Consumer Behavior 3321
Chapter 9: Individual Decision Making
Consumers as Problem Solvers
1 – Problem Recognition
2 – Information Search
3 – Evaluation of Alternative
4 – Product Choice
Some purchase decisions are more important than others, the amount of effort we
put into each differs
Decisions get more complicated in today’s environment where we have so many
options to choose from
Consumer Hyper choice: condition where the large number of available options
forces us to make repeated choices that may drain psychological energy while
decreasing our abilities to make smart decisions.
Perspectives on Decision Making
Rational Perspective: people
calmly and carefully integrate as much
information as possible with what they
already known about a product, weigh the
pluses and minuses of each alternative,
and arrive at a satisfactory decision. This
relates to the economics of information
We absorb additional pieces only
to the extend that we think they will add to
what we already know
Purchase Momentum: When
initial impulses actually increase the
likelihood that we will buy even more.
People differ in terms of their
cognitive processing style
o Rational system of
cognition: processing info analytically and
sequentially using rules of logic
o Experiential system of cognition: processing info holistically and in parallel
Decision makers have a repertoire of decision making strategies
Choose a strategy best fit to decision – constructive processing where tailor degree
of cognitive effort to task at hand
Low involved decisions are a learned response to the environment
o This is the - Behavioral influence perspective: assessing environmental,
such as physical surroundings and product placement, that influence
members of a target market
Highly involved decisions are experiential were the gestalt, or the totality of the P or
S are stressed.
Types of Consumer Decisions
Extended Problem Solving: Traditional decision making perspective. Fairly central to
the self-concept, and the decision carries fair risk. Collect as much info as possible
from memory (Internal search) and from outside sources (External Search). Each
alternative is carefully evaluated – by considering attributes of one brand at a time
and seeing how it shapes up to desired characteristics.
Limited Problem Solving: Not as motivated to search for info, or evaluate alternatives
Habitual Decision Making: Little or no actual effort. Automatically performed with
minimal effort and without conscious control. Minimize the time and energy spent on
mundane purchase decisions. Have to ―unfreeze‖ former habits and replace them
with new ones. Problem Recognition: occurs whenever the consumer sees a significant difference between
his or her current state of affairs and some desired or ideal state.
Quality of the consumer’s actual state can move downward (need recognition)
Ideal state can move upward (opportunity recognition)
Quality can be diminished by running out of a product – not to satisfy needs
Person’s circumstances have somehow changed
Information Search: Process in which the consumer surveys his or her environment for
appropriate data to make a reasonable decision.
Types of Information Search
Internal Versus External Search
o Internal: scanning own memory bank to assemble info about different
o Supplement this knowledge with external search
Deliberate Versus ―Accidental Search‖
o Existing knowledge of a product may be the result of directed learning –
from a previous search we performed
o Incidental learning – from exposure to ads, packaging, and sales
o Sometimes we can be experts and need no search
Online Search: Declare our desire to purchase. Search engines show ads to those who
search for brand names. Online sources create the new info shopper who searches online
before buying just about anything – these tend to be well educated, and affluent.
90% more confident in info they find online. 70% consult product reviews.
Search Engine Optimization (SEO) – small army of consultants who help companies
to ―game‖ the search engines, ensuring links are at the top of the list when certain terms are
searched. Do Consumers Always Search Rationally?
o Amount of external search is usually small
o Fair amount of external search for symbolic items like clothing
o Perceived risk leads to external search
o Often engage in brand switching even if current brands satisfy needs
o Variety seeking: people just like to try new things and vary their
experiences. More likely to happen in a good mood or for sensory-specific
satiety – pleasantness of eaten food drops while the pleasantness of
uneaten foods remains unchanged.
Mental Accounting: Biases in the Decision-making process. Decisions are influences
by the way a problem is posed (framed) and by whether it is put in terms of gains or
o Sunk cost fallacy: having paid for something makes us reluctant to waste it
o Hyperopia: who are obsessed with preparing for the future that they cant
enjoy the present
o Loss aversion: people place more emphasis on loss than they do on gain
o Prospect theory: descriptive model of choice, finds that utility is a function of
gains and losses, and risk differs when the consumer faces options
involving gains versus losses – willing to risk if they think they’re losing
someone else’s resources
How Much Search Occurs: As a general rule search activity is greater when the purchase is
important, when there is a need to learn more about the purchase, and when the relevant
information is easily obtained and used.
Amount of Information Available: We have limited capacity in ST memory. Truncate
environment to deal efficiently with it.
The Consumers Prior Expertise: Novices who know little should be more motivated
for info but experts should know the value of knowledge more. Search is greatest
among those who are moderately knowledgeable.
o Little knowledge: don’t know where to start
o Experts: selective search – more focused and efficient
o Novices: relay opinions and non-functional attributes. Process in top down
o Blissful ignorance effect – know more less happy. Feel we’ve bought the
Perceived Risk: Belief that the product has potentially negative consequences. Expensive or
complex and hard to understand. Run the risk of embarrassment. Highly self confident person
is less worried about social risk. Evaluation of Alternatives: Most of the effort of a decision is here.
