Exam 2: Chapters 6-10 Flashcards
Consumer Behavior
processes a consumer uses to make purchase decisions, as well as to use use and dispose of purchased goods or services; also includes factors that influence purchase decisions and product use.
Consumer decision-making process
a five step process used by consumers when buying goods or services
1) Need recognition
2) Information search
3) Evaluation of alternatives
4) Purchase
5) Post-purchase behavior
Need recognition (consumer decision making process)
result of an imbalance between actual and desired states
Information search (consumer decision making process)
internal information search: process of recalling past information stored in memory
External information search:process of seeking information in outside enviornment
Nonmarketing: controlled information source-a product information source that is not associated with advertising or promotion
Marketing: controlled information source-a project information source that originates with marketers promoting the product
Evoked set (consideration set): a group of brands resulting from an information search from which a buyer can choose.
Evaluation of alternatives
consumer decision making process
Series of decisions that decide if you purchase
- whether to buy
- when to buy
- what to buy (product type and brand)
- where to buy (type of retailer, specific retailer, online, in store, etc)
- how to pay
Purchase (consumer decision making process)
buy it
Post-purchase behavior (consumer decision making process)
cognitive dissonance. self doubt/second guessing yourself
ex: professor wanted to buy a car, had 3 options, settled on a Mazda because the warranty and cloth seats. As soon as he drove off the car lot with his new car, he saw another car on the freeway and got upset that he bought the Mazda over the other car.
Cognitive Dissonance
inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions
Customer Relationship Management (CRM)
All consumer buying decisions generally fall along a continuum of three broad categories: routine response behavior, limited decision making, and extensive decision making
- level of consumer involvement
- length of time to make a decision
- cost of the good or service
- degree of information search
- number of alternatives considered
Routine Response Behavior (CRM)
the type of decision making exhibited by consumers buying frequently purchased, low cost goods and services. Requires little search and decision times
Limited Decision Making (CRM)
the type of decision making that requires a moderate amount of time for gathering information and deliberating about an unfamiliar brand in a familiar product category.
Extensive Decision Making (CRM)
the most complex type of consumer decision making, used when buying an unfamiliar, expensive product or an infrequently bought item; requires use of several criteria for evaluating options and much time for seeking information
Factors determining level of consumer involvement (CRM)
- Previous experience:
- interest
- perceived risk of negative consequences
- social visibility
- product involvement
- situational involvement
- shopping involvement
- enduring involvement
- emotional involvement
Previous experience
Factors determining level of consumer involvement (CRM)
because consumers are familiar with product and know whether it will satisfy their needs, they become less involved in purchase. (ex: professor not wanting to try new food places because he’s found everywhere he likes to eat)
perceived risk of negative consequences
Factors determining level of consumer involvement (CRM)
financial, social (he won’t wear bell bottoms because he knows he’ll be laughed at), Psychological (trying to lose weight, deciding on whether to get ice cream or donuts when knowing he shouldn’t.)
social visibility
Factors determining level of consumer involvement (CRM)
where you want to be seen, looking to show off
product involvement
Factors determining level of consumer involvement (CRM)
product category has high personal relevance (you like a certain brand)
situational involvement
Factors determining level of consumer involvement (CRM)
circumstances of purchase may temporarily transform a low involvement decision into a high-involvement situation (ex mothers day, you buy your mom an expensive bottle of wine she likes)
shopping involvement
Factors determining level of consumer involvement (CRM)
personal relevance of process of shipping ( showrooming: practice of examining merchandise in a physical retail location without purchasing it, then shopping online for a better deal on the same item)
enduring involvement
Factors determining level of consumer involvement (CRM)
ongoing interest in some product, such as kitchen gadget
emotional involvement
Factors determining level of consumer involvement (CRM)
represents how emotional a consumer gets during some specific consumption activity
Factors that affect consumer decision making
- cultural factors
- social factors
- individual factors
- psychological factors
Cultural Factors (Factors that affect consumer decision making)
- Culture and values
- subcultures
- social class
Culture and values (Cultural factors, consumer decision making)
the set of values, norms, attitudes, and other meaningful symbols that shape human behavior and the artifacts, or products, of that behavior as they are transmitted from one generation to the next
- culture is pervasive: values and influences are different, but it’s everywhere around you
- culture is functional: how you learn to behave
- culture is learned: you learn the culture tat you grow up in
- Culture is dynamic- changes all the time
the most defining element of culture is value
-value: the enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct
Subculture (Cultural factors, consumer decision making)
homogeneous group of people who share elements of the overall culture as well as unique elements of their own group
Social class (Cultural factors, consumer decision making)
group of people in a society who are considered nearly equal in status, or community esteem, who regularly socialize among themselves both formally and informally and who share behavioral norms.
