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CHAPTER ONE

Consumer Behavior: Meeting Changes and Challenges

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Consumer Behavior
The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs.

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Personal Consumer
The individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend. Organizational Consumer: A business, government agency, or other institution (profit or nonprofit) that buys the goods, services, and/or equipment necessary for the organization to function.
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Development of the Marketing Concept


Production Concept
Product Concept Selling Concept Marketing Concept
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The Production Concept


Assumes that consumers are interested primarily in product availability at low prices Marketing objectives:
Cheap, efficient production Intensive distribution Market expansion

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The Product Concept


Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features Marketing objectives:
Quality improvement Addition of features

Tendency toward Marketing Myopia


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The Selling Concept


Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so Marketing objectives:
Sell, sell, sell

Lack of concern for customer needs and satisfaction

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The Marketing Concept


Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition Marketing objectives:
Make what you can sell Focus on buyers needs

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Implementing the Marketing Concept


Consumer Research: The process and tools used to study consumer behavior
Two perspectives: Positivist approach Interpretivist approach

Segmentation: Process of dividing the market into subsets of consumers with common needs or characteristics Targeting: The selection of one or more of the segments to pursue Positioning: Developing a distinct image for the product in the mind of the consumer

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The Marketing Mix


Product Price Place Promotion

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Successful Relationships
Customer Value - ratio between customers
perceived benefits and the resources used to obtain those benefits.

Customer Satisfaction - The individual's


perceived vs. expected performance. Loyalists, apostles, defectors, terrorists, hostages, and mercenaries

Customer Retention - Provide value to retain


highly satisfied (and profitable) customers

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Customer Profitability-Focused Marketing


Tracks costs and revenues of individual consumers Categorizes them into tiers based on consumption behavior A customer pyramid groups customers into four tiers (Platinum, Gold, Iron, Lead)

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Traditional Marketing Concept Vs. Value and Retention Focused Marketing


Table 1-2 Traditional Marketing Concept
Make only what you can sell instead of trying to sell what you Make Do not focus on the product; focus on the need that it satisfies Market products and services that match customers needs better than competitors offerings
Value & Retention Focused Marketing

Use technology to help customers customize what you make Focus on the products perceived value, as well as the need that it satisfies Understand customers needs to develop offerings that they perceive as more valuable than competitors offerings

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Impact of Digital Technologies


Consumers have more power and access to information Marketers can gather more information about consumers The exchange between marketer and customers is interactive and instantaneous and goes beyond the PC to mobile phones, TVs etc.. Marketers must offer more products and services

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CHAPTER TWO
The Consumer Research Process

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Concept of Consumer Research


No direct way to look into the Black Box, so we make logical inferences by studying other variables: - Inductive logic
- from specifics to generalities

- Deductive logic
-from generalities to specifics
IK

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Quantitative Research
Descriptive Enables marketers to predict consumer behavior (positivism). Uses experiments, survey techniques, and observation.

Findings are descriptive, empirical, and can be generalized to larger populations.

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Qualitative Research
Consists of depth interviews, focus groups, metaphor analysis, collage research, and projective techniques. Administered by highly trained intervieweranalysts. Findings tend to be subjective. Small sample sizes.

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Qualitative vs. Quantitative Research


Qualitative Research
Study Purpose Provide insights about ideas Exploratory research before quantitative study Types of Questions Open-ended Unstructured Data Collection Methods Projective techniques Depth interviews Focus groups

Quantitative Research
Study Purpose Describe target market Results for strategic marketing decisions Types of Questions Close-ended Attitude scales Data Collection Methods Observation Experimentation Questionnaires

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Qualitative vs. Quantitative Research, contd.


Qualitative Research
Sampling Methods Small Nonprobability samples

Quantitative Research
Sampling Methods Large Probability samples

Data Analysis Analyzed by researchers who collected data Look for key words Subjective
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Data Analysis Coded, tabulated, and entered into database Use of statistical methods

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Secondary Data
Data that have been collected for reasons other than the specific research project at hand Includes internal and external data

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Designing Primary Research


Quantitative Research Designs
Include research design, data collection methods, instruments to be used, and the sample design

Qualitative Research Designs


Include depth interviews, focus groups, projective techniques, and metaphor analysis

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Surveys Data Collection Methods


Personal interview Mail Telephone Online

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Validity and Reliability


A measuring instrument is valid if it measures what it is supposed to measure. A measuring instrument is reliable if it measurement results are the same under all circumstances.