Most extended processes happens when we experience negative emotions from
conflicts of available alt
Evoked/Consideration set: alternatives actively considered during choice process –
products already in memory. Inert set (aware & wont buy) inept set (not in game at
all).We also have an unwillingness to give products a second chance.
Product Categorization: product stimulus evaluated in terms of what people already know
about product or things similar to it. Categorization is crucial! Marketers offer knowledge
because they want to ensure that their products are grouped correctly.
Levels of Categorization:
o Basic level category: typically most useful, usually products with a lot in
o Superordinate level: abstract
o Subordinate category: individual brands
Strategic Implications of Product Categorization: important for determining its
competitors and what criteria will be used to make this choice.
o Product Positioning: convince the customer that product should be in a
certain category. o Identifying Competitors: superordinate level there is competition btwn
categories that compete on broad level. Ex. Different version of
o Exemplar Products: Rhubarb Versus Apples, For Example: If something is a
good example of a category, it is more easily recalled and recognized.
Unusual products may result in more information processing and positive
evaluations. Strongly discrepant may tend to occupy a unique niche position
o Locating Products: Product categorization can affect consumer’s
expectations regarding places they can locate a desired product
Product Choice: Selecting among Alternatives
Feature creep: overwhelmed with more and more features – assume more features
are better, its only when we try to use it that we realize the value of simplicity.
Evaluative Criteria: Dimensions used to judge the merits of competing options. From
functional to experiential ones.
Determinant attributes: used to differentiate among choices
Procedural learning: decision about which attribute to use – undergo cognition steps
before making a decision. Should point out:
1. Significant differences among brands
2. Supply consumer with a decision making rule
3. Convey a rule that can be easily integrated
Neuromarketing: How your Brain Reacts to Alternatives: using functional magnentic
resonance imaging – a brain scanning device that tracks blood flow as we perform
mental tasks. Measures reactions. Memory trumps out taste. Brains respond to cool
images. Brains react to unstylish items when ppl are anxious, apprehensive, or
Cybermediaries: helps to filter and organize online market information so that customers can
identify and evaluate alternatives more efficiently. Website evaluators, forums, fan clubs, user
groups, intelligent agents.
Electronic recommendation agent: software tool trying to understand human decision
makers multi attribute preferences for a product category by asking user to
communicate his or her preferences.
Heuristics: Mental rules of thumb that lead to a speedy decision.
Relying on a Product Signal: infer hidden dimensions of products from observable
attributes. Aspect of product that is visible acts as a product signal. If product info is
incomplete we get our judgment from covariation or association among events. We
are poor estimators of covariation.
Market Beliefs: about relationships in the market place. Which become shortcuts –
whether or not they’re accurate. Ex. Price Quality relationship.
Country of Origin as a Heuristic: Because of stereotypes (knowledge based on
inferences across products). Countries stimulate consumers interest in product to a
certain degree. When other info is available, experts ignore country of origin
information but novices continue to rely on it.
o Ethnocentrism: tendency to prefer products or people of own culture
Choosing Familiar Brand Names: Loyalty or Habit? Some brands known because they are
well known. We assume that if many people choose a product it must be good. Zipfs law: #1 is
50% better than #2
Inertia: where a brand is bought of our a habit merely because less effort is required.
Little to no underlying commitment to the product.
Brand Loyalty: form of repeat purchasing behaviour reflecting a conscious decision to
continue buying the same brand. Accompanied by an underlying positive attitiude
toward the brand. Can also create emotional attachment and these purchase
decisions become habitual over time leading to stronger commitment.
o Brand parity: consumers’ beliefs that there are no significant differences
Non-Compensatory Decision Rules: some poor attributes may eliminate the choice
despite its strength on other attributes. Basically simple decisions. o The Lexicographic rule: brand that is best on the most important attribute is
selected. If 2 or more are good, consumer compares with second most
o The Elimination-by-aspects rule: specific cut offs are imposed.
o The Conjunctive Rule: processing by brand. Brand chosen if meets all cut
offs while failure to meet any one means rejection – rates negative data
o The Disjunctive Rule: acceptable standards for each attribute. If choice
alternative exceeds the standard for any attribute it is accepted
Compensatory Decision Rules: one good attribute can compensate for other poorer
attributes. Giving a product a chance to make up for its short comings.
o Simple additive rule: consumer chooses alt with largest number of positive
attributes – motivation to process info is limited
o Weighted additive rule: take into account relative importance of positively
rated attributes, essentially multiplying brand ratings by importance weights
Chapter 10: Buying and Disposing
Choices are affected by many personal factors, such as mood, pressure, time, and
situation or context in which product is needed. A lot of important activity occurs after product
has been purchased and brought home. Forge a relationship with the consumer so he/she
can continue to buy product in the future. Situational Effects on Consumer Behaviour
Consumption situation is defined by factors over and above characteristics of the person and
the product. Behavioral or perceptual. Day reconstruction method: wake up grumpy but enter
state of pleasure and slowly increase. Bad day usually from Poor nights sleep, and tight work
deadlines. Situational Self Image asking who they are right them BY identifying important
usage situations, marketers can develop market segmentation strategies to position products
that will meet the specific needs arising from these situations.
