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CONSUMER BEHAVIOR:

Social Influence on Consumer Decision Making



Reference Groups/Family/Social Class/Interpersonal
Communication/Opinion Leadership
Culture/Sub-Culture



Instructor:
Mahendra Singh
Centre for Business Administration, Central University of
Jharkhand

Source: Schiffman and , Kanuk, Wells and Prensky,
Peter and Olson, Loudon and Bitta
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External Influences on
Consumer
Culture
Subculture
Demographics
Social Status
Reference Group
Family
Marketing Activities

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CONSUMER GROUPS

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A group may be defined as:

- two or more people who interact to accomplish either individual or
mutual goals.

There are many basis to classify groups:
- by regularity of contact,
- by structure and hierarchy,
- by membership,
- by size.


The realm of consumer behavior, focuses on the fourth basis, and
primarily on the study of small groups, because such groups are
more likely to influence the consumption behavior of group
members.

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a) Primary Versus Secondary Groups:
Basis: The extent to which members interact.

b) Formal Versus Informal Groups:
Basis: The extent to which the group structure, the members' roles,
and the group's purpose are clearly defined.

c) Membership Versus Symbolic Groups
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From the standpoint of consumer behavior, informal social or friendship
groups are generally more important to the marketer, because their less
clearly defined structures provide a more conducive environment for the
exchange of information and influence about consumption-related
issues.

In summary, small, informal, primary membership groups are of the
greatest interest to marketers, because they exert the greatest potential
influence on consumption decisions.

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Consumer-Relevant Groups:

There are six basic consumer-relevant groups:

-the family: the best position to influence his or her
consumption decisions.
Two or more people related by blood, marriage or adoption who
reside together
Functions of family:
Economic well being
Emotional support
Suitable life style
Socialization of family members.
Family Consumption Roles:
Influencers
Gate Keepers (Information controllers)
deciders
buyers, Prepares, Users, Maintainers, Disposers








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Dynamics of Husband-wife
decision making

1.Husband-dominated
2.Wife-Dominated
3.Joint-Decision
4.Autonomic (Unilateral)
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Family Life Cycle
Stage I- Bachelorhood
Stage II-Honeymooners
Stage III-Parenthood
Stage IV-Post parenthood (Old couple, no
children at home)
Stage V- Dissolution (1surviving spouse)

Type of family (slide 30)
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-friendship groups: In terms of relative influence, after an
individual's family, his or her friends are most likely to influence the
individual's purchase decisions.
Consumers are more likely to seek information from those friends
they believe have values or outlooks similar to their own.

-formal social groups: Because members of a formal social group
often consume certain products together, such groups are of
interest to marketers.
Some members may copy the consumption behavior of other
members whom they admire.

-shopping groups: -Two or more people who shop together,
whether for food for clothing, or simply to pass the time, can be
called a shopping group.
Such groups are often offshoots of family or friendship groups, and
therefore they function as what has been referred to as purchase
pals.



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-consumer-action groups: Consumer-action groups can be
divided into two broad categories:
-those that organize to correct a specific consumer abuse and then
disband.
-those that organize to address broader, more pervasive problem
areas and operate over an extended or indefinite period of time.

-work groups: The sheer amount of time that people spend at their
jobs, provides ample opportunity for work groups to serve as a
major influence on the consumption behavior of members.

Both the formal work group and the informal friendship work
group can influence consumer behavior.


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THE ROLE OF GROUPS IN CONSUMER
SOCIALIZATION:

Throughout our lives, we learn about consumer behavior from our
family, friends, community, and the media.

During childhood, one is typically surrounded by relatives, friends, and
community members from the same subculture, with whom one
shares common background characteristics, such as race and
ethnicity, religion, social class, geography, and lifestyle.

These values, customs, and rituals are continually reinforced
throughout childhood.


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As one grows, one is exposed to people from other sub-cultures
with different backgrounds, both directly, through face-to-face
interactions, and indirectly, through mass media vehicles such as
television, movies, and magazines.

This process, whereby people acquire the skills and knowledge
relevant to consumer purchase behavior, is referred to as
consumer socialization and involves various reference groups,
from the family to mass media.


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The major societal groupings that influence an individual's
consumer behavior are, in order: family, friends, social class,
various subcultures, one's own culture, and even other
cultures.

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CONSUMER REFERENCE GROUPS


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REFERENCE GROUPS

A Reference group is any person or group that serves as a point of
comparison (or reference) for an individual informing either general or
specific values, attitudes, or behavior.


A Reference group is a person or group that a consumer uses as a
standard of reference for his or her general or specific thoughts,
feelings, and actions.

From a marketing perspective, reference groups are groups that
serve as frames of reference for individuals in their purchase or
consumption decisions.

A consumer can have many different reference groups at any given
time and may turn to one group for guidance in making some
purchases and another group for other decisions.


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Broadening the Reference Group Concept
- the meaning of "reference group" has changed over the years.

As originally used, reference groups were narrowly defined to
include only those groups with which a person interacted on a
direct basis (e.g., family and close friends).

However, the concept gradually has broadened to include both
direct and indirect individual or group influences.

Indirect reference groups consist of those individuals or groups
with whom a person does not have direct face-to-face contact, such
as movie stars, sports heroes, political leaders, or TV personalities.