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Attitude Scales
Likert scales: easy to prepare and interpret; simple for consumers to answer Semantic differential scales: relatively easy to construct and administer Behavior intention scales: also easy to construct and administer Rank-order scales: subjects rank items in order of preference in terms of some criteria

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Likert Scale
Please place the number that best indicates how strongly you agree or disagree with each of the following statements about shopping online in the space to the left of the statement.
1 = Agree Strongly 2 = Agree 3 = Neither Agree or Disagree 4 = Disagree 5 = Disagree Strongly

_____ a. It is fun to shop online. _____ b. Products often cost more online. _____ c. It is a good way to find out about new products.

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Semantic Differential Profiles of Three Pay-Per-Movie Services


Poor
Neutral
5

4 3

DVD Digital Cable DIVX

Excellent

Availability

Number of Titles

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Clarity of Picture

Ease of Access

Cost

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Rank-Order Scale
Rank the following computer manufacturers in terms of hotline help by placing a 1 next to the one who provides the best telephone help, a 2 next to the second best, until you have ranked all six.
_____ IBM _____ Dell _____ Compaq _____Hewlett Packard _____ Gateway _____ NEC

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Qualitative Collection Method Depth Interview


Usually 30 minutes to 1 hour Unstructured Interpreted by a trained researcher Listen to words as well as body language

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Qualitative Collection Method Focus Group


8-10 participants Lasts about 2 hours Always taped or videotaped to assist analysis Often held in front of two-way mirrors

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Qualitative Collection Methods Projective Techniques


Research procedures designed to identify consumers subconscious feelings and motivations Consist of a variety of disguised tests

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Projective Techniques
1. Word Association Techniques
1. Simple 2. Controlled 3. Successive

2. Completion Techniques
1. Sentence 2. Story

3. Picture & Visual Techniques


1. Thematic Apperception Technique (TAT) 2. Cartoon Test

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Qualitative Collection Method


Metaphor Analysis: Based on belief that metaphors are the most basic method of thought and communication Zaltman Metaphor Elicitation Technique (ZMET) combines collage research and metaphor analysis to bring to the surface the mental models and the major themes or constructs that drive consumer thinking and behavior.
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Customer Satisfaction Measurement


Customer Satisfaction Surveys Gap Analysis of Expectations versus Experience Mystery Shoppers Customer Complaint Analysis Analysis of Customer Defections

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Sampling and Data Collection


Samples are a subset of the population used to estimate characteristics of the entire population. A sampling plan addresses:
Whom to survey How many to survey How to select them

Researcher must choose probability or nonprobabililty sample.


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Common Sampling Techniques


Probability: - Simple random sample - Systematic random sample - Stratified random sample - Cluster (area) sample

Non-probability:
IK

Convenience sample Judgment sample Quota sample Incremental sample

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CHAPTER THREE
Market Segmentation and Strategic Targeting

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Market Segmentation
The process of dividing a potential market into distinct subsets of consumers and selecting one or more segments as a target market to be reached with a distinct marketing mix.

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Three Phases of Marketing Strategy


Phase 3 Product/Brand Positioning

Phase 2 Target Market and Marketing Mix Selection

Phase 1 Market Segmentation

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Segmentation Studies
Discover the needs and wants of groups of consumers to develop specialized products to satisfy group needs Used to identify the most appropriate media for advertising

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Bases for Segmentation


Geographic Demographic Psychological Psychographic Sociocultural Use-Related Usage-Situation Benefit Sought Hybrid

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Segment Strategies by Customer Usage


Table 3-8

Current Share High High Consumption Low

HiHighs (stroke)

LowHighs (chase)

Low

HiLows (tickle)

LoLows (starve)

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Use-Situation Segmentation
Segmenting on the basis of special occasions or situations For example:
Whenever our daughter Jamie gets a raise, we take her out to dinner When Im away on business, I try to stay at a suites hotel I always buy my wife flowers on Valentines Day

Benefit Segmentation: Segmenting on the basis of the most important and meaningful benefit

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VALS Framework
Figure 3-7

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Criteria for Effective Targeting of Market Segments


Identification Sufficiency Stability Accessibility

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Implementing Segmentation Strategies


Concentrated Marketing
One segment

Differentiated
Several segments with individual marketing strategies

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CHAPTER FOUR
Consumer Motivation