Physical/ Social Surroundings
Can make big difference in motives and include physical, as well as #/type of people
Décor, smells, temperature
Co-consumers: the people around you that affect you when youre buying
Large # of people in a consumer environment increases arousal levels so that
subjective experience of a setting tends to be more intense
Actual experience depends on interpretation of this arousal
Consumers who patronize the store/service can serve as attribute
Economic Time: priorities determine our lifestyle. Today we are more pressed for
time than ever before which is the feeling of time poverty. It may just be that we have
more options and are pressured by these options. Theres a rise in polychromic
activity (do more than one thing at a time).
Psychological Time: experience of time is subjective and influenced by immediate
priorities and needs.
o People are more likely to be receptive to mktg messages when:
Flow time: become absorbed we know nothing else
Occasion time: special moments
Time to kill:
o Four dimensions of time:
Social dimension: time for me/others
Temporal orientation dimension: significance attached to past,
present, and future
Planning orientation dimension: diff time management styles
varying on a continuum from analytic to spontaneous
Polychromic orientation dimension: 1 thing at a time, to
o Perspectives on time:
Time is a pressure cooker
Time is a map
Time is a mirror
Time is a river
Time is a feast
o Experience of time is largely a result of culture
Antecedent States: If It Feels Good, Buy It…
Mood at time of purchase can have a big impact on decision and how products are
evaluated because behaviour is directed to certain goal states.
Stress can impair information processing and problem solving abilities
Arousal can be either distressing or exciting depending on pos or neg context
Mood state biases judgments of P&Ss in that direction Some high tech cos sudy mood very closely – true smiles vs. social smiles
Shopping: A job or an adventure? Utilitarian, or hedonic reasons. Women shop to love,
while men shop to win.
Reasons for shopping:
o Hedonic Shopping motives:
Sharing of common interests
Thrill of the chase
o Shopping orientation: General attitudes about shopping.
E-commerce: Clicks versus Bricks
Experience of acquiring goods differs online and offline
E-commerce reaches customers around the world, but competition increases
Benefits: Good customer service, technology value
Limitations: Security/identity theft, actual shopping experience, large delivery/return
Retailing as Theatre: Appealing to social motives, and providing access to desired goods.
Creating imaginative environments to entertain consumers by retail theming. Landscape
themes, marketscape themes, and cyberspace themes. Convert store into a being space:
resemble a commercial living room to relax. Ex. Starbucks. Minipreneurs: offer work-centered
being places. Pop up stores appear in many forms all around the world. Store Image: May be thought of as having a personality and a defined image. Which is
composed of features, location, merchandise suitability, and knowledge and congeniality of
sales staff. We evaluate stores in terms of both their specific attributes and global evaluation
Shifting retail landscape: drug store = corner store
Atmospherics: careful store design increases the amount of space the shopper
covers and stimulating displays keep them in aisles longer.
o Area just inside super market = decompression zone slow down before you
get a serious start ex. Produce sections fresh food makes people feel good
and righteous so they feel less guilty when they throw chips and cookies in
the cart later
o Atmospherics: conscious designing of space and its various dimensions to
evoke certain effects in buyers – colours, scents, and sounds, even smells.
All affect purchasing behaviour
o Recognition of a new audio environment has created a new niche – ambient
music affects shoppers from subliminally discouraging theft to putting
people in the mood to buy
o Light colours impart a feeling of spaciousness and serenity and signs in
bright colours create excitement
In Store Decision Making
o Unplanned buying: when unfamiliar with stores layout and is under pressure
– reminded of something by seeing it or recognizing new needs while in
o Impulse buying: when person experiences sudden urge he or she cannot
o Planners: know what they’ll buy and what brands
o Partial planners: know what just not what brand
o Impulse purchasers: do no advanced planning
Point-of-purchase stimuli: elaborate product display or demonstration that is
designed to catch the attention of the consumer.
Most important in store factor
Exchange theory: stresses that every interaction involves an exchange of value;
each participant gives something to the other and hopes to receive something in
Factors influencing their role is age, appearance, educational level, and motivation to
Ability to be adaptable is especially vital
Has IT destroyed customer service? Corporate culture pays lip service to customer service,
while focusing on immediate returns and cost cutting.