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Types of Reference Groups:

Reference groups can be classified in terms of:

-a person's membership or degree of involvement with the group

-the positive or negative influences they have on his or her values,
attitudes, and behavior.

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a) A contactual group is one in which a person holds
membership or has regular face-to-face contact and of whose
values, attitudes, and standards he or she approves.

Thus, a contactual group is likely to have a congruent influence on
an individual's attitudes or behavior.

b) An aspirational group is a group in which a person does
not hold membership and does not have face-to-face contact but
wants to be a member.

Thus, it often serves as a positive influence on that person's
attitudes or behavior.

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Factors that affect Reference Group Influence:

The degree of influence that a reference group exerts on an
individual's behavior usually depends on:

-the nature of the individual

-the product

-specific social factors.

21

Five major types of reference group appeals in common
marketing usage are:

- celebrity appeals: Particularly movie stars, TV personalities,
popular entertainers, and sports icons

- expert appeals,

- common man appeals: slice of the life commercial

- executive appeals: An increasing number of firms have used their
top executives as spokespersons in consumer ads

- trade or spokes-character appeals.
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Benefits of the Reference Group Appeal:

Reference group appeals have two principal benefits:
-they increase brand awareness.
-they serve to reduce perceived risk.

a) Increased Brand Awareness

Reference group appeals provide the advertiser with the opportunity to gain
and retain the attention of prospective consumers with greater ease and
effectiveness; particularly true of the celebrity form of reference group appeal.

Even in the case of less known or unknown spokesmodels (those without
celebrity status), it appears that a combination of their "good looks" (e.g.,
physical attractiveness) and consumers' perceptions of their personalities
contribute to positive judgments about the product being promoted.

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b) Reduced Perceived Risk

The use of a reference group appeal may also serve to lower the
consumer's perceived risk in purchasing a specific product.

The example set by the endorser or testimonial-giver may demonstrate to
the consumer that uncertainty about the product purchase is unwarranted.

On the basis of very positive experiences in the marketplace, advertisers
continue to use celebrities, experts, and common-man appeals, as well as
other reference group appeals, to promote and to differentiate their
products.

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Does Reference Group Influence Vary by Product?

Regardless of the type of group they turn to, consumers are more
susceptible to the influence of reference groups in choosing certain
products over others.

Bearden and Etzel examined the effects of reference groups on both the
decision to purchase the type of product and the choice of a specific brand.

They investigated this issue and found that influence varied by:
a) the type of producta luxury versus a necessity, and

b) its visibilitywhether it is used in public or private settings.

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FAMILY


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THE FAMILY:

Traditionally, family has been defined as two or more persons related by
blood, marriage, or adoption who reside together.

In a more dynamic sense, the individuals who constitute a family might be
described as members of the most basic social group who live together
and interact to satisfy their personal and mutual needs.

Although families sometimes are referred to as households, not all
households are families.

However, within the context of consumer behavior, households and
families usually are treated as synonymous.

In most societies, three types of families dominate: the married couple,
the nuclear family, and the extended family.

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a) married couple: The simplest type of family; a husband and a wife.
As a household unit, the married couple generally is representative of
new marrieds who have not yet started a family, and older couples who
have already raised their children.

b) nucleur family: A husband and wife and one or more children;

c) extended family: The nuclear family, together with at least one
grandparent living within the household;

In contrast, because of divorce, separation, etc., there has been a rapid
increase in the number of single-parent family households consisting of
one parent and at least one child.

Also, which type of family is most "typical" can vary considerably from
culture to culture.

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i) Consumer Socialization of Children:

-consumer socialization: defined as the process by which children acquire the
skills, knowledge, and attitudes necessary to function as consumers.

Many children acquire their consumer behavior norms through observation of
their parents, who function as role models.

Preadolescent children tend to rely on their parents and older siblings as the
major sources of cues for basic consumption learning.

Adolescents and teenagers are likely to look to their friends for models of
acceptable behavior.

Shared shopping experiences also give children the opportunity to acquire in-
store shopping skills.



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ii) Adult Consumer Socialization:

The socialization process is not confined to childhood; rather, it is an
ongoing process.

Socialization begins in early childhood and extends throughout a person's
entire life.

For example, when a newly married couple establishes a separate
household, their adjustment to living and consuming together is part of this
continuing process.


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iii) Intergenerational Socialization:

It is quite common for selected product loyalty or brand preferences to be
transferred from one generation to anotherintergeneration brand
transfermaybe even three or four generations within the same family.

Another type of transfer between family members is the giving or loaning of
"things."

When one family member gives or loans another family member some
hand-me-down clothing, an old car or TV, a set of dishes or flatware, a
sofa, etc. these transfers serve as substitutes for the purchase of such
items in the marketplace.

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FAMILY DECISION MAKING:

Marketers recognize the family as the basic decision-
making unit.

However, they most frequently examine the attitudes and behavior
of the one family member whom they believe to be the major
decision maker.

In some cases, they also examine the attitudes and behavior of the
person most likely to be the primary user of the product or service.

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Influencing Spouses and Resolving Consumer Conflicts:

When it comes to making purchasing decisions, husbands and wives
frequently find themselves in disagreement.