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Types of Needs
Innate Needs
Physiological, Primary or Biogenic needs:
Positive or Supply needs Negative or Avoidance needs Specie maintenance need

Acquired needs
Psychological, Secondary or Psychogenic
Ego defensive needs Ego bolstering needs Affectional needs

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Goals
The sought-after results of motivated behavior Generic goals are general categories of goals that consumers see as a way to fulfill their needs Product-specific goals are specifically branded products or services that consumers select as their goals
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Goal Conflicts
Positive Motivation: A driving force toward some object or condition Approach Goal (A positive goal toward which behavior is directed) Negative Motivation: A driving force away from some object or condition Avoidance Goal (negative goal from which behavior is directed away) Conflicts: Approach/Approach Approach/Avoidance Avoidance/Avoidance

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Rational versus Emotional Motives


Rational implies that consumers select goals based on strictly objective criteria such as size, weight, price, or miles per gallon Emotional motives imply the selection of goals according to personal or subjective criteria

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The Dynamic Nature of Motivation


Needs are never fully satisfied New needs emerge as old needs are satisfied People who achieve their goals set new and higher goals for themselves

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Goal Adjustments
Substitute Goals Are used when a consumer cannot attain a specific goal he/she anticipates will satisfy a need The substitute goal will dispel tension Substitute goals may actually replace the primary goal over time Frustration Failure to achieve a goal may result in frustration. Some adapt; others adopt defense mechanisms to protect their ego.
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Defense Mechanism
Methods by which people mentally redefine frustrating situations to protect their self-images and their self-esteem:
- Aggression - Rationalization - Regression - Withdrawal - Projection - Daydreaming (Autism) - Identification - Repression

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Arousal of Motives
Physiological arousal Emotional arousal Cognitive arousal Environmental arousal

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Philosophies Concerned with Arousal of Motives


Behaviorist School
Behavior is response to stimulus Elements of conscious thoughts are to be ignored Consumer does not act, but reacts

Cognitive School
Behavior is directed at goal achievement Needs and past experiences are reasoned, categorized, and transformed into attitudes and beliefs

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Maslows Hierarchy of Needs Figure 4.10

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Table 4.3 Murrays List of Psychogenic Needs


Needs Associated with Inanimate Objects:
Acquisition, Conservancy, Order, Retention, Construction

Needs Reflecting Ambition, Power, Accomplishment, and Prestige:


Superiority, Achievement, Recognition, Exhibition, Infavoidance

Needs Connected with Human Power:


Dominance, Deferrence, Similance, Autonomy, Contrariance

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Table 4.3 (cont) Murrays List of Psychogenic Needs


Sado-Masochistic Needs : Aggression, Abasement

Needs Concerned with Affection between People: Affiliation, Rejection, Nurturance, Succorance, Play

Needs Concerned with Social Intercourse: Cognizance, Exposition

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A Trio of Needs
Power
individuals desire to control environment

Affiliation
need for friendship, acceptance, and belonging

Achievement
need for personal accomplishment closely related to egoistic and selfactualization needs

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CHAPTER FIVE
Personality and Consumer Behavior

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The Nature of Personality


Personality reflects individual differences Personality is consistent and enduring Personality can change

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Theories of Personality
Freudian theory
Unconscious needs or drives are at the heart of human motivation

Neo-Freudian personality theory


Social relationships are fundamental to the formation and development of personality

Trait theory
Quantitative approach to personality as a set of psychological traits

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Freudian Theory
Id Superego Ego
Consumer researchers using Freuds personality theory see consumer purchases as a reflection and extension of the consumers own personality

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Neo-Freudian Personality Theory Social relationships are fundamental to


Style of life (seeking rational goals) Feelings of inferiority

personality Alfred Adler: Harry Stack Sullivan


We establish relationships with others to reduce tensions and anxiety

Karen Horneys three personality groups


Compliant: move toward others Aggressive: move against others Detached: move away from others
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Trait Theory
Focus on measurement of personality in terms of traits Trait - any distinguishing, relatively enduring way in which one individual differs from another Personality is linked to broad product categories and NOT specific brands

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Personality and Understanding Consumer Behavior


Consumer innovativeness
Dogmatism

Social character

Need for uniqueness

Optimum stimulation level

Sensation seeking

Variety-novelty seeking
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Consumer Innovativeness
Personality trait that fosters a willingness to create and accept change Further broken down for hi-tech products
Global innovativeness Domain-specific innovativeness Innovative behavior

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Consumer Innovativeness Scales


Table 5.3 (excerpt)

A GENERAL CONSUMER INNOVATIVENESS SCALE 1. I would rather stick to a brand I usually buy than try something I am not very sure of. 2. When I go to a restaurant, I feel it is safer to order dishes I am familiar with. A DOMAIN-SPECIFIC CONSUMER INNOVATIVENESS SCALE 1. Compared to my friends, I own few rock albums. 2. In general, I am the last in my circle of friends to know the titles of the latest rock albums.