Many times customer service fails
Call centres use activated response systems that often do not satisfy the customer
A custom-made guitar was destroyed on an airplane
There was no compensation until the Canadian musician posted a video song on
Post Purchase Satisfaction: overall feelings or attitude, a person has about a product after
purchase. It’s a big competitive advantage.
Perceptions of Product Quality
Number of cues infer quality: brand name, price, estimates. Consumers use post
purchase aspects to relive perceived risk and assure themselves. Quality threatens
to become meaningless if companies overuse it.
Expectancy disconfirmation mode: consumers form beliefs of product quality based
on prior performance
Marketers should manage expectations
Don’t promise what you can’t deliver
When product fails, marketers must reassure customers with honesty Marketers: quality = ―good‖
Expectancy disconfirmation model of product performance
o Expectations determine satisfaction and/or dissatisfaction
o Importance of managing expectations
Acting on Dissatisfaction
Three ways consumers can act on dissatisfaction:
1. Voice response: Appeal to retailer directly
2. Private response: Express dissatisfaction to friends or boycott store
3. Third-party response: legal action
A number of factors influence which way a consumer will act. Action is more likely for
expensive products, while a meek person may not react. If usually satisfied customers are
more likely to complain. Encourage consumers to complain because if they don’t complain
they may just switch if they think the company wont react or help.
The Real Value of Happy customers
78% of customers are willing pay more for products if they experience great
Good service travels fast via social networking
TQM: Going to the Gemba
Important to know how people actually interact with their environment in order to
identify potential problems
TQM: mgmt and eng procedures aimed at reducing errors and increasing quality
Gemba: One true source of information
o Need to send marketers/designers to the precise place of product
consumption - Host Foods study in airport cafeterias
Product Disposal: products serve as anchors to our identities: our past lives on in our things.
Ease of product disposal is now a key product attribute to consumers
2. Temporarily dispose
3. Permanently dispose
In many cases new product bought even though old one still functions. This is due to desire
for new features, and a change in environment, or change in role and self-image.
Public policy implications of product disposition: Recycling is a priority in many countries.
Means-end chain analysis study of lower-order goals linked to abstract terminal values when
consumers recycle. Perceived effort involved in recycling as predictor.
Lateral Cycling: Junk versus “Junque”
Already purchased products are sold to others or exchanged for still other things
o Flea markets, garage sales, classified ads, bartering for services, hand-me-
Freegans: Anti-consumerists (like vegans) but political statement
against corporation and consumerism
Divestment rituals: where they take steps to gradually distance themselves from
things they treasure so that they can be sold or given away.
o Iconic transfer: pictures or videos
o Transition-place: out of way location first o Ritual cleansing: washing/ironing/wrapping the item
Internet has revolutionized lateral cycling
Re-stores across Canada (Habitat for Humanity)
Chapter 11: Group Influence and Opinion Leadership
Reference Groups: Actual or imaginary individual/group conceived of having significant
relevance upon an individual’s evaluations, aspirations, or behaviour. Our desire to fit in is
primary motivation for many of our purchases and activities.
Influences consumers in three ways:
Reference group influences stronger for purchases that are: Luxuries rather than necessities,
Socially conspicuous/visible to others.
Normative influence: Helps to set and enforce fundamental standards of conduct
Comparative influence: Decisions about specific brands or activities are affected Any external influence that provides social clues
A large, formal organization: Tend to be more product- or activity-specific:
Small and informal groups: Exert a more powerful influence on individual consumers.
A part of our day-to-day lives: normative influence.
Types of Reference Groups
Formal vs. Informal
o Reference group can be large and formal with a standard, recognized
structure, these are more product or activity specific
o The reference group can be small and informal, just a group of friends
o However - As a rule, small informal groups can exert powerful influence on
individual consumers because they are more involved in day to day lives
Brand Communities and Tribes
o Brand communities are a group of consumers who share a set of social
relationships based upon usage or interest in a product
o Brandfests enhance brand loyalty, feeling more positive about the product,
more forgiving over mistakes, and being brand missionaries.
o Consumer tribe is a group of ppl who share a lifestyle and can identify with
each other because of a shared allegiance to an activity or product. Share
emotions, moral beliefs, styles of life, and affiliated product.
Tribal marketing: linking a product to the needs of a group as a
Membership vs. Aspirational
o People the consumer actually knows vs. people the consumer doesn’t know
o Aspirational strategies concentrate on highly visible, widely admired figures
(athletes or performers)
o Membership strategies focus on ―ordinary‖ people whose consumption
provides informational social influence
o Propinquity: As physical distance btwn people decreases and opportunities
for interaction increase, relationships are more likely to form.
o Mere exposure: we come to like people or things simply as a result of
seeing them more often.
o Group cohesiveness: degree to which members of a group are attracted to
each other and value their group membership
As value of group to individual increase so does likelihood that
group will influence decisions
Smaller groups are more cohesive. Exclusivity is a benefit.