To avoid or resolve potential disagreements, husbands and wives
commonly attempt to influence each other to arrive at what they feel to
be the best outcome.

Six influence strategies for resolving husband-wife consumption-
related conflicts have been identified:

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Expert. An attempt by a spouse to use his or her superior information
about decision alternatives to influence the other spouse.

Legitimacy. An attempt by a spouse to influence the other spouse on the
basis of position in the household.

Bargaining. An attempt by a spouse to secure influence now that will be
exchanged with the other spouse at some future date.

Reward. An attempt by a spouse to influence the behavior of the other
spouse by offering a reward.

Emotional. An attempt by a spouse to use an emotion-laden reaction to
influence the other spouse's behavior.

Impression. Any persuasive attempts by one spouse to influence the
behavior of the other.

These influence strategies tend to be used by either husbands or wives
when they find themselves in disagreement or in conflict with the other
spouse regarding a specific consumer decision.


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Dynamics of Husband-Wife Decision Making:

Marketers are interested in the relative amount of influence that a husband and
a wife have when it comes to family consumption choices.

Most husband-wife influence studies classify family consumption decisions as
husband-dominated, wife-dominated, joint (i.e., equal or syncratic), and
autonomic (i.e., solitary or unilateral).

Studies that have examined both the extent and nature of husband-wife
influence in family decisions have found that such influence is fluid and likely to
shift, depending on:
-the specific product or service,
-the family role structure orientation, (culture and sub-culture),
-the specific stage in the decision-making process.

These factors also are influenced by changing lifestyles, particularly the
changes in family lifestyle options associated with women working outside of the
home and the increased occurrence of dual-income households.

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Children:

Young children attempt to influence family decisions as soon as they possess the
basic communication skills needed to interact with other family members.

Specifically, children attempt to influence their parents to make a purchase (to
yield).

Children not only attempt to influence their parents to make purchases of special
interest to them (cereal, candy) but also products of remote interest (e.g., laundry
detergents) for which they see ads on TV.

Latchkey Kids:

Many consumer-goods firms target special marketing efforts at preteen "latchkey"
children (those who are home alone for at least part of each school day while their
parents work).

Latchkey kids constitute a special market with distinctive needs.

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Teenagers:
Experts on the teen market have identified a variety of factors as to
why they are a particularly significant target market.

According to one expert there are six key reasons why teenagers
deserve a marketer's special attention:

1. Teens spend a lot of money.
2. Teens influence what the family buys.
3. Teens are trendsetters.
4. Teens are a growing market.
5. Teens are future consumers.

College-Age Children:
College students are another important family subgroup.

Like preteens and teenagers, college students are still in the
process of establishing many of their brand preferences and
shopping habits.

Marketers frequently attempt to gain the attention and loyalty of
college students because of their current and future prospects as
consumers.

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THE FAMILY LIFE CYCLE:

Sociologists and consumer researchers have long been attracted to the
concept of the family life cycle (FLC).

Looked upon as a means of depicting what was once a rather steady and
predictable series of stages that most families progressed through.

However, with the advent of many diverse family and lifestyle
arrangements, what was the rule has been on the decline.

Despite the decline in its predictive precision, the FLC remains a useful
marketing tool.

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FLC analysis enables marketers to segment families in terms of a series of
stages spanning the life course of a family unit.

The FLC is a composite variable created by systematically combining such
commonly used demographic variables as marital status, size of family,
age of family members (focusing on the age of the oldest or youngest
child), and employment status of the head of household.

The ages of the parents and the relative amount of disposable income
usually are inferred from the stage in the family life cycle.


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Traditional Family Life Cycle:

- A progression of stages through which many families pass.

- Starting with bachelorhood, moving on to marriage (and the creation of
the basic family unit), then to family growth (with the birth of children), to
family contraction (as grown children leave the household), and ending
with the dissolution of the basic unit (due to the death of one spouse).

Different researchers have expressed various preferences in terms of the
number of FLC stages.

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STAGE IN FAMILY LIFE CYCLE

BUYING OR BEHAVIORAL
PATTERN

1. Bachelor stage: young, single people

Few financial burdens.
Recreation oriented.
Buy: basic kitchen equipment, basic
furniture, cars, equipment for hobbies,
vacations.

2. Newly married couples: young, no
children.

Better off financially than they will be in
near future. Highest purchase rate and
highest average purchase of durables.
Buy: cars, refrigerators, stoves, sensible and
durable furniture, vacations.

3. Full nest I: youngest child six or below.

Home purchasing at peak.
Liquid assets low.
Dissatisfied with financial position and
amount of money saved.
Interested in new products.
Like advertised products.
Buy: washers, dryers, TV, baby food, chest
rubs and cough medicines, vitamins, dolls,
skates, games etc.

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STAGE IN FAMILY LIFE CYCLE

BUYING OR BEHAVIORAL
PATTERN

4. Full nest II: youngest child six or over.

Financial position better.
Some wives work.
Less influenced by advertising.
Buy larger-size packages, multiple-unit
deals. Buy: many foods, cleaning
materials, bicycles, music lessons, pianos.

