Integrated marketing communication imc campaigns typically involve ______

Marketing Assignment

Consumer Behavior

INSTRUCTIONS TO STUDENTS 1

LESSON ASSIGNMENTS 5

LESSON 1: GROUNDWORK OF THE TEXT 7

LESSON 2: INDIVIDUAL INFLUENCES ON BEHAVIOR 27

LESSON 3: SOCIAL AND CULTURAL INFLUENCES ON BEHAVIOR 89

RESEARCH ASSIGNMENT 135

SELF-CHECK ANSWERS 139

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When was the last time you made a purchase? What motivated you? What questions did you ask yourself before you bought the item? Did you purchase it quickly, or did you take some time to think about it? These questions are part of the con- sumer decision process. When you understand this process, you’ll be both a better consumer and a better marketer.

This course will teach you the principles involved in how and why consumers make decisions. It’s intended to show you how, through study and research, marketing analysts and managers can predict and influence consumer behavior.

The textbook for this course is the fourth edition of Consumer Behavior: An Applied Approach, by Nessim Hanna, Richard Wosniak, and Margaret Hanna. This study guide will assist you in your studies and guide you through your course. The study guide also explains what your assignments are for each lesson and provides you with the best approach to achieve the maximum benefit from this course.

OBJECTIVES

When you complete this course, you’ll be able to

■ Explain the role of the marketing concept in exchange processes

■ Identify the macro forces and emerging trends that influence consumer behavior

■ Describe the roles of segmentation, targeting, and positioning in developing a marketing strategy

■ Discuss the influence of perception, learning, memory, and attitude on consumer behavior

■ Explain the function of motivation, emotion, personality, and self-concept in purchasing behavior

■ Describe the consumer decision-making process

■ Identify the factors that influence consumer acceptance of new products

■ Describe the marketing implications of social and cultural influences on behavior

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COURSE MATERIALS The following materials are part of this course:

1. This study guide, which contains an introduction to your course, plus

■ A lesson assignments page, which outlines the study assignments in your textbook

■ Assignment introductions, which emphasize the main points in the textbook

■ Self-checks and answers to help you assess your understanding of the material

■ Instructions for your research assignment

2. Your course textbook, Consumer Behavior: An Applied Approach, which contains your assigned readings

YOUR TEXTBOOK

Before you begin your study of consumer behavior, take some time to become familiar with your textbook and its layout.

Begin by reading the foreword on page xi and the preface on pages xiii–xxi. These pages give valuable background material on your textbook and what it has to offer you.

Next, examine the Brief Contents on page iii. The titles of the chapters convey a general idea of the topics you’re going to study. As you proceed through the course, use the full table of contents on pages v–x. If you read the contents for each chapter just before you begin to study that particular chap- ter, you’ll know what you’ll be studying in that assignment. The formal study material for this course begins on page 3.

At the end of the textbook, following the study material, are two helpful resources:

1. A glossary (pages 475–482), which contains definitions of important terms used throughout the textbook

2. An index (pages 483–501), which lists the topics, companies, and individuals mentioned in your textbook, along with the pages on which those references may be found

Instructions to Students2

A STUDY PLAN

This study guide is a blueprint for your course. Read it carefully, and use the following steps to help you receive the maximum benefit from your studies:

1. Note the pages for each assignment, and read the introductory material in the study guide.

2. Scan the assignment in the textbook to get a general idea of its content. Then, carefully read and study the assignment. Pay attention to all details, especially defini- tions and main concepts. Be sure to read the summary as a review of the material in the chapter.

3. The self-checks are designed to help you identify weak- nesses and guide you back to the areas where you need further study. As you finish each reading assignment, answer the self-check questions in this study guide. Then, compare your answers to those provided. Completing the self-check will help you to make sure you’ve recognized the most important points. Each is a review of the material you’ve just studied, so test yourself seriously. Don’t look up an answer before giving your own, and don’t submit the self-check answers for grad- ing. They’re for you to evaluate yourself on your own.

4. After you’ve completed the self-checks for Lesson 1, complete the Lesson 1 homework assignments.

5. After you’ve completed the homework assignments, take the first examination.

6. Follow this procedure until you complete all three lessons. At any point you can contact your instructor for assistance and clarification.

7. After you complete the examination for Lesson 3, you’ll complete a research assignment in which you’ll apply your new course knowledge. Instructions for submitting your assignment are in this study guide.

Instructions to Students 3

You’re now ready to begin Lesson 1. With concentration and determination, you’ll be on your way to acquiring valuable business and marketing skills. Moreover, you may even become a better consumer yourself.

