientation are thrift and perseverance; values associated with ST orientation are respect for tradition, fulfilling social obligations, and protecting ones face. o Rokeach value survey: Identified set of terminal values (desired end states) that apply (to varying degrees) to many different cultures. A scale used to measure these values, also includes a set of instrumental values, which comprise actions needed to achieve these terminal values. o List of Values (LOV) Scale: not been widely used. Developed to isolate values with more direct marketing applications. 9 consumer segments based on values they endorse and related each to differences in consumption behaviors. Consumers who place a priority on such values as sense of belonging, excitement, warm relationships with other, and security. o Means-End Chain Model: assumes specific product attributes are linked at levels of increasing abstraction to terminal values. Valued as the means to an end.  Laddering: consumers associations between specific attributes and general consequences are uncovered.
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