- Capitalist class: income mostly inherited
- Upper middle class: self-made- bill gates is technically this bc his money wasn’t inherited and he’s self-made
- Middle class: income somewhat above national average, loss of manufacturing jobs reduced this class
- Working class: income below national average. skilled or semi-skilled service jobs
- Working poor: work but still can’t survive
- Underclass: not regularly employed and depend on welfare
Social Factors (Factors that affect consumer decision making)
- reference groups
- opinion leaders
- family
Reference groups (Social factors, consumer decision making)
all the formal and informal groups in society that influence an individual’s purchasing behavior.
Direct:
-Primary reference group: group which people interact with regularly in an informal, face-to-face manner such as friends or family or coworkers -Secondary reference group: reference group with which people associate less consistently and more formally than a primary membership group such as a club, professional group, or religious group. classmates, barely know each other but know that you’re all here for same purpose
Indirect:
- Aspirational reference group: someone would like to join. You’d like to be a dodger
- Nonaspirational reference group: group with which an individual does not want to associate, kkk, etc.
Opinion leaders (Social factors, consumer decision making)
individual who influences the opinion of others.
ex: Epert and Ropert, the movie critics.
Family (Social factors, consumer decision making)
Socializing process: how cultural values and norms are passed down to children
Individual Factors (Factors that affect consumer decision making)
-gender (masculine/feminine specific products)
-age and family
(–Life cycle stage: stage you are in with your family: Married with kids, married without kids, single, widow, etc.
–Nontraditional life cycle:
Divorced, gay, etc
–Life events: Start college, finish college, have first baby, etc)
- personality (way of organizing and grouping consistencies of an individual’s reactions to situations:
- -Self-concept: how consumers perceive themselves in terms of attitudes, perceptions, beliefs, and self-evaluations
- -Ideal self-image: way an individual would like to be perceived
- -Real self-image: way individual actually perceives himself or herself)
Psychological Factors (Factors that affect consumer decision making)
- perception
- motivation
- learning
- beliefs and attitudes
Perception (Psychological factors, consumer decision making)
Perception: process by which people select, organize, and interpret stimuli into a meaningful and coherent picture.
-One of the most important and difficult things for marketers to overcome. If you think in-n-out has the best hamburger, no matter how often I tell you that the habit is good, you won’t care because you already picked your favorite and it’s hard to get you to change your mind
- Selective exposure: the process whereby a consumer notices certain stimuli and ignores others
(ex: He’s an idiot and a republican, so he sets himself up to not even listen to democratic side of things. We choose what we want to listen to) - Selective distortion: a process whereby a consumer changes or distorts information that conflicts with his or her feelings or beliefs
(ex: Listening to political speech, you distort what other person says. If half the class is democrat and hears Obama speaking about jobs, we call him innovative and great, other class is republican and says he lies, etc. ) - Selective retention: whereby a consumer remembers only that information that supports his or her personal beliefs
(ex. You’ll remember bad things about democrats, but won’t remember the good things)
Motivation (Psychological factors, consumer decision making)
Motivation: driving force that causes a person to take action to satisfy specific needs
- Maslow’s hierarchy of needs: popular theory about what drives people’s particular needs at particular times; it arranges needs in ascending order of importance:
- Physiological: food, water, sex
- Safety: security, protection
- Social : sense of belonging, love
- Esteem: self-esteem, recognition, status
- Self-actualization - self-development, self-realization
Learning (Psychological factors, consumer decision making)
Learning: process that creates changes in behavior, immediate or expected, through experience and practice. Every time we shop we learn and our credit card companies learn about us (RFM)
- Stimulus generalization: form of learning that occurs when one response is extended to a second stimulus similar to the first.