Instructions to Students4

Remember to regularly check “My Courses” on your student homepage. Your instructor may post additional resources that you can access to enhance your learning experience.

Lesson 1: Groundwork of the Text For: Read in the Read in the

study guide: textbook:

Assignment 1 Pages 7–15 Pages 3–35

Assignment 2 Pages 16–26 Pages 39–69

Examination 080628 Material in Lesson 1

Lesson 2: Individual Influences on Behavior For: Read in the Read in the

study guide: textbook:

Assignment 3 Pages 27–38 Pages 73–106

Assignment 4 Pages 39–49 Pages 109–143

Assignment 5 Pages 50–60 Pages 149–180

Assignment 6 Pages 61–69 Pages 185–217

Assignment 7 Pages 70–78 Pages 221–249

Assignment 8 Pages 79–88 Pages 255–283

Examination 080629 Material in Lesson 2

Lesson 3: Social and Cultural Influences on Behavior For: Read in the Read in the

study guide: textbook:

Assignment 9 Pages 89–96 Pages 289–318

Assignment 10 Pages 94–104 Pages 321–346

Assignment 11 Pages 105–112 Pages 351–380

Assignment 12 Pages 113–120 Pages 383–414

Assignment 13 Pages 121–126 Pages 417–442

Assignment 14 Pages 127–133 Pages 445–472

Examination 080630 Material in Lesson 3

Research Assignment 080632

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t sNote: To access and complete any of the examinations for this study

guide, click on the appropriate Take Exam icon on your “My Courses” page. You should not have to enter the examination numbers. These numbers are for reference only if you have reason to contact Student Services.

NOTES

Lesson Assignments6

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Groundwork of the Text ASSIGNMENT 1 Read this introduction. Then read Chapter 1, “Introduction to Consumer Behavior” pages 3–35, in your textbook, Consumer Behavior.

What Is Consumer Behavior?

To study consumer behavior, you have to know what it is. Therefore, Chapter 1 begins with a definition of consumer behavior and then discusses the activities investigated in this field—specifically, the way people choose, purchase, use, and dispose of goods and services. Each of these activities repre- sents a stage in what marketers as a whole refer to as the customer life cycle.

The aim of understanding each stage of the customer life cycle is to create and deliver lasting value to the consumer during interactions with a particular firm. Each of these interactions may be referred to as touchpoints, which are of special interest to companies that have begun to adopt Customer Touchpoint Management (CTM) as a means of enhancing a firm’s relation- ship with its customers.

Note that the term consumer behavior is different from a similar term, buyer behavior. The latter includes behavior that involves business-to-business consumption as well as personal or individual consumer purchasing behavior.

Approaches to the Discipline of Consumer Behavior

Understanding consumer behavior means studying individual, or intrapersonal, influences—such as perceptions, attitudes, and personality—as well as broader group, interpersonal, cultural, and cross-cultural influences. Accordingly, the discipline of consumer behavior draws on the insights and processes offered by a variety of fields. These include psychology, sociology, social psychology, anthropology, and economics. Each of these fields offers a slightly different perspective on consumer behavior, which, taken together, form a full picture.

Consumer Behavior8

What Do Buying Decisions Involve?

Pages 8–9 of your textbook offer a hypothetical case of a family deciding to acquire a pet. As you read through this example, you’ll see that a number of factors influenced the family’s decision. Some of the factors were social—many other households in the neighborhood owned dogs—and oth- ers were cultural—the parents believed that owning a pet would help teach their children responsibility. The parents also engaged in research, considered economic factors, and investigated requirements and options for the ownership, care, and maintenance of the family pet.

Consumer Behavior: The Forces behind Human Actions

Many concepts are essential to the study of consumer behavior, and these will be explained in more detail as you proceed through your course. For example, the decision to purchase a puppy is a high-involvement process, because introducing a dog into the home represents a significant change in the way the household functions. By contrast, purchasing toys, treats, and food for the dog, which has significantly less impact on the overall household function, are low-involvement processes.

The Role of the Marketing Concept in Exchange Processes

Most firms today understand the essential role that consumers play in the entire business process, and they’ve consequently adopted an approach known as the marketing concept. Briefly, the marketing concept is an operational philosophy that views the consumer as central to all of a firm’s activities. At the heart of the marketing concept is an understanding that an industry is a consumer-satisfying process, not a goods- producing process.

The marketing concept is grounded in the notion of exchange, the process through which a firm offers its products or services in return for consumers’ resources. Any exchange requires two parties: one that offers a product or service of perceived

Lesson 1 9

value and another that gives up something of perceived value— for example, cash, time, or labor—to acquire a valued product or service.

