case study
johnnys996
4.BuyerBehavior1.pptxConsumer and Organizational
Buying Behavior
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This a great cartoon of the evolution of what Erich Fromm (social philosopher) tongue-in-cheek called Homo Consumens
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Chapter 7: Analyzing Business Markets
Chapter 6: Analyzing Consumer Markets
Marketing Planning Process
Analyze the Marketing Environment
Analyze Company Strengths & Weaknesses
Analyze the Competitive
Environment
Analyze Customers (Behavior)
Segment customers.
Target segments with unmet needs or weak competitors.
Differentiate and Position your brand
Design an integrated Marketing Mix (4P strategies). How will it change over the PLC
Implementation Plan, Roll-out
Control
Performance Metrics and Measurement Plan Evaluation
Corrective Action
So where are we in our master framework of the Marketing Planning process ?
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Factors Affecting Consumer Behavior
Culture
Sub-
culture
Social
class
Reference
groups,
social
networks
Family
Roles &
status
Age and
life-cycle
Occupation
Economic
situation
Lifestyle
Personality
and
self-concept
Motivation
Perception
Learning
Beliefs and
attitudes
Decision
process
Situation
factors
PERSONAL
CULTURAL
SOCIAL
PSYCHO-
LOGICAL
BUYING
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US moving from a melting pot society to a
salad bowl society with many subcultures
SUBCULTURES
Hispanic
Americans
59 mil $1.7 tril
African
Americans
47 mil $1.5 tril
Asian
Americans
20 mil $1 tril
Cross
cultural
marketing
Book discusses ethnic sub cultures. Numerous companies from Autos, personal care, fast food, retail etc. have ethnically targeted campaigns
Hispanics will grow to 29 % of pop in 2060. There are strong country of original loyalties. Surprising behaviors—35% of Twitter users are Hispanic vs 18% of the rest.
African Americans growing in affluence and sophistication. Heavy users of digital and social media.
Asia Americans are a very diverse group from many countries. Most affluent and most educated.
In very recent years big growth in Cross cultural marketing (text calls “total marketing strategy”) featuring interracial and blended couples and families.
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SOCIAL CLASS
Upper Uppers 0.3%
Lower Uppers 1.2%
Upper Middle 12.5%
Inherited wealth. Cultural products. Reference group for LU.
Earned wealth. Conspicuous consumption.
Career professionals. Deal in ideas. Functional quality market.
Middle Class 32%
Working Class 38%
Upper Lowers 9%
Lower Lowers 7%
White, gray, “aristocratic” blue collars. Middle class morality.
Neat & Pretty homes. Buy “popular” brands.
Blue collar. Traditional sex-roles & stereotypes. Heavy peer
influence in brand choice.
Unskilled labor, low education, just above poverty.
Buy impulsively, unwisely.
Visibly poor, on welfare. Resigned, reject middle-class values.
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Text doesn’t cover social class in any detail. But for your quick reference this is the way social class has been described for many many years. The percentages are merely figurative in this day and age. There is considerable movement across classes in beliefs and behaviors. I have grouped then in three broad groups which are more useful today
US middle class shrank from 61% in 1971 to 51% in 2011 and has been stable the past 10 years. But middle markets have taken a beating.
PEW Research Center data
Population: Share of US adults living in middle-income households decreased from 61% in 1971 to 51% in 2019.
PEW Research Center data
Projections
Strategic Q1: What is the Impact of a Smaller US Middle Class on the Market?
Smaller middle class = Declining middle brands:
Lower End Middle Brand Premium
Hyundai Chevrolet Lexus
Wal-Mart Sears Nordstrom’s
Days Inn Holiday Inn Four Seasons
We talked about this.
The values of the middle market are also getting pulled toward successful brands in the polar markets. This is exacerbated by high quality Value brands and downward stretch of luxury brands. Middle brands increasingly look like being stuck in Porter’s “middle”.
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Middle market is shrinking but still substantial.
Yet it is increasingly difficult to come up with
a viable middle-market positioning strategy.
WHY?
Quality
Value-brands
Downward
stretch of
Luxury-brands
Middle
brands
The values of the middle market are also getting pulled toward successful brands in the polar markets. This is exacerbated by high quality Value brands and downward stretch of luxury brands. Middle brands increasingly look like being stuck in Porter’s “middle”.
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Q2: What is the Impact of a Growing Global Upper Middle Class?
Transformation of the Luxury Niche into a
$157 bil Global Mass Market dominated by Louis Vuitton, Gucci, Prada, Giorgio Armani, Hermes and Chanel
Predicted
to be 44%
by 2020
We also talked about this.