Positive vs. Negative Reference Groups
o Consumers model behaviour to what they believe to be consistent with what
o Reference groups may exert either a positive or negative influence on
o Avoidance groups: motivation to distance oneself from other people/groups
o Motivation to distance ourselves from negative reference group can be as or
more powerful than the desire to please a positive group
o Marketers show ads with undesirable people using competitor’s product
o Coalesce around a celebrity, store, or brand—but in this case they’re united
by their disdain for it
o Social Idealists who advocate non-materialistic lifestyles
o Usually share a moral stance, support network to achieve common goals, or
a means for coping with workplace frustrations, and a hub for information,
activities, and related resources
o Many oppose Walmart, Starbucks, McDonald’s and Hummers
When Reference Groups are Important
Impact of reference groups vary based on whether the product is complex or, a
product with little perceived risk (less susceptible), as well whether or not the product
can be tried before purchase.
Two dimensions of influence:
o Purchases to be consumed privately or publicly o Whether a luxury or a necessity
Reference groups are most robust for purchases:
o Luxuries: subject to individual taste and preferences
o Socially conspicuous products: sway more than items that people will not
The Power of Reference Groups
Social power: capacity to alter the actions of others.
Referent Power: Admires the qualities of individual and try to imitate those qualities
by copying the referents behaviour
Information power: b/c you know what others would like to know – influence opinion
by virtue of access to truth
Legitimate power: virtue of social agreement
Expert power: possessing a specific knowledge or skill – evaluate products in an
objective and informed way
o Affiliation with elite uni, think tank, or investment house
o Authorship of a slim, easy-to-read book that yields a vision of the future
Reward power: to provide positive reinforcement – power to the extent that the
reward is valued. Social approval/acceptance.
Coercive power: effective in short term. Does not create attitude/behavioral change.
It is evident in fear appeals.
Conformity refers to a change in beliefs or actions as a reaction to real or imagined group
pressure. Norms are informal rules that govern behaviour. Ex. Gift giving, gender roles, and
Factors Influencing the Likelihood of Conformity
Fear of deviance: apply sanctions to punish behaviours
Commitment to group: principle of least interest, person/group with least commitment
to staying in a relationship has the most power
Group unanimity, size, expertise: compounded when group members are perceived
as knowing what they’re talking about
Susceptibility to interpersonal influence: individuals need to identify with or to
enhance his or her image in the opinion of significant others. Role relaxed individuals
usually have higher confidence, and are more affluent.
Social Comparison Theory: We look to others’ behaviour to inform us about reality. Occurs
as way to increase stability of one’s self-evaluation (sans physical evidence). Tastes in music
and art. We tend to choose co-oriented peers when performing social comparison.
Tactical requests o People want others to conform
o Foot in the door technique: Ask for a small request then hit them up for
o Low-ball technique: Asked for small favour that becomes costly
o Door in the face technique: First ask to do something extreme, and when
they refuse the person will then ask for a smaller request
Group effects on individual behaviour
o Likely to focus less attention to yourself.
o Home shopping parties: capitalize on group pressure to increase sales. Can
lead to the bandwagon effect.
Tupperware and Botox parties
Informational and normative social influence
o Deindividuation: individual identities become submerged within a group.
Example: binge drinking at college parties
o Social loafing: People don’t devote as much to a task when their
contribution is part of a larger group. Example: we tend to tip less when
eating in groups
o Risky shift: Group members show a greater willingness to consider riskier
alternatives following group discussion than if members decide alone. Due
to diffusion of responsibility, and the value hypothesis.
Anti-conformity: Defiance of the group is the actual object of behaviour. Don’t want to do what
is in style. Innovation should be encouraged, as it creates change and demands for more
styles and products. Difference btwn independence, and anti conformity.
Reactance: Threats of censoring books, television or rock music that people find objectionable
actually results in an increase desire for these items.
Word of Mouth Communication
WOM: product information transmitted by individuals to individuals. More reliable form of
marketing-buzz marketing. Social pressure to conform. Influences two-thirds of all sales. We
rely upon WOM in later stages of product adoption. Powerful when we are unaware of product
category. Mountain Dew’s young U.S. consumers happily discovered the high caffeine content
of the drink.
Factors encouraging WOM
o Powerful when consumer is unfamiliar with the WOM
o Product related conversations can be created
Take pleasure in talking about product
Knowledgeable about product and use conversations as a way to
let others know it
Initiate discussion out of a genuine concern for someone else.
o We weigh negative WOM more heavily than we do positive comments!
90% of unhappy customers will not do business with a company
Negative WOM is easy to spread, especially online
o Web sites allow members to post information about themselves and make
contact with similar others
o Empower consumers to become partners and shape markets
o Share interests, opinions, business contacts
o Twitter, facebook, myspace
o Web 2.0: internet on steroids
Crowd Power: Wisdom of crowds – under right circumstances a group can be
smarter than the smartest individual in it.
o Guerrilla Marketing: Promotional strategies that use unconventional
locations and intensive WOM to push products
Recruits legions of real consumers for street theater
Hip-hop ―mix tapes‖/street teams
o Virtual Communities: A collection of people who share their love of a
product in online interactions – members usually remain anonymous Multi-user dungeons (MUD), Rooms (IRC), rings, and lists. Boards.