Marketers who understand and implement the insights of consumer behavior can influence the perceived value of a product or service. They’re often referred to as agents of change, employing a variety of marketing tactics to create or direct the perception of value.

The Influence of Macro Forces on Consumer Behavior

Extraordinary technological advances now offer consumers a host of sources through which they can learn about and pur- chase an enormous array of products and services, as well as interact with the firms that offer them. Mobile and electronic commerce services, search engines, location-based searches, online auctions, online ads, as well as email campaigns, Facebook, Twitter, instant messaging, and mobile apps have created an environment in which consumers can access an immense amount of information. The amount and variety of information available, along with the many methods of interaction, can be overwhelming to both consumers and marketers. Marketers are charged with the task of discovering novel and inventive ways of communicating with consumers and enhancing the exchange process, while consumers can sometimes be deluged with too much information and unwanted or ineffectually targeted advertising.

Emerging Trends in Contemporary Society

Pages 14–33 show seven emerging trends influencing twenty- first-century consumer behavior in significant ways. This section details the impact of e-commerce and m-commerce; hyperconnectivity and social networks; safety, security, and heightened anxiety; global interdependence and connectivity; and a vision for college education.

Consumer Behavior10

The Explosion of E- and M-Commerce

The emergence of the first web browser brought about a new way for people to interact, and with it, a new economic ecosystem. E-commerce is the term generally used to describe the process through which products and services are bought and sold online. E-commerce sites, such as Amazon.com, have enjoyed a huge advantage in terms of access, presence, promotion, discounts, and delivery over traditional brick-and- mortar retailers, many of which have established online presences to attract and interact with consumers. E-commerce has even extended into areas of business such as investment and stock trading.

M-commerce is a subset of e-commerce, through which busi- ness transactions may be conducted through mobile devices or tablets. As tablets and smartphones have proliferated, m-commerce has grown dramatically, providing such benefits as easy accessibility, convenience, localization, instant connectivity, personalization, and immediacy. Mobile advertising, which also benefits from immediacy, convenience and personalization, has consequently become a valuable tool for marketers.

Hyperconnectivity and Social Networks

Consumer behavior has always been a social activity, involving some interaction between providers and consumers. It has also been influenced by the opinions and behavior from those around us. In today’s marketplace, that sphere of social influence has expanded tremendously through social media sites like Facebook and Twitter, as well as blogs, user forums, and group-buying platforms such as Groupon.com and Daily deals. To accommodate the complexity, diversity, and integration of new applications and devices, many firms are employing a strategy known as hyperconnectivity, enabling large increases in network bandwidth that often exceed demand.

Consumers can benefit through social media. They discover new products and services, evaluate them through ratings and recommendations, seek more information and help in using products and services, and find bargains and discounts. In recent years, many new social sites that function as online magazines have evolved to meet the needs of specifically targeted audiences.

Lesson 1 11

Because the advent of social media and its effects on consumer behavior are so new, firms are in the process of evaluating their impact on their integrated marketing communications (IMC) strategies, the communication tools through which they manage customer relationships that drive brand value. At present, firms are looking at how to quantify the return-on- investment (ROI) generated by investing in social media.

Safety, Security, and Heightened Anxiety

Fear and anxiety tend to have an overall negative effect on consumer behavior. Reports of dire events and warnings, at home and abroad, generate feelings of insecurity and insta- bility. The continuing effects of the global financial downturn have also negatively impacted consumer behavior, as people have lost homes and jobs, or fear that they may do so. The proliferation of online scams, computer virus attacks, and identity theft have led to further unease and a corresponding detrimental effect on personal and business consumption.

The Green Revolution

Dependence on foreign energy supplies comes at a great cost to U.S. businesses and consumers. Consequently, consumers and firms that manufacture and distribute products and/or deliver services are seeking new ways to lower costs, while offsetting some of the projected climatic effects of using carbon- based energy sources. Recently, a shift in focus toward other types of energy sources, such as solar power and renewables, has created some new markets, products, and services that aim to deliver lower costs and be more environmentally observant.

The “Buy American” Movement

As your textbook notes, manufacturing in America reached its peak in 1979 and then began to decline as many compa- nies realized that products could be manufactured much less expensively abroad. While this trend has led to an influx of cheaper goods into the American marketplace, opponents argue that inferior quality, together with the loss of manufacturing jobs at home (along with the loss of income tax revenue), ends up costing consumers more. The “Buy American” movement

Consumer Behavior12

aims to correct this dilemma by urging the return of more manufacturing jobs to this country and purchasing products with the “Made in USA” label rather than products manufac- tured abroad. Opponents argue that protectionist strategies will negatively impact our financial global presence and point out that the income derived from U.S.-based distributors— including sales and marketing channels—compensates for the loss of American jobs. While the debate is still ongoing, the “Buy American” movement has opened a significant marketing niche.