5. Full nest III: older married couples with
dependent children.


Financial position still better.
More wives work.
Some children get jobs.
Hard to influence with advertising.
High average purchase of durables.
Buy: new, more tasteful furniture, auto
travel, unnecessary appliances, dental
services.

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STAGE IN FAMILY LIFE CYCLE

BUYING OR BEHAVIORAL
PATTERN

6. Empty nest I: older married couples, no
children living with them

Home ownership at peak.
Most satisfied with financial position and
money saved.
Interested in travel, recreation, self-
education. Make gifts and contributions.
Not interested in new products.
Buy: vacations, luxuries, home
improvements.

7. Empty nest II: older married. No children
living at home, head retired.


Drastic cut in income.
Keep home.
Buy: medical appliances, medical-care
products that aid health, sleep, and digestion.

8. Solitary survivor, in labor force.

Income still good but likely to sell home.

9. Solitary survivor, retired.


Same medical and product needs as other
retired group;
Drastic cut in income.
Special need for attention, affection, and
security.

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Modifications to the FLC:

The traditional FLC model has lost it ability to fully represent the
progression of stages through which current family and lifestyle
arrangement move.

The underlying sociodemographic forces that drive this expanded FLC
model include divorce and later marriages, with and without the presence
of children.

Nontraditional FLC Stages:
These nontraditional stages include not only family households but also
nonfamily households: those consisting of a single individual and those
consisting of two or more unrelated individuals

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Consumption in Nontraditional Families:

When households undergo status changes (e.g., divorce, temporary
retirement, a new person moving into the household, or the death of a
spouse), they often undergo spontaneous changes in brand preferences
and, thus, become attractive targets for many marketers.

They also need to buy more products.

These requirements mean that a divorced person might need to contact
real estate agents, call the local and long-distance telephone companies,
visit furniture stores, and possibly contact a personnel agency or career
consultant.

In another sphere, the substantial increase in dual income households
has also affected the lifestyle and consumption patterns.

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SOCIAL CLASSES AND THEIR INFLUENCE ON
CONSUMER BEHAVIOR
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WHAT IS A SOCIAL CLASS?

Social class can be thought of as a continuuma range of social
positions on which each member of society can be placed.

Researchers have preferred to divide the continuum into a small
number of specific social classes, or strata.

Within this framework, the concept of social class is used to assign
individuals or families to a social-class category.

Consistent with this practice, social class is defined as the division
of/members of a society into a hierarchy of distinct status classes,
so that members of each class have relatively the same status and
members of all other classes have either more or less status.

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Social Class and Social Status:

Researchers often measure social class in terms of social status;

They define each social class by the amount of status the members
of that class have in comparison with members of other social
classes.

In social-class research (sometimes called "social stratification"),
status is frequently thought of as the relative rankings of members
of each social class in terms of specific status factors.

When considering consumer behavior and marketing research,
status is most often defined in terms of one or more of the following
convenient demographic variables: family income, occupational
status, and educational attainment.


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a) Social Class is Hierarchical, ranging from low to high status.

To many people, therefore, social-class categories suggest that others are
either equal to them (about the same social class), superior to them
(higher social class), or inferior to them (lower social class).

This hierarchical aspect of social class is important to marketers.

Consumers may purchase certain products because these products are
favored by members of their own or a higher social class, and consumers
may avoid other products because they perceive the products to be "lower-
class" products.

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b) Social Class and Market Segmentation

The various social-class strata provide a natural basis for market
segmentation for many products and services.

In many instances, consumer researchers have been able to relate product
usage to social-class membership .

c) Social Class and Behavioral Factors
Consumer researchers have been able to relate social-class standing to
consumer attitudes concerning specific products and to examine social-
class influences on the actual consumption of products.


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d) Social Class as a Frame of Reference

Social-class membership serves consumers as a frame of reference (i.e., a
reference group) for the development of their attitudes and behavior.

In the context of reference groups, members of a specific social class may
be expected to turn most often to other members of the same class for
cues (or clues) regarding appropriate behavior.

In other cases, members of a particular social class (e.g., upper-lower
class) may aspire to advance their social-class standing by emulating the
behavior of members of the middle class.

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Social-Class Categories

Studies have divided the organization of specific communities into
five- or six-class social structures.

However, other researchers have found nine-, four-, three-, and
even two-class schemas suitable for their purposes.

The choice of how many separate classes to use depends on the
amount of detail that the researcher believes is necessary to
explain adequately the attitudes or behavior under study.

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Objective measures of social class fall into two basic
categories:

-single-variable indexes and composite-variable indexes.

i) Single-Variable Indexes
A single-variable index uses just one socioeconomic variable to evaluate
social-class membership.

Some of the variables that are used for this purpose are:
-Occupation (eg. marketers frequently think in terms of specific
occupations when defining a target market for their products),

-Education (eg. Generally speaking, the more education a person has, the
more likely it is that the person is well-paid and has an admired or
respected position),

-Income ( eg. used to approximate social-class standing) and,

-Other variables (eg. Quality of neighborhood and rupee value of
residence)

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ii) Composite-Variable Indexes

Composite indexes systematically combine a number of socioeconomic
factors to form one overall measure of social-class standing.

Such indexes are of interest to consumer researchers because they may
better reflect the complexity of social class than single-variable indexes.