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Dogmatism
The degree of rigidity a person displays toward things unfamiliar and information contrary to his or her own established beliefs
Need for Uniqueness: Consumers who avoid conforming to expectations or standards of others
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Social Character
Ranges on a continuum for innerdirectedness to other-directedness Inner-directedness rely on own values when evaluating products Innovators Other-directedness look to others less likely to be innovators
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Optimum Stimulation Level


A personality trait that measures the level or amount of novelty or complexity that individuals seek in their personal experiences High OSL consumers tend to accept risky and novel products more readily than low OSL consumers. Sensation Seeking: The need for varied, novel, and complex sensations and experience. And the willingness to take social and physical risks for the sensations.

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Variety-Novelty Seeking
Measures a consumers degree of variety seeking Examples include:
Exploratory Purchase Behavior Use Innovativeness Vicarious Exploration

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Cognitive Personality Factors


Need for cognition (NFC)
A persons craving for or enjoyment of thinking Individual with high NFC more likely to respond to ads rich in product information

Visualizers Verbalizers .
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From Consumer Materialism to Compulsive Consumption


Materialistic People: Acquire and show-off possessions Self-centered and selfish Seek lifestyle full of possessions Do not get greater personal satisfaction from possessions

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From Consumer Materialism to Compulsive Consumption


Fixated consumption behavior
Characteristics
Passionate interest in a product category Willingness to go to great lengths to secure objects Dedication of time and money to collecting

Compulsive consumption behavior


Addicted or out-of-control consumers

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Consumer Ethnocentrism and Cosmopolitanism


Ethnocentric consumers feel it is wrong to purchase foreign-made products because of the impact on the economy Target by stressing nationalistic themes Cosmopolitan orientated consumers consider the world to be their marketplace and would be attracted to products from other cultures and countries.

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Product Anthropomorphism and Brand Personification


Product Anthropomorphism
Attributing human characteristics to objects,

Brand Personification
Consumers perception of brands attributes for a human-like character Mr. Coffee is seen as dependable, friendly, efficient, intelligent and smart.

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A Brand Personality Framework


Figure 5.12

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Product Personality Issues


Gender Coffee and toothpaste perceived as masculine; bath soap and shampoo perceived as feminine Geography Actual locations, like Philadelphia cream cheese and Arizona iced tea Fictitious names such as Hidden Valley and Bear Creek Color Color combinations in packaging and products denotes personality
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Self and Self-Image


Consumers have a variety of enduring images of themselves Self image contains traits, skills, habits, possessions, relationships, and way of behavior Developed through background, experience, and interaction with others Consumers select products congruent with their self-image

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Different Self-Images
Actual Self-Image Ideal Self-Image Social Self-Image Ideal Social Self-Image Expected Self-Image Out-to self
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How consumers see themselves How consumer would like to see themselves How consumers feel others see them How consumers would like others to see them How consumers expect to see themselves in the future Traits an individual believes are in her duty to possess
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Extended Self
Possessions can extend self in many ways:
Actually Symbolically Conferring status or rank Bestowing feelings of immortality Endowing with magical powers

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Virtual Personality
You can be anyone Gender swapping Age differences Mild-mannered to aggressive Altering the Self-Image: Using self-altering products to express individualism by: Creating new self Maintaining the existing self Extending the self Conforming

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CHAPTER SIX
Consumer Perception

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Perception
The process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world Elements of Perception
Sensation Absolute threshold Differential threshold Subliminal perception

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Sensation
Sensation is the immediate and direct response of the sensory organs to stimuli
A stimulus is any unit of input to any of the senses.

The absolute threshold is the lowest level at which an individual can experience a sensation.

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Differential Threshold (Just Noticeable Difference j.n.d.)


Minimal difference that can be detected between two similar stimuli Webers law
The j.n.d. between two stimuli is not an absolute amount but an amount relative to the intensity of the first stimulus The stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different.
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Marketing Applications of the J.N.D.

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Subliminal Perception
Stimuli that are too weak or too brief to be consciously seen or heard
They may be strong enough to be perceived by one or more receptor cells.

Is it effective?
Extensive research has shown no evidence that subliminal advertising can cause behavior changes Some evidence that subliminal stimuli may influence affective reactions
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Aspects of Perception
Selection
Organization Interpretation

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Perceptual Selection
Selection Depends Upon:

Nature of the stimulus Expectations


Motives

Includes the products physical attributes, package design, brand name, advertising and more Based on familiarity, previous experience or expectations.

Needs or wants for a product or service.

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Perceptual Selection Important Concepts


Selective Exposure: Tendency to seek out message that are pleasant, close to self identity and promise goal attainment (e.g., will help make good purchases) Selective Attention: Motivation, contrast etc. Perceptual Defense: Tendency to screen out unpleasant or threatening stimuli Perceptual Blocking: Avoid being bombarded by tuning out, TiVo etc.
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Perceptual Organization.
Figure and ground: The figure is sharp, ground is usually hazy. Marketers usually design so the figure is the noticed stimuli. Grouping: Grouping stimuli by proximity, similarity etc.. It helps memory and recall. Closure: Supplying in missing details to complete an experience Good Figures: People tend to perceive familiar, well-known, symmetrical designs better than unfamiliar or odd ones

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Interpretation
People hold meanings related to stimuli

Stereotypes Stereotypes Physical Appearances Physical Appearances Descriptive Terms Descriptive Terms First Impressions First Impressions Halo Effect Halo Effect

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Interpretation
Positive attributes of people they know to those who resemble them Important for model selection

Stereotypes

Stereotypes
Physical Appearances

Physical Appearances Descriptive Terms Descriptive Terms First Impressions First Impressions Halo Effect Halo Effect

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Interpretation
Verbal messages reflect stereotypes

Stereotypes
Physical Appearances

Descriptive Terms
First Impressions

Halo Effect

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Interpretation
First impressions are lasting The perceiver is trying to determine which stimuli are relevant, important, or predictive

Stereotypes

Stereotypes
Physical Appearances

Physical Appearances Descriptive Terms Descriptive Terms First Impressions First Impressions Halo Effect Halo Effect

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Interpretation
Consumers perceive and evaluate multiple objects based on just one dimension

Stereotypes

Stereotypes
Physical Appearances

Physical Appearances Descriptive Terms Descriptive Terms First Impressions First Impressions Halo Effect Halo Effect

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Product Positioning
Establishing a specific image for a brand in the consumers mind in relation to competing brands Conveys the product in terms of how it fulfills a need Successful positioning creates a distinctive, positive brand image

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Packaging as a Positioning Element


Packaging conveys the image that the brand communicates to the buyer. Color, weight, image, and shape are all important. Repositioning might be necessary because:
Increased competition Changing consumer tastes

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Perceptual Mapping
An analytical technique that enables marketers to plot graphically consumers perceptions concerning product attributes of specific brands

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Positioning of Services
Image is a key factor for services Services often want a differentiated positioning strategy to market several versions of their service to different markets.

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Perceived Price and Perceived Quality


Reference prices used as a basis for comparison in judging another price
Internal External

Perceived Quality of Products


Intrinsic vs. Extrinsic Cues

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Perceived Quality of Services


Difficult due to characteristics of services
Intangible Variable Perishable Simultaneously Produced and Consumed

SERVQUAL scale used to measure gap between customers expectation of service and perceptions of actual service. A more recent measure is: RATER - Reliability, Assurance, Tangibles, Empathy, and Responsiveness

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Price/Quality Relationship
The perception of price as an indicator of product quality (e.g., the higher the price, the higher the perceived quality of the product.)

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Perceived Risk
The degree of uncertainty perceived by the consumer as to the consequences (outcome) of a specific purchase decision Types
Functional Risk Physical Risk Financial Risk Social Risk Psychological Risk Time Risk
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How Consumers Reduce Risk


Seek Information Buy the same brand Buy the most popular brand Select by Brand Image Rely on Store Image Buy from the same salesperson Buy the Most Expensive choice Buy the cheapest Seek Reassurance, etc.
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CHAPTER SEVEN
Consumer Learning

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