Global Interdependency and Connectivity

Over the past several decades, the marketplace has become increasingly global. American and foreign firms trade and compete with each other and provide goods and services in wide-ranging, often overlapping markets. Their supply chains are interconnected across nations and continents. The economy has gone global.

While this financial interdependence has positive aspects— including a wider, more diverse marketplace—the global economy is more vulnerable to disruption. Additionally, connectivity has paved the way for the emergence of a new class of highly informed consumers and helped create demand for products and services in previously untapped markets.

A Vision for College Education

College tuition and related fees have increased dramatically over recent decades. Many question—and even protest—the increase. This section also examines the value and benefits of a college education, such as the opportunity to find higher- paying work, personal satisfaction, and enhanced life experience.

Ramifications of Current Trends for Consumers and Marketers

The current and emerging trends offer opportunities and challenges for marketers. Connectivity and globalization have helped to create a more diverse and robust marketplace, and many of today’s consumers are better informed than those of

Lesson 1 13

previous generations. However, competition between firms and the efforts to develop and implement an effective marketing strategy require greater flexibility, innovation, and the ability to adapt to a rapidly changing, expanding environment.

After you’ve read the assigned pages, review any material you found difficult. Then, complete Self-Check 1 and Chapter 1 Homework. Check your answers with those provided, and review the material for any of the questions you missed.

Key Terms

Term Page

consumer behavior 5

marketing concept 11

agents of change 11

e-commerce 14

m-commerce 16

hyperconnectivity 17

integrated marketing communication 19

Consumer Behavior14

Self-Check 1

At the end of each section of Consumer Behavior, you’ll be asked to pause and check your understanding of what you’ve just read by completing a “Self-Check” exercise. Answering these questions will help you review what you’ve studied so far. Please complete Self-Check 1 now.

Questions 1–5: Indicate whether each of the following statements is True or False.

______ 1. When a company attempts to create and deliver lifetime value to consumers during

every interaction in their relationship with the firm, the company is basically focusing

on the customer life cycle.

______ 2. The goal of Customer Touchpoint Management (CTM) is getting the company’s

managers involved in the promotional activities of the firm.

______ 3. Brick-and-mortar firms have failed to counter competition from online retail operations.

______ 4. While it’s easy to quantify the return on investment generated through traditional

media by such measures as reach and frequency, these are ill-suited for measuring

ROI in the contemporary interactive media environment.

______ 5. Human consumption has always been regarded as an individual act, seldom influenced

by other people around us.

(Continued)

Lesson 1 15

Self-Check 1

Questions 6–10: Select the one best answer to each question.

6. In your textbook’s narrative on the Donatos’ purchase of a puppy, they considered the fact that most families in their middle-class neighborhood owned dogs. To the Donatos, in this case, those neighbors represent

a. agents of change. c. opinion leaders. b. a reference group. d. opinion followers.

7. The marketing concept is a philosophy advocating that

a. the consumer is the focal point of all business activities. b. business firms are instrumental in maintaining our high standard of living. c. without an efficient distribution system, the economy cannot function properly. d. marketing is the most important activity in any society.

8. Actions adopted in the transportation field to reduce energy consumption include all of the following except

a. upgrading mass transportation. b. passing laws to increase automotive gas mileage. c. encouraging increased usage of bicycles. d. placing higher taxes on the purchase of gas-guzzling vehicles.

9. Today, reports reveal that nearly _______ percent of everything we buy in the United States is made overseas.

a. 30 c. 60 b. 40 d. 80

10. Which of the following reflects features of m-commerce?

a. Localization c. Immediacy b. Personalization d. All of the above

Check your answers with those on page 139.

Consumer Behavior16

ASSIGNMENT 2 Read this introduction. Then read Chapter 2, “Segmentation, Targeting, and Positioning” pages 39–69, in your textbook, Consumer Behavior.

Mass Marketing

The Model-T automobile was efficiently and economically pro- duced in a standardized version, available in just one color. History shows, though, that the eventual failure of Henry Ford’s Model-T can largely be attributed to his employment of a mass- market strategy, which assumed a homogenous marketplace made up of consumers sharing virtually identical needs and preferences.

Many firms quickly learned and have come to acknowledge as a reality that consumers want choice and flexibility in purchas- ing goods and services. The marketplace, in fact, is highly diverse, comprised of many smaller subgroups, or segments, each with a distinctive set of needs and wants.