For instance, research exploring consumers' perceptions of mail and
phone order shopping reveals that the higher the socioeconomic status (in
terms of a composite of income, occupational status, and education), the
more positive the consumers' ratings of mail and phone order buying,
relative to in-store shopping.

Several of the more important composite indexes are the Index of Status
Characteristics and the Socioeconomic Status Score.
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SOCIAL CLASS MOBILITY

Individuals can move either up or down in social-class
standing from the class position held by their parents.

Upward mobility is common.

Because upward mobility has commonly been attainable, the higher social
classes often become reference groups for ambitious men and women of
lower social status.

Recognizing that individuals often aspire to the lifestyle and possessions
enjoyed by members of a higher social class, marketers frequently
incorporate the symbols of higher-class membership.

Another characteristic of social-class mobility is that products and services
traditionally within the realm of one social class may filter down to lower
social classes.

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SELECTED CONSUMER BEHAVIOR APPLICATIONS
OF SOCIAL CLASS:

a) Clothing, Fashion, and Shopping

Most people dress to fit their self-images, which include their perceptions of
their own social-class membership.

Members of specific social classes differ in terms of what they consider
fashionable or in good taste.

Social class is also an important variable in determining where a consumer
shops.


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b) The Pursuit of Leisure

Social-class membership is also closely related to the choice of
recreational and leisure time activities.

For instance, upper-class consumers are likely to attend the theater and
concerts, to play bridge, etc.

Lower-class consumers tend to be avid television watchers.

Furthermore, the lower-class consumer spends more time on commercial
types of activities and craft activities rather than cerebral activities.

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c) Saving, Spending, and Credit

Saving, spending, and credit-card usage all seem to be related to social-class
standing.

Upper-class consumers are more future-oriented and confident of their financial
acumen; they are more willing to invest in insurance, stocks, and real estate.

In comparison, lower-class consumers are generally more concerned with
immediate gratification; when they do save, they are primarily interested in safety
and security.

Lower-class purchasers tend to use their credit cards to "buy now and pay later"
for things they might not otherwise be able to afford, while upper-class
purchasers use their credit cards as a convenient substitute for cash.

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d) Social Class and Communication

Social class groupings differ in terms of their media habits and in how they
transmit and receive communications.

Knowledge of these differences is invaluable to marketers who segment
their markets on the basis of social class.

When it comes to describing their world, lower-class consumers tend to
portray it

Generally speaking, middle-class consumers have a broader or more
general view of the world, while lower-class consumers tend to see the
world through their own immediate experiences.

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Selective exposure to various types of mass media differs by social class.

In the selection of specific television programs and program types, higher-
social-class members tend to prefer current events and drama, while
lower-class individuals tend to prefer soap operas, quiz shows, and
situation comedies.

Higher-class consumers tend to have greater exposure to magazines and
newspapers than do their lower-class counterparts.

Lower-class consumers are likely to have greater exposure to publications
that dramatize romance and the lifestyles of movie and television
celebrities.

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PERSONAL INFLUENCE

INTERPERSONAL COMMUNICATION


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Consumers rely on two primary forms of communication to help them
complete the purchase process.

1. Marketing communication
2. Interpersonal communicationthe informal, two-way exchange of
information and influence among individuals.

We ascribe the same components to interpersonal communication as
apply to marketing communicationsource, message, medium,
receiver, and feedback.

The difference is the context: Interpersonal communication occurs
among individual consumers rather than between marketers and
consumers.

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WORD-OF-MOUTH COMMUNICATION:

Any informal communication among consumers about products that will
satisfy their needs is known as word-of-mouth communication.

It is important to recognize that word-of-mouth communication is a relational
conceptthat is, it involves an informal relationship among two or more
consumers.


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Word-of-mouth communication may differ from situation
to situation, depending on the following circumstances:

(1) the information content of the communication,

(2) the receiver's purpose in gathering information,

(3) the source's purpose in providing information,

(4) the source's credibility,

(5) the source's evaluation of the product,

(6) the type of communication partner, and

(7) the type of product.

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(1) Information content:

The information content of interpersonal communication can be
classified into three broad types:

(a) Product news

(b) Advice

(c) Personal experience

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(2) The receivers purpose:

- to collect the information necessary to make a purchase decision.

Gathering product news, advice, and personal experiences from others
has two advantages.

1. It helps reduce the level of cognitive effort the consumer must expend to
gather and evaluate information.

2. It reduces the uncertainty of making the right choice.
- particularly true for high involvement products.

Consumers are particularly likely to turn to experts and members of their
positive reference groups for these purposes.


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(3) The sources purpose:
Different people provide information to their friends and
acquaintances for different reasons.

a) People who are very involved in a product category may simply
enjoy talking about it;

b) Interpersonal communication gives them the opportunity to discuss
their interests, provide product news, express their opinions, or talk about
their experiences.

c) Others may experience a feeling of altruism by providing assistance,
or they may feel powerful or competent when other people come to them for
advice.

d) Still others may have their own reasons for recommending a
particular purchase.
- They may want to try a new product only after someone else buys it first, or
they may be seeking to confirm their own purchase decision by enlisting
others as users.

e) Some people may give their opinion about a product with which they
are dissatisfied in order to seize the opportunity to complain about it.