(ex: Heinz ketchup: stores copy the design as much as they can. Make it look the same for cheaper price and steal business from other brands) - Stimulus discrimination: learned ability to differentiate among similar products
(ex: Try not to look like other company, try to stand out)
Beliefs and attitudes (Psychological factors, consumer decision making)
Belief: organized pattern of knowledge that an individual holds as true about his or her world
Attitude: learned tendency to respond consistently toward a given object
Business marketing (industrial, business to business, B-to-B, or B2B marketing)
the marketing of goods and services to individuals and organization for purposes other than personal consumption
Business product (industrial product)
a product used to manufacture other goods or services to facilitate an organizations operations or to resell to other customers.
Consumer product
a product bought to satisfy an individuals personal wants and needs
Key characteristic between consumer good and business good
intended use. not the form, shape, or size.
ex: Professor used to run chemical company that sold chlorine, bleach, etc for pools, sold bleach to ralphs, that’s business to business. Ralphs sold to consumers, making it a consumer product/good.
Professor sold same bleach to that company timothy mcvay shot up. That company used it to clean their facilities. That makes it a business good.
Same product can be business or consumer, just depends on how they’re gonna use it.
B2B Electronic Commerce
the use of the internet to facilitate the exchange of goods, services, and information between organizations
- Gets rid of intermediary -disintermediation-getting rid of stores
- Reintermediation -companies reopened some stores in areas they know old peeps at so they gain back their business
Stickiness
a measure of a web sites effectiveness; calculated by multiplying the frequency of visits by the duration of a visit by the number of pages viewed during each visit (site reach)
- How frequently do you go, how long do you stay, how many clicks/different pages do you go to when you’re there, tracking cookies (where’d you come from, where ya going)
- Google analytics
Trends in B2B
- going online
- negotiation/contracts are all being done through scanning and emailing now
Strategic alliance/ partnership
a cooperative agreement between business firms
○ Should benefit consumers too
Ex: Ford motor company- JIT ( just in time) - have suppliers deliver stuff to them daily so they don’t have to carry inventory
Ford told tire company they need to be closer to them bc transportation is unreliable, asked them to build a tire plant nearby to ford, built a railroad track between the two, asked them to deliver every morning. Offered them a 15 year contract if they built tire plant nearby. Example of relationship commitment
Ford did the same thing with mirror contractor, asked to go in to their plant (which holds proprietary info) so they can find out how to save money on production. Was okay because relationships have to exist with trust.
Has to have relationship commitment and trust
- Relationship commitment: firms belief that an ongoing relationship with another firm is so important that the relationship warrants maximum efforts at maintaining it indefinitely
- Trust: the condition that exists when one party has confidence in an exchange partner’s reliability and integrity
Keiretsu
network of interlocking corporate affiliates
-Strategic alliance in japan
Categories of B2B
- Producer/original equipment manufacturing (OEM) - individuals and organizations that buy business goods and incorporate them into products they produce for eventual sale to other products or consumer
- Resellers - buy product, own it, then they can do what they want with it/resell it: ralphs, nordstroms, etc
- Government - state, local, federal
- Institutions - universities, churches, hospitals, prisons
North American Industry Classification System (NAICS)
detailed numbering system developed by the United States, Canada, and Mexico to classify North American business establishments by their main production process
Business vs Consumer Market
The basic philosophy and practice of marketing are the same whether the customer is a business organization or consumer.
-demand: derived demand inelastic demand joint demand fluctuating demand/multiplier effect/ accelerator principle:
- purchase volume: business buy huge quantities (100s or 1000s)
- number of customers: millions of consumers in US, but if you’re selling airplane engines you may only have 5 customers
- concentration of customers: more than half ended up up in california, new york, ohio, illinois, michigan, texas, pennsylvania, and new jersey
- distribution structure: B2B business online exchange: electronic trading floor that provides companies with integrated links to customers and suppliers
- nature of buying: formal
- nature of buying influence: a lot of people have a say
- type of negotiations: formal, written documents, etc
- use of reciprocity: basically agreeing to buy from eachother
- use of leasing: lease heavy machinery
- primary promotional method: face to face
Demand (Business to Consumer Market)
Demand: different based on business or consumer. Consumer will buy 1 finished product like a car, business will buy 200,000 steering wheels, etc.
Derived demand: the demand for business product
Professor had to forecast sales and demand for shashta drinks. Trying to figure out demand for a year in advance. Look at previous sales, etc.
Seasonal product, mostly summer, 30% of sales were for 4th of July.