To succeed in such a diverse marketplace, most firms employ a three-step market-matching strategy, as illustrated in Exhibit 2.1 on page 42. The first step is segmentation, which is dividing the general marketplace into a variety of smaller submarkets, made up of consumers who want or need differ- ent marketing mixes of products and/or services. The second step is targeting, which means examining specific submarkets and determining which of them to pursue. The final step is positioning, which consists of developing, in the mind of the consumer, a distinctive and attractive image for the product or service.

Market Segmentation

Market segmentation is a process of defining or describing different submarkets, or niches, through identifying common needs and wants within a segment, as well as of distinguishing between different segments. Your textbook provides examples. Commercial airlines, for instance, typically separate segments into business and leisure travelers. Forrester Research, a technology consultant firm, has identified 10 segments according to various criteria.

Lesson 1 17

As illustrated in Exhibit 2.2 on page 43, there are five basic variables commonly used to segment consumer markets: geo- graphic, demographic, geodemographic, psychographic, and behavioral.

Geographic Segmentation

Geographic segmentation is segmentation by location, such as by region, county, city, or town. Geography represents a significant variable because differences in climate, location, distance, and landscape can all influence attitudes and behaviors, and people in different regions therefore want or need different types of products or services and tend to respond differently to marketing programs. To make the most of these differences, many firms employ specifically regionalized or localized marketing strategies to appeal to consumers in different geographical locations.

Demographic Segmentation

Demographic segmentation uses variables such as age, gender, family life cycle, income, occupation, education, and ethnicity. For example, toy manufacturers typically market to children. Certain breakfast food companies develop and market some brands and products geared for children and others tailored to appeal to adults. Likewise, Harley Davidson, which manu- factures motorcycles, discovered through research that it could extend its market share by introducing new product lines that appealed to a demographic younger than its traditional demographic.

The family life cycle—the series of stages through which families typically progress—is also a key determinant in understanding and marketing to families as they undergo changes in needs, resources, and spending habits. Hotel chains are prime exam- ples of firms that develop and market services that appeal to families in different stages of the family life cycle—for example offering weekend discounts for families with young children and offering special amenities, such as children’s menus, cribs, and video games.

Consumer Behavior18

Gender is another important demographic factor, influencing the decision to produce products and services specifically tai- lored for women and for men. Race and ethnicity are also significant variables, especially given the growth of Hispanic- American, African-American, and Asian-America populations. Each of these demographic subsegments has nuanced needs and preferences, and firms have developed products and services to appeal to them.

Although education, income, and occupation are seen by many researchers to be interconnected, many firms have identified occupation as a significant demographic factor on its own. Accordingly, many firms develop and market products espe- cially aimed at members of a particular profession. As your textbook notes, many pharmaceutical companies target doctors in their marketing strategy.

Geodemographic Segmentation

Through integrating geographic and demographic variables, marketers identify an even more-focused description of a segment than either of the two characteristics considered separately. Geodemographic segmentation means segmenting a market by honing in on data on neighborhoods, ZIP codes, or census reports, under the assumption that consumers in particular cluster systems will behave similarly. This type of segmentation is especially valuable for highly directed, precise marketing.

Over the years, several geodemographic analysis systems have been developed. One of the earliest, known as Potential Rating Index by Zip Market (PRIZM), combines data from census records, past purchasing behavior, media preferences and other factors, along with zip codes to identify extremely precise seg- ments. Other systems include CACI, ACORN, ESRI Tapestry, and PersonicX.

Psychographic Segmentation

Psychographic segmentation divides a market into groups according to factors such as self-values, self-concept, and lifestyle. Psychographic profiles are most commonly identified through large-scale surveys aimed at determining people’s

Lesson 1 19

activities, interests, and opinions, which are commonly referred to as AIO inventories. A more recently developed technique, known as attitudinal data framing, uses information drawn from a firm’s computer database to determine the motivation behind purchase decisions. One of the most broadly employed psychographic survey tools is VALS, which identifies consumer segments in terms of eight different clusters.

Behavioral Segmentation

Behavioral segmentation means differentiating consumers into segments based on their attitudes toward or reaction to a product. These behavioral factors include

■ Usage rate, the frequency or quantity in which people purchase or use a specific product or service

■ Benefits sought, an evaluation of the different benefits consumers seek as they examine similar products or services

■ Brand and store loyalty, the tendency to purchase goods or services exclusively from a particular company or store

■ Marketing tactic sensitivity, the response to various types of marketing tactics, such as perception of quality, coupons, promotions, customer service, advertising appeals, and salesperson interaction

Market Targeting

The analysis that goes into market segmentation results in a market profile, a detailed representation of the various segments within the broader market, the characteristics of members of each segment, and the position of competitors within each segment.