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(4) Source Credibility:

Source credibility is the belief that a communication source provides accurate
and unbiased information.

Credibility results from expertise and objectivity.

People gain expertise in a product area through knowledge, training, and
experience.

Objectivity is an equally important component of credibility. People want the
sources they turn to provide information for their benefit, not for the source's
own profit.

That is why many consumers are skeptical of salespersons or celebrities who
appear in advertisementsthese individuals are paid to provide information to
consumers;

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(5) Source Evaluation: Complaint versus praise:

Word-of-mouth communication can be either positive or negative.

People are more likely to complain about a product when it is highly
involving or when they are still not satisfied after voicing a direct complaint
to the marketer, i.e., they are seeking another outlet for their
dissatisfaction.

Complaints tend to be more influential than positive word-of-mouth.

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(6) Type of communication partner:

Communication partners can come from a wide variety of settings.

Consumers may seek information from members of positive reference
groups because they want to choose the same products as the members
in order to gain approval.

Following the advice of these members helps ensure that the consumer
continues to be a part of a positive membership group;

In some cases, it helps the consumer gain entry into a positive aspirational
group to which he or she wants to belong.

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(7) Type of product:

a) Consumers need information and advice from credible sources when they are
considering the purchase of a product that is new to them.

The consumer is unlikely to have the necessary knowledge or experience with the
product and will likely turn to highly involved consumers with whom he or she has
direct contact.

b) People are more likely to seek word-of-mouth communication about a
technically complex product.

In this case, the consumer is seeking explanatory information, advice about the
product's attributes and their associated benefits, or any experiences others have had
with the product.

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c) People are more likely to seek information when they perceive risk
from using a product.

People look for experts who can help them estimate the risks involved in
making a certain purchase, and they consult with others like them who can
reassure them that their product experience has been successful.


d) People are more likely to seek information from members of their
positive reference groups about products they use in visible settings.

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THE OPINION LEADERSHIP PROCESS


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WHAT IS OPINION LEADERSHIP?

One of the parties in an informal product-related communications
encounter usually offers advice or information about a specific product or
product category, such as which of several brands is best, or how a
particular product may be used. He is the opinion leader.

Individuals who actively seek information and advice about products
sometimes are called opinion seekers.

Opinion leadership is the process by which one person (the opinion
leader) informally influences the actions or attitudes of others, who may be
opinion seekers or merely opinion recipients.

The opinion leader, may become an opinion receiver when another
product or product category is brought up as part of the discussion.

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An opinion leader plays a dominant role in a specific instance of
word-of-mouth communication by providing product news, advice, or
personal experience to others.


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DYNAMICS OF THE OPINION LEADERSHIP PROCESS:

The opinion leadership process is very dynamic.

1. Opinion Leaders are Persuasive:
Opinion leaders are remarkably effective at influencing consumers in their
product-related decisions. Some of the reasons for the effectiveness of opinion
leaders are:

a) Credibility
Opinion leaders are highly credible sources of product-related information,
because their intentions are perceived as being in the best interests of the opinion
recipients. This is because they receive no compensation for the advice.

b) Positive and Negative Product Information
Opinion leaders provide both favorable and unfavorable information adds to their
credibility.

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c) Information and Advice
Opinion leaders are the source of both information and advice. They may
simply talk about their experience with a product, relate what they know about
a product, or, more aggressively, advise others to buy or to avoid a specific
product.

d) Opinion Leadership is Category-Specific
Opinion leadership tends to be category-specific; that is, opinion leaders often
"specialize" in certain product categories about which they offer information
and advice.

e) Opinion Leadership is a Two-Way Street
Consumers who are opinion leaders in one product-related situation may
become opinion receivers in another situation.

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2.The Motivation behind Opinion Leadership

a) The Needs of Opinion Leaders
Motivation theory suggests that people may provide information or advice to
others to satisfy some basic need of their own.

However, opinion leaders may be unaware of their own underlying motives.

I) Opinion leaders may simply be trying to reduce their own postpurchase
dissonance.

Thus, the opinion leader's true motivation may really be self-confirmation or self-
involvement.

II) Furthermore, the information or advice that an opinion leader dispenses may
provide all types of tangential personal benefits: it may confer attention; imply
some type of status, grant superiority; demonstrate awareness and expertise, and
give the feeling of possessing inside information and the satisfaction of
"converting" less adventurous souls.

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III) Opinion leaders who are motivated by product involvement may find
themselves so pleased or so disappointed with a product that they simply must
tell others about it.

IV)Those who are motivated by social involvement need to share product-
related experiences. In this type of situation, opinion leaders use their product-
related conversations as expressions of friendship, neighborliness, and love.

V)The pervasiveness of advertising in our society encourages message
involvement. Individuals who are bombarded with advertising messages and
slogans tend to discuss them and the products they are designed to sell.

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b)The Needs of Opinion Receivers

Opinion receivers satisfy a variety of needs by engaging in product-related
conversations.

I They obtain new-product or new-usage information.

II They reduce their perceived risk by receiving firsthand knowledge from a user
about a specific product or brand.

III They reduce the search time entailed in the identification of a needed product
or service.

IV Moreover, opinion receivers can be certain of receiving the approval of the
opinion leader if they follow that person's product endorsement or advice and
purchase the product.

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A PROFILE OF THE OPINION LEADER
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CULTURE, SUB-CULTURE, CROSS CULTURE

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WHAT IS CULTURE?

Culture is a society's personality.
- In the context of consumer behavior, culture is defined as the sum
total of learned beliefs, values, and customs that serve to direct the
consumer behavior of members of a particular society.

The belief and value components:
-Imply the accumulated feelings and priorities that individuals have
about "things" and possessions.

In contrast to beliefs and values, customs are overt modes of
behavior that constitute culturally approved or acceptable ways of
behaving in specific situations.

Customs consist of everyday or routine behavior.

Thus, while beliefs and values are guides for behavior, customs are
usual and acceptable ways of behaving.


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COMPONENTS OF CULTURE

A) Values

B) Language

C) Myth

D) Customs

E) Rituals

F) Laws

G) Material artifacts
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Marketers must understand the components of culture so that they
can:

(1) use advertising and product design to link their products to
values in consumers' minds, and,

(2) identify the consumer subcultures for whom those links will be
appropriate.


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CHARACTERISTICS OF CULTURE

1. The Invisible Hand of Culture
The impact of culture is natural and automatic and it influences behavior.

2. Culture Satisfies Needs
Culture exists to satisfy the needs of the people within a society.

Cultural beliefs, values, and customs continue to be followed as long as they
yield satisfaction.

Marketers also must be alert to newly embraced customs and values.

For example, as people have become more health- and fitness-conscious, there
has been an increase in the number of gyms, spas etc.



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3.Culture is Learned

Consumers are not biologically endowed with culture; instead, they learn from
family and friends about what is acceptable and unacceptable.

At an early age, we begin to acquire from our social environment a set of
beliefs, values, and customs that make up-our culture.

Enculturation is the process of learning one's native culture.

By contrast, acculturation is the process of learning a new or foreign culture.

Marketers who wish to introduce products in other countries need to understand
the process of acculturation so that they can develop ways to help consumers
accept new customs.


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4. Culture is Shared

Culture is viewed as group customs that link together the members of a
society.

Various social institutions within a society transmit the elements of culture
and make the sharing of culture a reality.

Chief among such institutions is the family, educational institutions and
houses of worship.
A fourth, frequently overlooked, social institution that plays a major role in
the transfer of culture throughout society is the mass media.

We are exposed daily to advertising, an important component of the
media.


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5.Culture is Dynamic

Culture changes and expands to reflect the dynamic environment.

To fulfill its need-gratifying role, culture continually must evolve if it is to function in
the best interests of a society.

For this reason, the marketer must carefully monitor the socio-cultural environment
in order to market an existing product more effectively or to develop promising new
products.

Changes mean that marketers have to consistently reconsider who are the
purchasers and the users of their products (males only, females only or both),
when they do their shopping, how and where they can be reached by the media,
and what new product and service needs are emerging.


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THE MEASUREMENT OF CULTURE

A wide range of measurement techniques are used in the study of
culture.

a) Projective tests

b) Attitude measurement techniques

In addition, the value measurement instruments are are
frequently used to examine culture.

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WHAT IS SUBCULTURE?

Despite the pervasive nature of culture, not all of the consumers
within a society think, feel, and act the same way.

Every society has subculturesgroups of consumers that share
values but exhibit them in different ways.

In other words, a single culture can be divided into consumer
subcultures that exhibit shared values in different ways.

The members of a specific subculture possess beliefs, values, and
customs that set them apart from other members of the same
society.

Subculture, is a distinct cultural group that exists as an identifiable
segment within a larger, more complex society.

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Subcultural analysis enables the marketing manager to focus on
sizable and "natural" market segments.

Subcultures, therefore, are relevant units of analysis for market research.

There are a number of important subcultural categories: nationality,
religion, geographic location, race, age, and gender.

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CATEGORIES

EXAMPLES

Nationality

Indians, French, British, American

Religion

Hindu, Muslim, Sikhs, Christians

Geographic region

South Indian, North Indian

Race

Jats, Bhutias, Paharis

Age

Kids, Teenagers

Gender

Male, Female

Occupation

Doctor, Engineer, Businessman

Social class

Upper, Middle, lower



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Acquiring Exposure to Other Cultures:

As more and more consumers come in contact with the material
goods and lifestyle of people living in other parts of the world, they
have the opportunity to adopt these different products and
practices.

How consumers in one culture secure exposure to the goods of
other people living in other cultures is an important part of
consumer behavior.

Consumers' exposure to different cultures tends to come about
through:
1. Consumers' own initiatives

2. Marketers efforts: that is, seeking to expand their markets
by "bringing" new products, services, practices, and ideas to
potential consumers residing in a different country and possessing
a different cultural view.

Within this context, international marketing provides a form of
"culture transfer."


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CROSS CULTURE:

Cross-cultural consumer analysis:

To determine whether and how to enter a foreign market,
marketers need to conduct some form of cross-cultural consumer
analysis.

Cross cultural consumer analysis is defined as the effort to
determine to what extent the consumers of two or more nations are
similar or different.

Such analyses can provide marketers with an understanding of the
psychological, social, and cultural characteristics of the foreign
consumers they wish to target, so that they can design effective
marketing strategies for each of the specific national markets
involved.

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CROSS-CULTURAL CONSUMER ANALYSIS:

Comparisons of Consumers of Different Countries

a) Similarities and differences among people:

A major objective of cross-cultural consumer analysis is to determine how
consumers in two or more societies are similar and how they are different.

Such an understanding of the similarities and differences that exist between
nations is critical to the multinational marketer, who must devise appropriate
strategies to reach consumers in specific foreign markets.

The greater the similarity between nations, the more feasible it is to use
relatively similar strategies in each nation.

On the other hand, if the cultural beliefs, values, and customs of specific target
countries are found to differ widely, then a highly individualized marketing
strategy is indicated for each country.

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b) Acculturation Is a Needed Marketing Viewpoint:

Marketers must also go through a kind of acculturation process.

They must learn everything that is relevant about the usage or potential usage of
their products and product categories in the foreign countries in which they plan
to operate.

In a sense, cross-cultural acculturation is a dual process for marketers.

1. First, marketers must thoroughly orient themselves to the values, beliefs, and
customs of the new society to appropriately position and market their products
(being sensitive to and consistent with traditional or prevailing attitudes and
values).

2. Second, to gain acceptance for a culturally new product in a foreign society,
they must develop a strategy that encourages members of that society to modify
or even break with their own traditions (to change their attitudes and possibly alter
their behavior).

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To maximize opportunities in foreign markets, it is essential to learn
about culture and values;

Every element of that culture has an impact on marketing
strategies.

a) Language:
Product names should be checked for double meanings, to see whether
they can be pronounced in cultures lacking certain phonetic sounds, and to
ensure that another product in another culture does not use the same
name.

b) Customs:
Marketers have had to make adjustments for certain local customs in their
marketing strategy.


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c) Color:
Colors have different connotations and traditional uses across cultures.
When designing advertisements and packages, marketers must be careful
to avoid using colors that will send the wrong message to the consumers
of another culture.

d) Time:
How consumers view and use their time differs greatly across cultures.

e) Space:
The distance at which business is conducted varies across cultures.
Cultural rules about physical contact and social distance are usually
unwritten but are extremely important to the people of a culture.

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Research should be conducted in the following areas before
introducing a product or service.

(1) Check the product's appeal to the consumers in the target
market.

(2) Learn the limits of the physical and environmental resources.

(3) Never assume success based on the home country's experience.

(4) Watch for changing market conditions, such as economic, social,
and political trends, as well as changes in product use.

(5) Study the laws of the targeted country as they apply to
advertising, registration, copyrights, logos, and trademarks.

(6) Avoid rotating marketing personnel in a foreign market.

Local marketing managers should be allowed to use their familiarity
with their market to make localized decisions.

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ALTERNATIVE MULTINATIONAL STRATEGIES:
GLOBAL VERSUS LOCAL

Some marketers have argued that world markets are becoming
more and more similar and that standardized marketing strategies
are, therefore, becoming more feasible.

In contrast, other marketers feel that differences between
consumers of various nations are far too great to permit a
standardized marketing strategy.


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a) Favoring a "World Brand"
An increasing number of firms have created world brands products that are
manufactured, packaged, and positioned in exactly the same way regardless of
the country in which they are sold.

b) Adaptive Global Marketing
In contrast to the marketing communication strategy that stresses a common
message, some firms embrace a strategy that adapts their advertising messages
to the specific values of particular cultures. Eg McDonald's.


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Some marketers feel that the world-brand concept may he going too far.
Eg. Procter & Gamble The company believes that globally standardized
products may not be desirable.

Differences between countries are often sufficiently glaring to make
localized marketing more appropriate than a global approach, which may
sometimes prove to be too costly.

Following a "mixed" strategy, firms such as Coca-Cola and Unilever have
augmented their global strategies with local execution.

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A global marketing strategy is one that maintains the marketing plan
across all countries; that is, the product name, function, and ingredients
remain the same in all markets.

A global approach yields a consistent worldwide image and global name
recognition.

The company name and product names are not translated into many
languages, and few, if any, adjustments in product attributes are made.

Examples of companies that use global approaches include Coca-Cola,
Pepsi, IBM, Singer, Ford, and McDonald's.

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A localized marketing strategy takes into account the differences in consumer
behavior, such as culture and behavioral processes, as well as the differences in
the systems needed to market products, such as technology, law, the media, and
transportation.

Often the name of the product varies, and some firms alter product characteristics
for other cultures.

Procter & Gamble manufactures many formulas of Tide detergent.

In these cases, using a local strategy requires that marketers be aware of cultural
differences in terms of product preferences, product use, promotional
communications, and product formulations.

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MARKETING MISTAKES:
A FAILURE TO UNDERSTAND DIFFERENCES:

a) Product Problems
International marketers frequently neglect to modify their products to
meet local customs and tastes.

b) Promotional Problems
When communicating with consumers in different parts of the world, the
promotional message must be consistent with the language and
customs of the particular target society.

c) Pricing and Distribution Problems
International marketers must adjust their pricing and distribution
policies to meet local economic conditions and customs.


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