Internet users tend to progress from asocial information gathering
to increasingly affiliative social activities
Intensity of identification depends on:
More central activity to persons self concept more like to
pursue an active membership in a community
The intensity of the social relationships the person forms
with other members of the virtual community helps to
determine the extent of his or her involvement
Great potential for abuse via untrustworthy members
Dove.msn.com members can watch original programming
and get skin care information on the site.
o Viral Marketing: Getting visitors to a Web site to forward information on the
site to their friends.
Most of us rely on friends or family for website recommendations
Creating online content that is entertaining or weird
Which type of Web surfer are you?
o Virtual Worlds: 3D worlds that employ sophisticated computer graphics to
produce photo-realistic images
Consumer engagement and often creates the flow state
They walk, fly, teleport
Virtual Goods: a new market for these virtual goods are at least a
$1.5 billion market
Opinion leaders: influence others’ attitudes and behaviours. Researchers identify profile of a
representative opinion leader and then generalize these insights to a larger market.
Technically competent – expert power
Socially active, highly interconnected – legitimate power
Are similar to consumer – referent power slightly higher social status but not so high
that they’re in a different class
Are among the first to buy and likely to impart both positive and negative information
The Nature of Opinion leadership
Extent of an opinion leaders influence
o Generalized opinion leader versus monomorphic/polymorphic experts
o Although opinion leaders exist for multiple product categories, expertise
tends to overlap across similar categories
o It is rare to find a generalized opinion leader
o Innovative communicators
o Opinion seekers
o More likely to talk about products with others and solicit others’ opinions
o Casual interaction prompted by situation
Types of opinion leaders
o Opinion leaders absorb information from mass media and transmits data to
o May or may not purchase the products they recommend o Early purchasers are innovators
o Innovative communicators – early purchasers and opinion leaders
o Two-step flow of model of influence: small group of influencers change
opinions or many people. Responsible for dissemination of information
since they can modify the opinions of a large # of other people.
o Part of an influence network
o Cascades of information which is information that triggers a sequence of
o Market maven: Actively involved in transmitting marketplace information of
all types. Close to a generalized opinion leader.
Just into shopping and aware what’s happening in the marketplace
Overall knowledge of how and where to get products
Surrogate consumers: Hired to provide input into purchase
decisions and compensated for involvement ex interior designer
Identifying Opinion Leaders
Many ads intend to reach influencers rather than average consumer. Local opinion leaders
are harder to find. Companies try to identify influencers in order to create WOM ―ripple effect.
Exploratory studies identify characteristics of opinion leaders for promotional strategies
Self-designating model: Most commonly used technique to identify opinion leaders…
Simply ask individuals whether they consider themselves to be
Method is easy to apply to large group of potential opinion leaders
View with skepticism…inflation or unawareness of own
o Alternative: key informants identify opinion leaders
Sociometry: Trace communication patterns among group members and allows
researchers to create a systematic map of group interactions that take place
o Most precise method of identifying product-information sources, but is very
difficult/expensive to implement
o Very hard and expensive to implement
o Best in closed, self contained social settings
o Social contagion effect:
o Network analysis
Referral behaviour: locate S&Ws in terms of how ones reputation is
communicated through the community
Network analysis: communication in social systems. Considers
relations of people in a referral network and measures Tie strength
btwn them – nature of the bond between them
Bridging function, strength of weak ties
Chapter 12: Household Decision Making
More than one person is involved in the purchasing process for products or services that may
be used by multiple consumers who have different preferences, tastes, and investments in the
Households and Families
Before 1900s: Extended family
1950s: Nuclear family (mother, father, and children)
Today, many households: Married couples less than 50% of households. Majority of
adult women live without spouse. Unmarried opposite sex couples. Same-sex couples.
Intentional families: groups of unrelated people who meet regularly and celebrate
Extended family and nuclear family
Just what is a household?
Household living arrangements refers to whether or not the person lives with another
person or persons and, if so whether they’re related
Census family: married couple and children, both spouses living in common law, either or
both living with child, or lone parent with 1 child.
Extended family contains at least three generations living together
Nuclear family: mother and father with 1 or more children. Today: at least two people, regardless of their relationship. Divorces and separations are
accepted in our culture…marital breakups are ever-present theme in books, music, and
movies. Adult females are staying home with family/children more (especially among best-
educated/highest achieving women).