Inelastic demand: very few products are inelastic, increase or decrease in price doesn’t significantly affect demand . Ex: medicine
Joint demand: two or more items are used together in a final product
ex: If camry and corolla still use same air vent you can use it in both? Wtf idk
Fluctuating demand/multiplier effect/accelerator principle: phenomenon in which a small increase or decrease in consumer demand can produce a much larger change in demand for facilities and equipment needed to make consumer product
Ex: plant at 90% capacity, walmart calls and places their first order with you, their order is 20% of your current capacity. Since you’re at 90%, you don’t have room to produce 20% more since you’re already at 90%. You either have to outsource or build another plant. But if you build another plant, you have to pay more employees, rent, all for maybe 20% capacity of a whole new plant.
Types of business products
- major equipment
- accessory equipment
- raw materials
- component parts
- processed materials
- supplies
- business services
Major equipment
Types of business products
- includes capital goods such as large or expensive machines, mainframe computers, blast furnaces, generators, airplanes, and bulidings
- Anything bolted down. Like our desks. Long term depreciation
accessory equipment
Types of business products
goods such as portable tools and office equipment that are less expensive and shorter lived than major equipment
ex: computers, chairs,
raw materials
Types of business products
unprocessed extractive or agricultural products, such as mineral ore, lumber, wheat, corn, fruits, vegetables, and fish
component parts
Types of business products
either finished items ready for assembly or products that need very little processing before becoming part of some other product
ex: Bottle caps
processed materials (Types of business products)
products used directly in manufacturing other products: unlike component parts, processed materials do not retain identity in final product
ex: fluff pulp: soft white absorbent produced from loblolly pine timber, fluff pulp then becomes part of disposable diapers, etc.
supplies
Types of business products
consumable items that do not become part of final product
ex: paper towels, pencils, paper
Business services (Types of business products)
expense items that do not become part of final product
ex: outside providers for janitorial, marketing, advertising, legal, etc.
Buying center
all those people in an organization who become involved in the purchase decision
Roles in buying center
-Initiator: person who first suggests making purchase
(could be anyone)
-Influencers/evaluators- influence the buying decision, often help define specifications and provide information for evaluating options
-Gatekeepers: group members who regulate flow of information
(Secretaries, assistants)
- Decider: person who has formal or informal power to choose or approve the selection of the supplier or brand
- Purchaser: person who actually negotiates the purchase
- Users: members of organization who will actually use product
Implications of buying center for marketing manager
-important to realize and identify who is in decision making unit, each person’s evaluative criteria
Evaluative criteria for business buyers
- Quality
- Service
- Price
Buying situations
New buy: situation requiring the purchase of a product for the first time
Boeing bolt example: boeing puts on government website what they need, what it’s for, etc. companies bid for the job. never had it before, starting from scratch.
-Modified rebuy: situation in which the purchaser wants some change in the original good or service
Boeing bolt example: company goes to boeing and shows them a new titanium bolt, they’re more expensive off the bat, but the product will never have to be replaced, whereas the new ones will never have to be replaced. Boeing buys 80% old ones, 20% new ones, until they can prove the new products worth to themselves.
- Straight rebuy: situation in which purchaser reorders same goods or services without looking for new information or investigating other supplies
Boeing bolt example: need new bolts for new aircraft, they already buy it from the company, they don’t need anything else, nothing is modified, it’s automatic and in the contract to send over more bolts when boeing needs them.
Define market
people or organizations with needs or wants and the ability and willingness to buy.
Market segment
a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs
Market segmentation
the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.
Purpose: enable the marketer to tailor marketing mixes to meet the needs of specific groups.
Few firms practiced it before 1960.
Criteria for Successful Segmentation:
1) Substantiality: a segment must be large enough to warrant developing and maintaining a special marketing mix. Needs enough potential customers to make commercial sense.
2) Identifiability and Measurability: Data about the population within geographic boundaries, the # of people in various age categories, & other social and demographic characteristics are often easy to get and they provide fairly concrete measures of segment sizes. Need to gauge how many potential users.
3) Accessibility: Firm must be able to reach members of targeted segments with customized marketing mixes. Some are hard to reach: seniors, non-english speakers, illiterate.
4) Responsiveness: Markets can be segmented using any criteria that seem logical. If all customers are equally price conscious then there is no need to offer low, medium, and high price versions to different segments.
- this is the thing he mentioned lesbians don’t matter.