Partly due to global Gen Y, and partly leap frogging traditional mid class values.
China 33% of world luxury market in 2018, predicted 44% by 2020 (US was 22% in 2017 down 1% from 2016).
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REFERENCE GROUP INFLUENCE
SEEK TO
BELONG TO
MEMBERSHIP
REFERENCE
GROUP
ASPIRATIONAL
REFERENCE
GROUP
DISSOCIATIVE
REFERENCE
GROUP
Conformity
AVOID
EMULATE
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1. The typical influence of membership groups is “conformity.” But in some groups, such as Family, there is also pressure to be independent/individual in some ways.
3. E.G.: In a more “youthful” culture, a lot of medical ads still tend to use older spokespersons? AGE is a dissociative factor in many health care situations. As it is, denial is a common barrier in seeking HS. Many “younger” consumers are inclined to feel “I am too young to worry about that kind of a problem.”
GROUP DYNAMICS
Cliques
Closeness
Conformity
Opinion Leaders
Mavens
Bridges
Connectors
Salesmen
Bees
Strength of Weak Ties—Mark Granovetter
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1. The typical influence of membership groups is “conformity.” But in some groups, such as Family, there is also pressure to be independent/individual in some ways.
3. E.G.: In a more “youthful” culture, a lot of medical ads still tend to use older spokespersons? AGE is a dissociative factor in many health care situations. As it is, denial is a common barrier in seeking HS. Many “younger” consumers are inclined to feel “I am too young to worry about that kind of a problem.”
CELEBRITY ENDORSEMENTS ASPIRATIONAL REFERENCE GROUP INFLUENCE
Most Expensive Celebrity Ad Campaigns
George Clooney for
Nespresso. $40-60 mil
Beyonce Knowles
for Pepsi. $50 mil
Michael Jordan also $60 mil for Nike.
George Clooney, reportedly 60 million for Nespresso
For single ads between 500k and 2 mil
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INFLUENCER MARKETING Word of Mouth on Social Media
Companies spending $100 bil per
year on influencer marketing
Reportedly businesses make an
average of $6.50 for every 1$ they
spend on influencer marketing
Kylie Jenner, $1 mil
per post
Disney’s Social Media Mom’s
Celebration in Orlando
Caveat: 90% of WOM is still
offline (75 face to face, 15 on phone)
The social media include Instagram, Facebook, Twitter, Pinterest and Youtube
Kylie Jenner has 250 mil followers on social media
Disney invites 150-200 moms of their carefully selected 1300 bloggers, and their families to Orlando each year
We have a Guest Speaker Amanda Mizrahi on April 8 who is an expert on Influencer Marketing
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Psychological Factors Affecting Consumer Behavior
Culture
Sub-
culture
Social
class
Reference
groups
Family
Roles
&
status
Age and
life-cycle
Occupation
Economic
situation
Lifestyle
Personality
and
self-concept
Motivation
Perception
Learning
Beliefs and
attitudes
Decision
process
Situation
factors
PERSONAL
CULTURAL
SOCIAL
PSYCHO-
LOGICAL
BUYING
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Motivational Research
Rational vs. Subconscious
90% of behavior is driven by subconscious forces
Old marketing saying:
sell the sizzle, not the steak
Source Zaltzman, Harvard
Neuroscience research shows that people whose brains are damaged in the area that generates emotions are incapable of making decisions
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Freudian Psychoanalysis
“Freud on Madison Avenue” published in 2010 looks back into the development and evolution of motivational research since the 1950s.
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Ernest Dichter’s research:
Consumers resist prunes because prunes are
wrinkled looking and remind people of old age.
Men smoke cigars as an adult version of thumb
sucking.
Women associate baking with giving “birth.”
In 1957 subliminal ads (James Vicary):
"Eat Popcorn”
“Drink Coca-Cola”
increased popcorn sales 57.8%, Coke 18.1%
Subliminal Processing?
In 1957 James Vicary inserted a frame "Eat Popcorn" and "Drink Coca-Cola" into a movie for a split second.
The subliminal ads supposedly created an 18.1% increase in Coke sales, popcorn increased 57.8%. This was later discredited (some said it was a hoax).
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Learning Theory: Classical Conditioning, Stimulus-Response
Pavlovian Learning Model
Stimulus—Gratification—Conditioning—Learned
Response
Does stimulus-response work? Are we like animals? Well if you see who often advertisiers use "frequency" campaigns with much concentrated repetition, it must work !
But the alternate model is the attitude-behavior, or reasoned action model.