Age of the Family
o Most Canadians under 24 have never been married or living common-law
o 35-64 age group greatest number of marriages and common-law
o People are waiting longer to get married
o Trend toward giving non-traditional items as wedding gifts (home
o Depends on educational level, availability of birth control, and religion
o Total fertility rate: avg # of children that would be born per woman if all
women lived to the end of their child bearing years and bore children. In
2006 was 1.6, which is below the replacement rate of 2.1 to sustain
o Marketers keep an eye on fertility rate and birth rate
o Worldwide, women want smaller families (especially in industrialized
Divorce is common
Fewer young people to support their elders
Some countries want people to have more children
Non-Traditional Household and Family structures
o Any occupied housing unit is a household
o Same-sex households are increasingly common: Marketers target them as
POSSLQ living arrangement
o Rise of single-person households
Singles spend more on rent, alcohol, reading materials, health
care, and tobacco/smoking
Two income couples without children are better educated than two-
income couples with children
Child free children are more likely to have professional or
Who’s living at home?
o Sandwich generation: Adults who care for their parents as well as their own
o Boomerang kids: Adult children who return to live with their parents. If
moving in with roommates more likely to come back. Spend less on
household items and more on entertainment.
o Non-human Family Members: Pets are treated like family members and
spending has doubled in the last decade. Some Pet-smart marketing
Name-brand pet products
Designer dog water
Lavish kennel clubs, pet accessories
The Family Life Cycle
Factors that determine how couples spend money:
o Whether they have children
o Whether the woman works
Family life cycle (FLC) concept combines trends in income and family composition
with change in demands placed on income
o As we age, our preferences/needs for products and activities tend to
A number of models have been proposed before, but they fail to take into account
important social trends.
FLC Models: Useful models take into account the following variables in describing
longitudinal changes in priorities and demand for product categories:
o Marital status
o Presence/absence of children in home
o Ages of children o Definition of marriage must also be relaxed to include any couple living
together in a long term relationship.
Such factors allow use to identify categories of family-situation types
Family life cycle effects on bullying: FLC model categories show marked differences
in consumption patterns
o Young bachelors and newlyweds: exercise, go to bars/concerts/movies,
drink alcohol – dollar value of cars and homes is lowest
o Early 20s: apparel, electronics, gas
o Families with young children: health foods
o Single parents/older children: junk foods
o Newlyweds: appliances
o Mature consumers are having the time of their lives
Overall understanding of FLC can help marketers clearly identify their target markets
Household and Family Decision Making
Decision Roles and Dynamics
Families make two types of decisions:
Consensual purchase decision: Members agree on the desired purchase, differing
only in terms of how it will be achieved. Ex. Getting a dog.
Accommodative purchase decision: Members have different preferences or priorities
and cannot agree on a purchase to satisfy the minimum expectations of all involved. Use
bargaining, coercion, and compromise to get to an agreement.
Roles – depending on decision to be made some or all of these roles are used, or one person
can embody more than one:
Gatekeeper – conducts search for info and controls flow of info to group
Influencer – sway the outcome of the decision
Preparer – processes product and directs service into product that can be used by
Maintainer – upkeep
Disposer – discontinue or dispose
Conflict occurs when there is an incomplete alignment of family memebrs’ needs and
preferences. Specific factors that determine how much family decision conflict there will be:
Interpersonal need – persons level of investment in the group
Product involvement and utility – degree to which a person will use the product to
satisfy a need
Responsibility – for procurement, maintenance, payment and so on. More likely to
come into conflict if decision is about a LT commitment
Power – degree to which one member exerts influence over others in making a
decision. In traditional families husband has more than wife, who has more than
oldest child. Conflict can arise when a person continually uses their power to get own
Families construct a family identity: that defines the household both to members and to
Gender Roles and Decision-Making responsibilities
Who makes key decisions in a family?
Autonomic decision: one family member chooses a product. Wives still make
decisions on groceries, toys, clothes, and medicines
Syncratic decision: involve both partners. Used for cars, vacations, homes,
appliances, furniture, home electronics, interior design, phone service. As education
increases, so does syncratic decision making.
Gender convergence: gender neutral
As the couples are more educated they are more likely to compromise and make
decisions together. There is a shift to compromise and turn taking.
Identifying the decision maker o Marketers have to identify who is the decision maker in order to be able to
o Family financial officer (FFO): who keeps track of the bills and decides how
any surplus will be spent.
Newlyweds share this, but overtime one of another takes control
In traditional families, the man makes the money and the woman
If spouses adhere to modern sex-role norms, participation in family
Working mothers struggle with a juggling lifestyle
o Four factors in joint versus sole decision making:
Gender-role stereotypes – make more individual decisions
Spousal resources – spouse who contributes more has more
Experience – gained exp as unit will make individual decisions
Socioeconomic status – middle class families make decisions
o He-she decisions:
Half of kitchenware customers are men
25% men do the grocery shopping
Kin-network system: perform rituals intended to maintain ties
among family members both immediate, and extended. Generally
the women organize family rituals, send cards, visit relatives etc.