Dividing the total market into smaller, relatively homogeneous groups, or segments, is necessary for a marketer to focus on and plan strategies for targeting specific market groups. Once the market is segmented, the firm must then decide which of those segments is attractive enough and sufficiently feasible to target. Due to variations in size, resources, technical capacity,

Consumer Behavior20

and marketing capabilities, firms typically aim to fit their business attributes and models to the needs and wants of consumers as precisely as possible.

For targeting to be successful, firms must determine the overall marketing-target strategy and goals. The four main strategies are

■ Undifferentiated

■ Multisegment

■ Concentration

■ Customization

Undifferentiated Strategy

An undifferentiated strategy entails an approach to the marketplace as a single, homogeneous arena offering products or services understood as providing the same benefits to all consumers. This approach is best suited to marketing staples such as corn, wheat, flour, sugar, and salt. It’s also useful when introducing new products into the market where com- petition is negligible. Production, distribution, and other costs can be contained through this strategy, but as seen in the case of the Model-T, undifferentiated targeting can make firms vul- nerable as competitors enter the field and offer more variety and other differentiating factors.

Multisegment Strategy

A multisegment strategy targets several segments and offers a different marketing mix to appeal to each segment. Automobile firms, for example, can offer vehicles aimed at a variety of segments by adjusting all marketing mix elements (including product design and function, price, and promotion) to suit the needs and preferences of various segments. Technology firms like Apple can offer a variety of products that attract different segments.

Offering diverse product lines to serve multiple segments can reduce market risk. Declines in some segments can be offset by gains in others. However, the business costs associated with developing and marketing a diverse line often escalate

Lesson 1 21

exponentially according to the variety of products offered. Even so, targeting products that appeal to the characteristics of a particular segment can allow firms to charge a premium price.

Concentration Strategy

Using a concentration strategy means focusing all a firm’s resources on delivering a product or set of products specifically aimed at meeting a particular segment’s needs and wants— for example, marketing clothing for tall or large men. The advantages of employing a concentration strategy include gaining a dominant share of a particular market and mini- mizing operating costs. The risks associated with such a strategy include a decline in the segment as a whole, a shrinking of the segment’s purchasing power, changes in consumer tastes, or the entrance of a strong competitor.

Customization Strategy

A customization strategy is a specialized approach aimed at satisfying the wants and needs of a single customer through a “custom designed” offering. This approach can be seen in neighborhood stores that cater to local customers. It’s also seen in the targeted ads that now appear in many online sites, which draw from large databases of information gathered from online interactions.

In recent years, some firms have moved toward a mass customization strategy, integrating technological know-how and customer input to provide products and services to the needs and preferences of individual customers. Many computer manufacturers, for example, allow customers who visit their sites to “build” their own computers, offer upgrades and accessories, and provide the opportunity to “chat” with representatives. Some firms go even further, offering options for personalization, allowing customers to customize their products in a way that uniquely meets their needs and preferences.

Consumer Behavior22

Targeting Considerations

Few firms enjoy unlimited resources, so choosing the most viable target market or markets to serve is one of the most important tasks marketers face. Several criteria must there- fore be considered when making this decision, including

■ Size: Is the segment large enough to merit the costs and labor of the targeting effort?

■ Potential: Is there a genuine need for the product or service among consumers in a particular segment, together with customer willingness and resources to purchase it?

■ Measurability: Can the firm obtain reliable information about the size, nature, behavior, and profitability of the segment?

■ Accessibility: Can the firm reach segments through advertising programs or distribution channels?

■ Compatibility: Do the products or services and marketing mix fit the firm’s objectives, resources, and other capacities?

■ Stability: Is the segment growing or at least enduring?

■ Defendability: Can the firm withstand the emergence of a strong competitor?

Positioning

Marketers use product positioning to create and maintain an image that uniquely identifies a product or service and distinguishes it from the competition in each segment they wish to reach. Positioning strategies may include differentia- tion based on value, distinctive product attributes, unique symbols that define a product, and/or the relationship of a brand, product, or service to something similar offered by a competitor.

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When developing a positioning strategy, many firms create a perceptual map to distinguish a product in the minds of con- sumers. Exhibit 2.4 on page 65 illustrates a perceptual map for images of pain relievers. Additionally, when positioning a product, marketers typically focus on one or more distin- guishing features as a basis. The four most important criteria noted in your textbook are desirability, uniqueness, visibility, and affordability.

Irrelevant Attributes and Positioning

Irrelevant attributes are characteristics that appear to distin- guish a product from a similar one. For example, soaps may be distinguished by their scent or color, which doesn’t really impact their effectiveness. In the short term, irrelevant attrib- utes may boost sales, but over time their effectiveness as an incentive often diminishes in the face of competition.

Selecting a Unique Selling Proposition

When firms select and focus their marketing efforts on a single benefit that distinguishes a product or service, they’re employ- ing what’s known as a unique selling proposition (USP). As your textbook notes, Volvo has highlighted its excellent safety record as a feature across all of its marketing materials. This focus has established Volvo in the minds of consumers as number one in safety along with what some researchers refer to as a mental product ladder. Another USP is creating a personality for the brand or product, which serves as the basis for a large promise of benefits for the customer.

Repositioning

Of course, it’s possible that the competitive environment may change. If that happens, marketers must adapt their positioning strategies and reposition the brand by modifying its formulation, emphasizing new or different uses or benefits, or changing the brand image or design. Repositioning is typically supple- mented through promotion, advertisement, and different pricing strategies. Communication efforts, which can be quite expensive and time-consuming, are also critical to a repositioning effort.

Consumer Behavior24

Review any material you found difficult. Then complete Self- Check 2 and Chapter 2 Homework. Check your answers with those provided. Review the material for any of the questions you missed.

After you complete Self-Check 2 and Chapter 2 Homework, review any material from Assignments 1 and 2 that you found difficult. When you’re sure you understand the information covered in Lesson 1, take the examination.

When you complete the exam, you’ll be ready to begin Lesson 2.

Key Terms

Term Page

mass-market strategy 41

market segmentation 41

market targeting 41

positioning 42

geographic segmentation 44

demographic segmentation 45

geodemographic segmentation 50

psychographic segmentation 54

AIO inventories 54

behavioral segmentation 55

market profile 57

undifferentiated strategy 58

multisegment strategy 59

concentration strategy 61

customization strategy 61

mass customization 61

personalization 62

perceptual map 64

repositioning 66

Lesson 1 25

Self-Check 2

Questions 1–5: Indicate whether each of the following statements is True or False.

______ 1. Market targeting is the act of dissecting the overall marketplace into a number of sub-

markets that may require different products or services and thus can be approached

with different marketing mixes.

______ 2. A manufacturer that subdivides the market based on age is using

demographic segmentation.

______ 3. A retailer who subdivides the market by stage in the family life cycle is using

behavioral segmentation.

______ 4. PRIZM, ESRI Tapestry, and PersonicX are all basic geodemographic

segmentation systems.

______ 5. In a concentration targeting strategy, the company individualizes its products and

services to meet each customer’s specific requirements.

(Continued)

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Self-Check 2

Questions 6–10: Select the one best answer to each question.

6. A _______ strategy is based on the assumption that there’s a single, large, homogeneous marketplace with common needs.

a. multisegment c. concentration b. mass market d. customizing

7. A health club that targets persons who enjoy aerobics employs _______ segmentation.

a. demographic c. geodemographic b. geographic d. psychographic

8. An undifferentiated targeting strategy would most likely be used when a

a. product is relatively new to the marketplace. b. product’s price is higher than the competing products. c. product faces intense competition. d. product is heavily advertised.

9. Factory 121, a Swiss watch company, established a website where customers can create and design their own individually made Swiss timepieces in a fun and playful manner. This manner of conducting business exemplifies a(n) _______ strategy.

a. undifferentiated c. concentration b. multisegment d. mass customization

10. A product’s _______ refers to the manner in which it’s perceived by consumers in relation to similar products offered by the competition.

a. position c. portrait b. market share d. placement

Check your answers with those on page 139.

Individual Influences on Behavior

ASSIGNMENT 3 Read this introduction. Then read Chapter 3, “Consumer Perception” pages 73–106, in your textbook, Consumer Behavior.

Chapter 3 examines the vital role perception plays in shaping consumer behavior. As you read through the material, you’ll learn about the various stages of the perception process, as well as factors that influence perception itself.

What Is Perception?

Your textbook begins with a basic definition of perception, which is understood as the process of selecting, organizing, and interpreting sensations into a meaningful whole. As is pointed out, perception is subjective and can be manipulated or altered by many factors. Understanding the dynamics of perception is critical to developing a successful marketing plan.

Exposure, Attention, and Sensation

The fundamental building blocks of perception are three interrelated experiences. The first is exposure, or the act of deliberately or accidentally coming into contact with environ- mental stimuli. The second is attention, which is directing the mind to a stimulus or a task. The third is sensation, a process that involves receiving input from the sensory receptors (eye, ears, nose, mouth, and touch) and the transmission of this information to the brain through the nervous system.

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Sensory Systems

Exhibit 3.1 on page 78 illustrates the process of perception— that is, the relationship between the sensory organs, the sense faculties (such as sight, smell, and taste) and the processing and interpretation of sensory stimuli. The material in this section examines in detail the role and importance of each area of sensory perception.

For example, research indicates that nearly 80 percent of the information we receive from our environment is visual. This is a key understanding in product design, as well as develop- ing marketing or promotional materials that attract interest. Likewise, smell plays a significant role, especially in arousing emotional responses and triggering memories.

The role of taste is understandably central in the success of introducing or repositioning a food or beverage. Sound, meanwhile, plays a key role in influencing consumer perception. In-store announcements and spoken tag-lines in television and radio advertisements can be instrumental in shaping consumer responses; while music, skillfully utilized in retail or restaurant settings and advertising, can greatly impact consumer experience. Touch also plays a vital part in con- sumer behavior, particularly regarding items like clothing and furniture, where the feel of fabric, wood, and other mate- rials often determines the choice of one product over another.

While the five senses are necessarily explained separately, they’re actually closely interrelated. For example, the sense of taste often works with the sense of smell. In some instances, all five senses are so deeply integrated that they function as a sort of sixth sense, an experience referred to as synesthesia.

Input Variation and Its Effect on Sensation

Variations in the amount, variety, and intensity of sensory input can have a profound effect on consumer behavior. People tend to become more sensitive in environments where stimuli are minimal. This insight helps us to understand why people tend to just ignore advertisements when confronted with too

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many promotional messages—a situation referred to as perceptual overloading. In such situations, a capacity known as perceptual vigilance—an automatic ability to filter out sensory stimulation—takes over.

Perceptual Selectivity

Most of us are capable of filtering the massive amounts of stimuli we receive through our environment on a daily basis—a key factor in understanding consumer behavior. For example, we demonstrate selective exposure—the tendency to ignore media or advertising related to topics unimportant to us—and pay selective attention to information that interests us, while disregarding information that isn’t relevant to our needs and concerns. The influences on perception are illustrated in Exhibit 3.2 on page 85.

Two other processes play important roles. Perceptual defense blocks stimuli that adversely impact our beliefs or self-image. Selective sensitization, meanwhile, predisposes us to be open to stimuli that conform to our needs, preferences, and desires.

After our attention has been engaged by stimuli, we go through a process of consciously interpreting our perceptions. At this point, our perceptions begin to be weighed against memory and experience as a means of determining its relevance and emotional effect, a process referred to as selective interpretation.

The processes involved in perceptual selectivity present cer- tain challenges to marketers, who must find creative ways to engage consumers’ attention. This effort is especially critical in today’s marketplace, where consumers are bombarded with advertising and enjoy the capability of skipping or fast- forwarding through television advertisements or blocking online ads. In addition, they must contend with adaptation, which is the capacity to simply filter out stimuli with which people have become overly familiar.

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Stimulus and Individual Factors of Perception

Consumer perceptions are heavily influenced by the shape, size, scent, color, or taste of a product—the physical attrib- utes that attract or direct attention, which are collectively referred to as stimulus factors. Additionally, perceptions are influenced by individual factors, such as a consumer’s needs, goals, experiences, expectations, and lifestyle. One important individual factor is attention span. People can pay attention only to a small number of inputs at a time, generally collected in what are known as chunks, organized groups of information.

Research into the ways that consumers process information to form perceptions indicates two distinct pathways. Bottom- up processing begins with registering the stimulus factors, which are then sorted and organized in higher regions of the brain, and ultimately registered in long-term memory as a distinctive whole. Conversely, top-down processing begins with individual factors—such as memories, needs, interests, beliefs, expectations—that then influence the consumer’s per- ception of the meaning of a stimulus. Both pathways are illustrated in Exhibit 3.3 on page 89.

Threshold Levels

From studies of the relationship between sensory stimulation and sensation, researchers conclude that each of the five sen- sory faculties—sight, hearing, smell, taste, and touch—has limits in terms of its ability to respond to the intensity of stimuli. Three such limits, or thresholds, have been identified:

■ The absolute threshold—the lowest level of intensity at which a stimulus may be detected

■ The terminal threshold—the maximum intensity of a stimulus, beyond which no greater sensation is detected

■ The differential or just-noticeable difference (JND) threshold—the smallest increase in intensity that a person can detect