Early meta analysis study showed correlation of attitude behavior to be 0.38 but statistically very significant.
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Theory of Reasoned Action
Beliefs, Attitude, Behavioral Intentions
Subjective
Norms
Attitude
Behavioral Intentions ˜ Behavior
Developed Fishbein and Ajzen iin 1975 as a theory of moral behavior.
Subjective norms are about the social norms of behavior we believe are expected from us by family, friends, reference groups, and society in general.
Early (Wicker 1969) study showed average correlation to be only 0.15 (max 0.30). After refinement ad elaboration of model, meta analysis study (Kraus 1995) showed correlation of attitude behavior to be 0.38, statistically very significant but r-square still only comes to 0.14 i.e., explains only 14 % of behaviors.
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Information Processing Theory
Info processing theory is a rational model but is based on underlying mechanisms of subconscious and conscious processing, not just manifest phenomena.
Note again the importance of “frequency” rehearsal/repetiton
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Newest Phenom: Neuromarketing
New Technologies: fMRI (Functional Magnetic
Resonance Imaging) SST (Steady State Topography) EEG (Electroencephalography)
Eye Tracking Galvanic Skin Response
VIDEO
Picture left bottom is hyperlinked
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Subliminal Processing is Back?
“Priming”
Freudian motivation is back?
Amygdala
Rational ?
Emotional ?
The amygdala is the “primitive” brain responsible for emotions, survival instincts, and plays a role in sexual activity and libido, or sex drive.
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Highly successful Axe ads
In your face sexual
What about subliminal ads?
Magazine ads featuring sex
are on the rise.
business.com Jun 25, 2021
Thanks to social media, which reduces inhibitions
Article is reporting on a study from Georgia Univ.
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But what about subliminal ads?
Sex Symbol?
Appeals to our reptilian brain?
Appeals to our reptilian brain?
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“sex” plosion
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http://www.youtube.com/watch?v=erp-MQc1ubQ
Swensen’s Icecream
Photo is hyperlinked to http://www.youtube.com/watch?v=erp-MQc1ubQ
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“Priming”
Group 1 (left): https://forms.gle/hh3FPS1XscsLmx1R9
Group 2 (right): https://forms.gle/BD6rrCtgpS2A53BS8
Freudian motivation is back?
Quick read on priming on the Internet:
https://alldgt.com/priming-in-marketing/
Subliminal Processing is Back?
Priming are hidden or subtle cues embedded in words or pictures to trigger subconscious connections in the brain. Most Ads try to do this by using conscious or visible cues. But priming is subconscious. It’s the old subliminal drink coke, eat popcorn thing again. Works even in conscious cues. Person 1 is considered in a positive likeable way. Person 2 perceived in a negative way. Psychologist Malcolm Gladwell entire book on priming.
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Psychological Factors Affecting Consumer Behavior
Culture
Sub-
culture
Social
class
Reference
groups
Family
Roles
&
status
Age and
life-cycle
Occupation
Economic
situation
Lifestyle
Personality
and
self-concept
Motivation
Perception
Learning
Beliefs and
attitudes
Decision
process
Situation
factors
PERSONAL
CULTURAL
SOCIAL
PSYCHO-
LOGICAL
BUYING
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Consumer Decision Processes
Five Stage Model of Consumer Decision Making
Heuristics: Expectancy Value model,
Conjunctive, Lexicographic, Elimination rules
Conjunctive = minimum acceptable levels of attributes
Lexicographic = most important attribute
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Consumer Behavior on the Internet
Omnichannel
eWoM
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UGC
User
Generated
Content
Customer
Service
End Note ?
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Buyer Behavior in Business Markets
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Buyer Behavior in Business Markets
Market
Structure
And
Demand
Concentration: fewer, larger buyers
Geographically concentrated
Derived Demand
Buyer and seller more
dependent on each other
Build close long-term
customers relationships
Characteristics of Business Markets
1. Market Structure and Demand
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2. Nature of the Buying Unit
Professional purchasing
Complex buying influences
Buying
Center
Who would you direct
your marketing activities to
in an organization?
More Rational
Less Emotional
Inelestic dd
System buying
Service
Buying Influences
New Models of B2B
Joint Innovation
“Supplier Development”
Relationships
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Supplier Development Dept not Purchasing Dept. at Walmart
Maersk and IBM: Use of the same social media sites used in B2C marketing
New Models of B2B
Relationships
“Supplier Development”
Joint innovation
e-Procurement
Trading platforms
Social Media
590 million business professionals
Its content nabs 9 bil views per week
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Maersk and IBM illustrations. Use of the same social media sites used in B2C marketing
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