Heuristics in joint decision making
o Synoptic ideal: Husband and wife to take a common view and to act as joint
decision makers Thoroughly weigh alternatives, assign each other well
defined roles, and calmly make mutually beneficial consumer decisions
o Heuristics simplify decision making:
Salient, objective dimensions
Concessions based on intensity of each spouse’s preferences
Children as decision makes: Consumers-in-training
Children make up three distinct markets:
Primary market: Kids spend their own money on their own wants and needs
Influence market: Parents buy what their kids tell them to buy (parental yielding –
surrendering to a child) Likelihood of yielding depends on parents style, kids can ask for
things, saying they had seen the product on TV, sibling or friend had it, or doing chores,
sometimes evening engaging in persuasive behaviour.
Future market: Kids ―grow up‖ quickly and purchase items that normally adults
purchase (e.g., photographic equipment, cell phones) Lock in brand loyalty at a
Consumer Socialization: process by which young people acquire skills, knowledge, and
attitudes relevant to their functioning in the marketplace. Children’s purchasing behaviour is
influenced by: Parents, Television (―electronic babysitter‖), & Sex roles.
Influence of parents o Direct and indirect parental influences:
Deliberate attempt to instill own consumption values
Determine exposure to informational sources (TV, salespeople,
Cultural expectations regarding involvement of children in
o Grown-ups as models for observational learning
Passing down of brand loyalty
Children watch and imitate
o Parental styles that affect socialization:
Authoritarian: hostile, restrictive, and emotionally uninvolved –
censor their children
Neglecting – detaches and not exercise a lot of control
Indulgent – less restrictive, communicate, and are warm
Television and the web
o Advertising’s influence begins at early age:
Many marketers start to push their products on kids to encourage
them to build a habit young
o Kids are also exposed to idealized images of what it is like to be an adult
o In 2006, kids 2 to 11 years old watched more than 14 hours each week
o American pediatric organizations recommend less than two hours a day,
and one hour for preschoolers
Children pick up on gender identity at an early age than previously believed
o One function of play is to rehearse for adulthood, and learn about
expectations that others have of them
o Toy companies perpetuate gender stereotypes
Girls interested in creativity and relationships
Boys interested in battle and competition
Children rehearse adulthood roles via toys as props
o Toys ―R‖ Us Girls’ World & Boys’ World
o ―Male and female play patterns‖
o Smartees’ line of dolls and Working Woman Barbie
Stage of cognitive development: Ability to comprehend concepts of increasing complexity
o Very young children are thought to be able to learn consumption-related
information surprisingly well
o Experiment with lemon juice
An alternative approach identifies three segments of information-processing capability:
Limited – don’t employ storage and retrieval strategies under 6
Cued – 6-12 employ strategies when prompted
Strategic – 12 years and up spontaneously employ the strategies
o Children do not think in ―adult‖ ways—they cannot be expected to use
information the same way
o Children do not form the same ―adult‖ conclusions when presented with
o Therefore more vulnerable to persuasive msgs
o Multiple-intelligence theory
Marketing Research and Children
Relatively little real data on childrens’ preferences/influences on spending patterns is
Kids tend to:
o Be undependable reporters of own behaviour
o Have poor recall
o Not understand abstract questions
Product Testing: Tell them what they like and valuable perspective on which products
will succeed with other children
o Serious ethical issues when advertisers try to appeal directly to children
o Children may not understand persuasive intent of ads
o FTC action to protect children (1990 Children’s Television Act) Advertising to Children: An Ethnical Minefield
Canadian Advertising Foundation’s Broadcast Code for Advertising to Children Provides
Guidelines such as:
Endorsements by programme characters
Chapter 13: Income and Social Class
Its not just money
Social class has a profound impact on what person does with money and how consumption
choices reflect place in society. Other people know what our standing are through what we
buy, as we use this as status symbols.
Whether a skilled worker or a child of privilege, social class has a huge impact on one’s life.
Status symbols are valued as markers of social class. Average Canadian income increased
from $50,000 in 1970 to $70,400. This change is the result of increases in educational
attainment and the shift in women’s roles in life.
A larger proportion of people of working age are in the labour force
Mothers with preschool children comprise the fastest growth in the labour market
Women get high-paying jobs such as doctors, architects, etc.
Nearly 30 percent of wives make more money than their spouses
Yes, It pays to go to school
Education pays off in the long run
In 2006 about 50 per cent of Canadians have post-secondary education
25 percent have university training and 16 per cent have a degree
―Show me the money!‖
In 2005 graduates earned about $74,600 versus $43,700 for other education levels To spend or not to spend: that is the question
Demand for G&S depends on both ability to buy and willingness to buy
Discretionary income: money available to household over and above that required for
a comfortable standard of living.
o Households spend a much larger share of budget on shelter and
transportation, and less on food and apparel
o Households are spending more now on entertainment and education
Attitude toward money:
o Money = success/failure, social acceptability, security, love, or freedom
Individual Attitudes Toward money: