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consumer behavior

The study of when, where, and how people buy things and then dispose of them.

search advertising

Advertising that appears on the Web pages pulled up when online searches are conducted.

C H A P T E R 3 Consumer Behavior: How People Make Buying Decisions Why do you buy the things you do? How did you decide to go to the college you’re attending? Where and how do

you like to shop? Do your friends shop at the same places or different places? How much more likely are you to buy

a product if a bunch of friends “Like” it on Facebook or Instagram?

Marketing professionals that have the answers to those questions will have a much better chance of creating,

communicating about, and delivering value-added products and services that you and people like you will want to

buy. That’s what the study of consumer behavior is all about. Consumer behavior considers the many

reasons—personal, situational, psychological, and social—why people shop for products, buy and use them,

sometimes become loyal customers, and then dispose of them.

Companies spend billions of dollars annually studying what makes consumers “tick.” Google, Yahoo, Facebook,

among other organizations doing business online, monitor your Web patterns—the sites you search, that is. The

companies that pay for search advertising, or ads that appear on the Web pages you pull up after doing online

searches, want to find out what kind of things interest you. Doing so allows these companies to send you popup

ads and coupons you might actually be interested in instead of ads and coupons for things you don’t.

Massachusetts Institute of Technology (MIT), in conjunction with a large retail center, has tracked consumers in

retail establishments to see when and where they tended to dwell or stop to look at merchandise. How was it

done? By tracking the position of the consumers’ mobile phones as they shopped, MIT found that when people’s

“dwell times” increased in certain locations, sales increased, too.[1]

Researchers have even looked at people’s brains by having them lie in scanners and asking them questions

about different products. What people say about the products is then compared to what their brains scans

show—that is, what they are really thinking. Scanning people’s brains for marketing purposes might sound nutty,

but maybe not when you consider the fact that eight out of ten new consumer products fail, even when they are

test marketed. Could it be possible that what people say about potential new products and what they think about

them are different? Marketing professionals want to find out.[2]

Studying people’s buying habits isn’t just for big companies. Small businesses and entrepreneurs can study the

behavior of their customers with great success. By figuring out what zip codes their customers are in, a business

might determine where to locate an additional store. Small businesses such as restaurants often use coupon codes.

For example, coupons sent out in newspapers are given one code. Those sent out via the Internet are given

another. When the coupons are redeemed, the restaurants can tell which marketing avenues are having the

biggest effect on their sales.

F I G U R E 3 . 1 Tony Hsieh, the chief executive of the shoe company Zappos.com, has thousand followers on Twitter and his Zappos blog. Hsieh has made millions selling his shoes solely online.

Source: © Zappos.com, Inc.

Many businesses large and small are using an array of social networking websites and tools to both gather and

disseminate information to their customers at a low cost. One of those companies is Proper Cloth, a New York-

based company dedicated to designing dress shirts for men that fit perfectly. It’s not a company you would think

would have a big online presence. But its founder doesn’t agree. “We want to hear what our customers have to

say,” says Joseph Skerritt, the young MBA graduate who founded Proper Cloth.“It’s useful to us and lets our

customers feel connected to Proper Cloth.”[3] Skerritt also writes a blog for the company.[4]

Environmental factors (such as the economy and technology) and marketing actions taken to create,

communicate about, and deliver products and services (such as sale prices, coupons, Internet sites, and new

product features) may affect consumers’ behavior. However, a consumer’s situation, personal factors, and culture

also influence what, when, and how he or she buys things. We’ll look at those factors in Section 1. Section 2 focuses

on different types of buying decisions and the stages consumers may go through when making purchase

decisions.

1. FACTORS THAT INFLUENCE CONSUMERS’ BUYING BEHAVIOR

L E A R N I N G O B J E C T I V E S

1. Describe the personal and psychological factors that may influence what consumers buy and when they buy it.

2. Explain what marketing professionals can do to influence consumers’ behavior. 3. Explain how looking at lifestyle information helps firms understand what consumers want to

purchase. 4. Explain how Maslow’s hierarchy of needs works. 5. Explain how culture, subcultures, social classes, families, and reference groups affect con-

sumers’ buying behavior.

You’ve been a consumer with purchasing power for much longer than you probably realize—since the first time you were asked which cereal or toy you wanted. Over the years, you’ve developed rules of thumb or mental shortcuts providing a systematic way to choose among alternatives, even if you aren’t aware of it. Other consumers follow a similar process, but different people, no matter how similar they are, make different purchasing decisions. You might be very interested in purchasing a Nissan Leaf, but your best friend might want to buy a Ford F-150 truck. What factors influenced your decision and what factors influenced your friend’s decision?

46 PRINCIPLES OF MARKETING VERSION 3.0

F I G U R E 3 . 2

What’s hot and what’s not on the Web? Individuals and businesses can go to Google Trends (http://www.google.com/trends), a free resource, to find out.

Source: Thinkstock

atmospherics

The physical aspects of the selling environment retailers try to control.

As we mentioned earlier in the chapter, consumer behavior is influenced by many things, including environmental and marketing factors, the situation, personal and psy- chological factors, family, and culture. Businesses try to figure out trends so they can reach the people most likely to buy their products in the most cost-effective way pos- sible. The move to more natural organic products and less-processed foods are an ex- ample. Yogurt that was processed to remove all the fat was a big seller in years past, but today fat-laden Greek-style yogurt is all the rage. Who would have thought?

Businesses often try to influence a consumer’s behavior with things they can con- trol such as the way in which they design their websites, the layout of their stores, mu- sic, lighting, grouping a of products, pricing, and advertising. While some influences may be temporary and others are long lasting, different factors can affect how buyers behave—whether they influence you to make a purchase, buy additional products, or buy nothing at all. Let’s now look at some of the influences on consumer behavior in more detail.

1.1 Situational Factors Have you ever been in a department store and couldn’t find your way out? No, you aren’t necessarily directionally challenged. Marketing professionals take physical factors such as a store’s design and layout into account when they are designing their facilities. Presumably, the longer you wander around a facility, the more you will spend. Grocery stores frequently place bread and milk products on the opposite ends of the stores because people often need both types of products. To buy both, they have to walk around an entire store, which of course, is loaded with other items they might see and purchase.

Store locations also influence behavior. Starbucks has done a good job in terms of locating its stores. It has the process down to a science; you can scarcely drive a few miles down the road without passing a Starbucks. You can also buy cups of Starbucks coffee at many grocery stores and in air- ports—virtually any place where there is foot traffic.

Physical factors that firms can control, such as the layout of a store, music played at stores, the lighting, temperature, and even the smells you experience are called atmospherics. Perhaps you’ve visited the office of an apartment complex and noticed how great it looked and even smelled. It’s no co- incidence. The managers of the complex were trying to get you to stay for a while and have a look at their facilities. Research shows that “strategic fragrancing” results in customers staying in stores longer, buying more, and leaving with better impressions of the quality of stores’ services and products. Mir- rors near hotel elevators are another example. Hotel operators have found that when people are busy looking at themselves in the mirrors, they don’t feel like they are waiting as long for their elevators.[5]

Not all physical factors are under a company’s control, however. Take weather, for example. Rainy weather can be a boon to some companies, like umbrella makers such as Totes, but a problem for oth- ers. Beach resorts, outdoor concert venues, and golf courses suffer when it is raining heavily. Businesses such as automobile dealers also have fewer customers. Who wants to shop for a car in the rain?

Firms often attempt to deal with adverse physical factors such as bad weather by offering specials during unattractive times. For example, many resorts offer consumers discounts to travel to beach loca- tions during hurricane season. Having an e-commerce site is another way to cope with weather-related problems. What could be more comfortable than shopping at home? If it’s raining too hard to drive to REI, or Abercrombie & Fitch, you can buy products from these companies and many others online. You can shop online for cars, too, and many restaurants take orders online and deliver.

Crowding is another situational factor. Have you ever left a store and not purchased anything be- cause it was just too crowded? Some studies have shown that consumers feel better about retailers that attempt to prevent overcrowding in their stores. However, other studies have shown that to a certain extent, crowding can have a positive impact on a person’s buying experience. The phenomenon is often referred to as “herd behavior.”[6]

If people are lined up to buy something, you want to know why. Should you get in line to buy it too? Herd behavior has its downsides. A number of retailers including Walmart have experienced neg- ative PR after their customers and employees were trampled by early morning crowds rushing to buy products on Black Friday.

Social Situation

The social situation you’re in can significantly affect your purchase behavior. Perhaps you have seen Girl Scouts selling cookies outside grocery stores and other retail establishments and purchased noth- ing from them, but what if your neighbor’s daughter is selling the cookies? Are you going to turn her down or be a friendly neighbor and buy a box (or two)?

CHAPTER 3 CONSUMER BEHAVIOR: HOW PEOPLE MAKE BUYING DECISIONS 47

Video Clip

Are you going to turn down cookies from this cute Girl Scout? What if she’s your neighbor’s daughter? Please serve me up some of those cookies with my DQ Blizzard!

Companies like Pampered Chef that sell their products at parties understand that the social situation makes a difference. When you’re at a friend’s Pampered Chef party, you don’t want to look cheap or disappoint your friend by not buying anything. Certain social situations can also make you less willing to buy products. You might spend quite a bit of money each month eating at fast-food restaurants like McDonald’s and Subway, but would you take someone there for your first date? Some people might take a first date to Subway, but other people would perhaps choose a more upscale restaurant. Likewise, if you have turned down a drink or dessert on a date because you were worried about what the person you were with might have thought, your consumption was affected by your social situation.[7]

Time

The time of day, time of year, and how much time consumers feel like they have to shop affect what they buy. Researchers have even discovered that whether someone is a “morning person” or “evening person” affects shopping patterns. Have you ever gone to the grocery store when you are hungry or after pay day when you have cash in your pocket? When you are hungry or have cash, you may pur- chase more than you would at other times.

Companies worldwide are aware of people’s lack of time and are finding ways to accommodate them. If you need customer service from Amazon.com, there’s no need to wait on the telephone. If you have an account with Amazon, you just click a button on the company’s website and an Amazon rep- resentative calls you immediately. Some doctors’ offices offer drive-through shots for patients who are in a hurry and for elderly patients who find it difficult to get out of their cars.

Are you in a hurry to get to an appointment? No time to park your car? There’s an app for that called Luxe, which operates in major US cities. Your personal “parker” will meet you at your destina- tion and take care of it for you and then bring you your car when you need it back. For working and single parents, Blue Apron is one of a number of companies that will deliver healthy ingredients to your door along with instructions about how to combine them to whip up great meals for the kids.

Americans aren’t the only people who are “time starved.” South Koreans work very long hours and are extremely pressed for time. In that country marketers have placed electronic billboards in subway stations showing products and their prices. People commuting use their mobile phones to scan the products’ bar codes on their way to work, and the products are delivered to their doors when they re- turn home.[8]

Reason for the Purchase

The reason you are shopping also affects the amount of time you will spend shopping. Are you making an emergency purchase? What if you need something for an important dinner or a project and only have an hour to get everything? Are you shopping for a gift or for a special occasion? Are you buying something to complete a task/project and need it quickly? In recent years, emergency clinics have sprung up in strip malls all over the country. Convenience is one reason. The other is sheer necessity. If you cut yourself and you are bleeding badly, you’re probably not going to shop around much to find the best clinic. You will go to the one that’s closest to you.

Purchasing a gift might not be an emergency situation, but you might not want to spend much time shopping for it either. Gift certificates and cards you can buy online or easily pick up at a grocery

View the video online at: http://www.youtube.com/embed/GJHN4eutKjY?rel=0

48 PRINCIPLES OF MARKETING VERSION 3.0

Personality

An individual’s disposition as other people see it.

self-concept

How a person sees himself or herself.

ideal self

How a person would like to view himself or herself.

or drugstore while you’re shopping for something else are popular for this reason. By contrast, suppose you need to buy an engagement ring. Sure, you could buy one online in a jiffy, but you probably wouldn’t do that. What if the diamond were fake? What if your significant other turned you down and you had to return the ring? How hard would it be to get back online and return the ring?[9]

Mood

Have you ever felt like going on a shopping spree? At other times, it’s likely wild horses couldn’t drag you to a mall. People’s moods temporarily affect their spending patterns. People who are in a good mood are likely to linger longer in a store, buy more, and even pay more. One study found that relaxed shoppers are willing to pay up to 15 percent more for goods than less-relaxed shoppers. The clothing brand and retailer Tommy Bahama found that offering free appetizers and mimosas at its stores during the holidays was a major sales booster.[10]

Offering people places to sit down and free WiFi are other ways to get shoppers to relax. Maverick, an upscale Western-wear store in Fort Worth, Texas, has a full-bar on one side of its store where one’s spouse or shopping companions can take a break while the other(s) shops. Restaurants are putting computer tablets on tables to keep antsy or cranky kids entertained and stressed out patrons happy while looking at food offerings until their waiters shows up. Offering people places to sit down and the ability to connect to free WiFi are other ways to get shoppers to relax.

Economic Situation

People’s economic situations definitely affect what they will buy and how much of it. For example, dur- ing economic downturns, many people reduce their spending. Stores with lower-priced merchandise like Costco and Walmart tend to fare better during these periods than higher-end stores such Saks Fifth Avenue and Nordstrom’s.[11] To get buyers in the shopping mood during an economic down- turn, companies resort to different measures, such as introducing more lower-priced brands. Studying customer’s loyalty cards to figure out ways to persuade customers to purchase nonfood items that have higher profit margins is another strategy.

Recessions can be downright good for some companies though. During the last economic recession, deep-discounters such as Half-Priced Books saw their sales surge. So did seed sellers as people began planting their own gardens. And the sales of products hawked on TV infomercials, such as Snuggies, were the best ever. Apparently, consumers too broke to go on vacation or shop at Saks were instead watching television and treating themselves to the products.[12]

1.2 Personal Factors

Personality and Self-Concept

Personality describes a person’s disposition, helps show why people are different, and encompasses a person’s unique traits. The “Big Five” personality traits that psychologists discuss frequently include openness or how open you are to new experiences, conscientiousness or how diligent you are, extraver- sion or how outgoing or shy you are, agreeableness or how easy you are to get along with, and neur- oticism or how prone you are to negative mental states.

Do personality traits predict people’s purchasing behavior? Can companies successfully target cer- tain products to people based on their personalities? How do you find out what personalities con- sumers have? Are extraverts wild spenders and introverts penny pinchers?

The link between people’s personalities and their buying behavior is somewhat unclear. Some re- search studies have shown that “sensation seekers,” or people who seek out thrilling, dangerous, or un- usual experiences, are more likely to respond well to advertising that’s violent and graphic. The prob- lem for firms is figuring out “who’s who” in terms of their personalities.

Marketers have had better luck linking people’s self-concepts to their buying behavior. Your self-concept is how you see yourself—be it positive or negative. Your ideal self is how you would like to see yourself—whether it’s prettier, more popular, more eco-conscious, or how you think others see you, also influences your purchase behavior. Marketing researchers believe people buy products to en- hance how they feel about themselves—to get themselves closer to their ideal selves.

The slogan “Be All That You Can Be,” which for years was used by the US Army to recruit soldiers, is an attempt to appeal to the self-concept. Presumably, by joining the US Army, you will become a bet- ter version of yourself, which will, in turn, improve your life. Many beauty products and cosmetic pro- cedures are advertised in a way that’s supposed to appeal to the ideal self people seek. All of us want products that improve our lives.

CHAPTER 3 CONSUMER BEHAVIOR: HOW PEOPLE MAKE BUYING DECISIONS 49

Gender, Age, and Stage of Life

Men and women need and buy different products.[13] They also shop differently and in general, have different attitudes about shopping. You know the old stereotypes. Men see what they want and buy it, but women “try on everything and shop ‘til they drop.” There’s some truth to the stereotypes. That’s why you see so many advertisements directed at one sex or the other—beer commercials that air on ESPN and commercials for household products that air on Lifetime.

Women influence fully two-thirds of all household product purchases, whereas men buy about three-quarters of all alcoholic beverages.[14] The shopping differences between men and women seem to be changing, though. Younger, well-educated men are less likely to believe grocery shopping is a wo- man’s job and would be more inclined to bargain shop and use coupons if the coupons were properly targeted at them.[15] One survey found that approximately 45 percent of married men actually like shopping and consider it relaxing.

One study by Resource Interactive, a technology research firm, found that when shopping online, men prefer sites with lots of pictures of products and women prefer to see products online in lifestyle context—say, a lamp in a living room. Women are also twice as likely as men to use viewing tools such as the zoom and rotate buttons and links that allow them to change the color of products.

Video Clip

Check out this Heineken commercial, which highlights the differences between “what women want” and “what men want” when it comes to products.

More businesses today are taking greater pains to figure out “what men want.” Does a guy want six- shooter or a four-poster canopy bed (a bed with tall posts on each corner and drapes around it)? Be- lieve it or not, some men today do want four-poster beds. But instead of them being them made of or- nate wood and fancy curtains, men want them to be masculine and modern looking, and say, made from iron or steel posts (think Fifty Shades of Gray.) Ralph Lauren Home and Anthropologie are obli- ging these male shoppers. The haircutting franchise Sports Clips offer sports-themed salons where men can feel more comfortable getting their hair cut.[16]

Marketers are also targeting women in ways they haven’t in the past. Flasks for liquor used to be almost exclusively given to men as presents. Today, more women are begin to carrying flasks decked out with fake diamonds and painted with bright colors. The online retailer Zazzle has a broad array of flasks designed for women. Likewise, Harley-Davidson has stepped its efforts to tailor its products for women and techniques to sell them.[17]

You have probably noticed that the things you buy have changed as you age. Think about what you wanted and how you spent your money when you were a child, a teenager, and an adult. When you were a child, the last thing you probably wanted as a gift was clothing. As you became a teen, however, cool clothes probably became a bigger priority. Don’t look now, but depending on the stage of life you’re currently in, diapers and wrinkle cream might be just around the corner.

If you’re single and working after graduation, you probably spend your money differently than a newly married couple. How do you think spending patterns change when someone has a young child, teenager, or child in college? Diapers and day care, orthodontia, tuition, electronics—regardless of the age, children affect the spending patterns of families. Once children graduate from college and parents are empty nesters, spending patterns change again.

Empty nesters and baby boomers are a huge market that companies are trying to tap. Ford and other car companies have created “aging suits” for young employees to wear when they’re designing automobiles.[18] The suit simulates the restricted mobility and vision people experience as they get

View the video online at: http://www.youtube.com/embed/yIutgtzwhAc?rel=0

50 PRINCIPLES OF MARKETING VERSION 3.0

F I G U R E 3 . 3

You’re only as old as you feel—and the goods and services you buy.

chronological age

A person’s age in years.

cognitive age

The age a buyer perceives himself or herself to be.

psychographics

Measuring the attitudes, values, lifestyles, and opinions of consumers using demographics.

older. Car designers can then figure out how to configure the automobiles to better meet the needs of these consumers.

Video Clip

The “aging suit” has elastic bindings that hamper a car designer’s movement and goggles that simulate deteriorating eyesight. The suit gives the designer an idea what kinds of car-related challenges older consumers face.

Lisa Rudes Sandel, the founder of Not Your Daughter’s Jeans (NYDJ), created a multimillion-dollar business by designing jeans for baby boomers with womanly bodies. Since its launch, NYDJ has be- come the largest domestic manufacturer of women’s jeans under $100. “The truth is,” Rudes Sandel says, “I’ve never forgotten that woman I’ve been aiming for since day one.” Rudes Sandel “speaks to” every one of her customers via a note tucked into each pair of jean that reads, “NYDJ (Not Your Daughter’s Jeans) cannot be held responsible for any positive consequence that may arise due to your fabulous appearance when wearing the Tummy Tuck jeans. You can thank me later.”[19]

Your chronological age, or actual age in years, is one thing. Your cognitive age, or how old you perceive yourself to be, is another. A person’s cognitive age affects his or her activities and sparks interests consistent with his or her perceived age.[20] Cognit- ive age is a significant predictor of consumer behaviors, including people’s dining out, watching television, going to bars and dance clubs, playing computer games, and shop- ping.[21] Companies have found that many consumers feel younger than their chrono- logical ages and don’t take kindly to products that feature “old folks” because they can’t identify with them. If you watch network TV news, you’ll notice that the commercials often feature products designed for older audiences because these people are more likely to watch the broadcasts than younger ones. But oddly, the people shown using the products in the ads appear to be barely over age 40.

Lifestyle

If you have ever watched the TV shows Wife Swap or Celebrity Wife Swap you can see that even though people’s lifestyles can differ radically, even when by all outward ap- pearances the individuals seem very similar. To better understand and connect with consumers based on their lifestyles, companies interview or ask people to complete questionnaires about factors that relate to their lifestyles, such as their activities, interests, and opinions (often referred to as AIO statements). Consumers are not only asked about products they like, where they live, and what their gender is but also about what they do—that is, how they spend their time and what their priorities, values, opinions, and general outlooks on the world are. Where do they go other than work? Who do they like to talk to? What do they talk about? Researchers hired by Procter & Gamble have gone so far as to follow women around for weeks as they shop, run errands, and socialize with one another.[22] Other companies pay people to keep a daily journal of their activities and routines.

A number of research organizations examine lifestyle and psychographic characteristics of con- sumers. Psychographics combines the lifestyle traits of consumers and their personality styles with an analysis of their attitudes, activities, and values to determine groups of consumers with similar charac- teristics. One of the most widely used systems to classify people based on psychographics is the VALS (Values, Attitudes, and Lifestyles) framework. Using VALS to combine psychographics with

View the video online at: http://www.youtube.com/embed/_hcw17EsE7A?rel=0

CHAPTER 3 CONSUMER BEHAVIOR: HOW PEOPLE MAKE BUYING DECISIONS 51

motivation

The inward drive people have to get what they need.

demographic information such as marital status, education level, and income provide a better under- standing of consumers.

1.3 Psychological Factors

Motivation

Motivation is the inward drive we have to get what we need. In the mid-1900s, Abraham Maslow, an American psychologist, developed the hierarchy of needs shown in Figure 3.4.

F I G U R E 3 . 4 Maslow’s Hierarchy of Needs

Maslow theorized that people have to fulfill their basic needs—food, water, and sleep—before they can begin fulfilling higher-level needs. Have you ever gone shopping when you were tired or hungry? Even if you were shopping for something that would make you the envy of your friends (maybe a new car) you probably wanted to sleep or eat even more. (Forget the car. Just give me a nap and a candy bar.) The need for food is recurring. Other needs, such as shelter, clothing, and safety, tend to be enduring.

During the last recession, the sales of new automobiles dropped sharply virtually everywhere around the world—except the sales of Hyundai vehicles. Hyundai understood that people needed to feel secure and safe and ran an ad campaign that assured car buyers they could return their vehicles if they couldn’t make the payments on them without damaging their credit. Seeing Hyundai’s success, other carmakers began offering similar programs. Likewise, banks began offering “worry-free” mort- gages to ease the minds of would-be homebuyers. For a fee of about $500, First Mortgage Corp., a Texas-based bank, offered to make a homeowner’s mortgage payment for six months if he or she got laid off.[23]

Still other needs arise at different points in time in a person’s life. For example, during grade school and high school, your social needs probably rose to the forefront. You wanted to have friends and get a date. Perhaps this prompted you to buy certain types of clothing or electronic devices. After high school, you began thinking about how people would view you in your “station” in life, so you de- cided to pay for college and get a professional degree, thereby fulfilling your need for esteem. If you’re lucky, at some point you will realize Maslow’s state of self-actualization. You will believe you have be- come the person in life that you feel you were meant to be.

52 PRINCIPLES OF MARKETING VERSION 3.0

Perception

How people interpret the world around them.

Selective attention

The process whereby a person filters information based on how relevant it is to them.

selective retention

The process whereby a person retains information based on how well it matches their values and beliefs.

Subliminal advertising

Advertising that is not apparent to consumers but is thought to be perceived subconsciously by them.

While achieving self-actualization may be a goal for many individuals in the United States, con- sumers in Eastern cultures may focus more on belongingness and group needs. Marketers look at cul- tural differences in addition to individual needs. The importance of groups affects advertising (using groups versus individuals) and product decisions.

Perception

Perception is how you interpret the world around you and make sense of it in your brain. You do so via stimuli that affect your different senses—sight, hearing, touch, smell, and taste. How you combine these senses also makes a difference. For example, in one study, consumers were blindfolded and asked to drink a new brand of clear beer. Most of them said the product tasted like regular beer. However, when the blindfolds came off and they drank the beer, many of them described it as “watery” tast- ing.[24]

Consumers are bombarded with messages on their mobile phones, television, radio, magazines, the Internet, and even bathroom walls. The average consumer is exposed to about three thousand ad- vertisements per day.[25] Consumers are surfing the Internet, watching television, and checking their mobile phones for text messages simultaneously. Some, but not all, information makes it into our brains.

Have you ever read or thought about something and then started noticing ads and information about it popping up everywhere? Many people are more perceptive to advertisements for products they need. Selective attention is the process of filtering out information based on how relevant it is to you. It’s been described as a “suit of armor” that helps you filter out information you don’t need.

At other times, people forget information, even if it’s quite relevant to them, which is called selective retention. Often the information contradicts the person’s belief. A longtime chain smoker who forgets much of the information communicated during an antismoking commercial is an ex- ample. To be sure their advertising messages get through to you and you remember them, companies use repetition. How often do you see the same commercial aired during a single television show? Using surprising stimuli or shock advertising is also a technique that works. One study found that shocking content increased attention, benefited memory, and positively influenced behavior among a group of university students.[26]

Video Clip

This funny video parodies how Apple bombarded consumers with iPhone commercials when the product was first launched.

Subliminal advertising is the opposite of shock advertising and involves exposing consumers to marketing stimuli such as photos, ads, and messages by stealthily embedding them in movies, ads, and other media. Although there is no evidence that subliminal advertising works, years ago the words Drink Coca-Cola were flashed for a millisecond on a movie screen. Consumers were thought to per- ceive the information subconsciously and to be influenced to buy the products shown. Many people considered the practice to be subversive, and in 1974, the Federal Communications Commission con- demned it. Much of the original research on subliminal advertising, conducted by a researcher trying to drum up business for his market research firm, was fabricated.[27]

People are still fascinated by subliminal advertising, however. To create “buzz” about a new televi- sion show a few years ago called The Mole, ABC began hyping it by airing short commercials composed of just a few frames. If you blinked, you missed it. Some television stations actually called ABC to figure

View the video online at: http://www.youtube.com/embed/4vle73VqtHw?rel=0

CHAPTER 3 CONSUMER BEHAVIOR: HOW PEOPLE MAKE BUYING DECISIONS 53

learning

The process by which consumers change their behavior after they gain information or experience with a product.

operant or instrumental conditioning

A type of behavior that’s repeated when it’s rewarded.

gamification

A strategy of building a game component into a product to encourage consumers to use it or use it more.

Attitudes

“Mental positions” or emotional feelings, favorable or unfavorable evaluations, and action tendencies people have about products, services, companies, ideas, issues, or institutions.

Culture

The shared beliefs, customs, behaviors, and attitudes that characterize a society used to cope with their world and with one another.

out what was going on. One-second ads were later rolled out to movie theaters. Unfortunately for ABC, the show lasted only about as long as the ads for it prior to being cancelled: not long.[28]

Different consumers also perceive information differently. A couple of frames about a show such as The Mole might make you want to see it. However, your friend might see the ad, find it stupid, and never tune in. Similarly, one woman sees a luxurious Gucci purse, and the other sees an overpriced bag to hold keys and makeup.[29] The goal for companies is to figure out who they are most likely to sell their products to, how to capture the attention of these people, build interest in their products, and ul- timately sell them.

Learning

Learning refers to the process by which consumers change their behavior after they gain information or experience. It’s the reason you don’t buy a bad product twice. Learning doesn’t just affect what you buy; it affects how you shop. People with limited experience about a product or brand generally seek out more information than people who have used a product before.

Companies try to get consumers to learn about their products in different ways. Car dealerships offer test drives. Pharmaceutical reps leave samples and brochures at doctor’s offices. Other companies give consumers free samples. You have probably eaten free food samples in a grocery store. While sampling is an expensive strategy, it gets consumers to try the product and many customers buy it, es- pecially right after trying in the store.

Another kind of learning is operant or instrumental conditioning, which is what occurs when researchers are able to get a mouse to run through a maze for a piece of cheese or a dog to salivate just by ringing a bell. In other words, learning occurs through repetitive behavior that has positive or negat- ive consequences. Companies engage in operant conditioning by rewarding consumers, which cause consumers to want to repeat their purchasing behaviors. Prizes and toys that come in Cracker Jacks and McDonald’s Happy Meals, free tans offered with gym memberships, a free sandwich after a certain number of purchases, and free car washes when you fill up your car with a tank of gas are examples.

Gamification works along the same lines as operant conditioning. In a marketing context, gamification is a strategy of building a game component into a product to encourage consumers to use it or use it more. The Fitbit exercise tracker is a perfect example. The Fitbit doesn’t just track your steps, it rewards you with certain “badges” for completing a certain amount of steps. It also features an online leader board that lets you compete against your friends to see who is winning the exercise war. If you lose your Fitbit or disable it by running it through the washing machine, it’s expensive to replace. But who wants to go back to a plain old pedometer? That’s no fun.

Attitude

Attitudes are “mental positions” or emotional feelings, favorable or unfavorable evaluations, and ac- tion tendencies people have about products, services, companies, ideas, issues, or institutions.[30] Atti- tudes tend to be enduring, and because they are based on people’s values and beliefs, they are hard to change. Companies want people to have positive feelings about their offerings. In recent years con- sumers have began demanding food that’s healthier and less processed. As a result, fast-food compan- ies like Chipotle that use fresh ingredients have flourished. Rivals like McDonald’s are finding it hard to compete against them, and are seeing their sales stagnate. Although McDonald’s and a number of other firms have vowed to use fresher ingredients and advertised as much, they are finding it hard to changes people’s attitudes toward their firms.

1.4 Societal Factors Situational factors, personal factors, and psychological factors influence what you buy, but only on a temporary basis. Societal factors are a bit different. They are more outward and have broad influences on your beliefs and the way you do things. They depend on the world around you and how it works.

Culture

Culture refers to the shared beliefs, customs, behaviors, and attitudes that characterize a society. Cul- ture is a handed down way of life and is often considered the broadest influence on a consumer’s beha- vior. Your culture prescribes the way in which you should live and has a huge effect on the things you purchase. For example, in Beirut, Lebanon, women can often be seen wearing miniskirts. If you’re a woman in Afghanistan wearing a miniskirt, however, you could face bodily harm or death. In Afgh- anistan, women generally wear burqas, which cover them completely from head to toe. Similarly, in Saudi Arabia, women must wear what’s called an abaya, or long black garment.

54 PRINCIPLES OF MARKETING VERSION 3.0

F I G U R E 3 . 5

Care to join the subculture of the “Otherkin”? Otherkins are primarily Internet users who believe they are reincarnations of mythological or legendary creatures—angels, demons, vampires—you name it. To read more about the Otherkins and seven other bizarre subcultures, visit http://www.oddee.com/ item_96676.aspx.

subculture

A group of people within a culture who are different from the dominant culture but have something in common with one another, such as common interests, vocations or jobs, religions, ethnic backgrounds, or sexual orientations.

social class

A group of people who have the same social, economic, or educational status in society.

Even cultures that share many of the same values can be quite different. Most Germans don’t own credit cards, and running up a lot of debt is something people in that culture generally don’t do. But people in the United States rely heavily on credit cards, even when they pay their balances every month. As a result, credit card companies such as Visa, American Express, and MasterCard must understand cultural perceptions about credit.

Subcultures

A subculture is a group of people within a culture who are different from the domin- ant culture but have something in common with one another such as common in- terests, vocations or jobs, religions, ethnic backgrounds, and geographic locations. The fastest-growing subculture in the United States consists of people of Hispanic origin, followed by Asian Americans, and African Americans.[31] Companies and marketers pay close attention to subcultural (and cultural) changes because they create opportun- ities to develop and market new products people want. Home Depot is one of a number of companies that has a Spanish version of its website. Walmart converted some of its Neighborhood Markets into stores designed to appeal to Hispanics. The Supermercado de Walmart stores are located in Hispanic neighborhoods and feature elements such as cafés serving Latino pastries and coffee and full meat and fish counters.[32]

Marketing products based on the ethnicity of consumers is useful but may become harder to do in the future because the boundaries between ethnic groups are blurring. Quick quiz: What do people in the United States buy more of: ketchup or salsa? The answer: salsa, by a 2-to-1 margin! Consequently, if you were marketing salsa, it wouldn’t be a good idea to aim the product solely at the Hispanic market.

Subcultures can develop in response to people’s interests, similarities, and behavi- ors that allow marketing professionals to design specific products for them. Hip-hop- pers, individuals who in engage in extreme types of sports such as helicopter skiing, and gamers are examples of people who belong to subcultures.

Social Class

A social class is a group of people who have the same social, economic, or educational status in society.[33] While income helps define social class, the primary variable de- termining social class is occupation. To some degree, consumers in the same social class exhibit similar purchasing behavior. Have you ever been surprised to find out that someone you knew who was wealthy drove a beat-up old car or wore old clothes and shoes, or that someone who isn’t wealthy owns a Mercedes or other upscale vehicle? While some products may appeal to people in a social class, you can’t assume a person is in a certain social class because they either have or don’t have certain products or brands.

Table 3.1 shows seven classes of American consumers along with the types of car brands they might buy. When asked, people tend to say they are middle class, which is not always the case but, rather, how they view themselves. Keep in mind that the US market is just a fraction of the world market. The rise of the middle class in India, China, and Brazil are creating opportunities for many companies to successfully sustain their products. For example, Ch- ina—not the United States—is now the world’s largest auto market.[34]

T A B L E 3 . 1 An Example of Social Classes and Buying Patterns

Class Type of Car

Definition of Class

Upper-Upper Class Rolls- Royce

People with inherited wealth and aristocratic names (the Rockefellers, Kennedys, Vanderbilts, etc.)

Lower-Upper Class Mercedes Professionals such as CEOs, doctors, and lawyers

Upper-Middle Class Lexus College graduates and managers

Middle Class Toyota Both white-collar and blue-collar workers

Working Class Chevrolet Blue-collar workers

Lower but Not the Lowest

Used Vehicle

People who are working but not on welfare

Lowest Class No vehicle

People on welfare

CHAPTER 3 CONSUMER BEHAVIOR: HOW PEOPLE MAKE BUYING DECISIONS 55

http://www.oddee.com/item_96676.aspx

F I G U R E 3 . 6

The whiskey brand Johnnie Walker has managed to expand its market share without cheapening the brand by producing a few lower-priced versions of the whiskey and putting them in bottles with different labels.

Reference groups

Groups a consumer identifies with and wants to join.

Opinion leaders

People with expertise certain areas. Consumers respect these people and often ask their opinions before they buy goods and services.

influencers

People who aren’t necessarily celebrities or experts but who have a great deal of influence over what people purchase often because of what they post online about products.

The makers of upscale brands want their customer bases to be as large as possible yet don’t want to risk “cheapening” their brands. That’s why, for example, Smart Cars, which are made by BMW, don’t have the BMW label on them. For a time, Tiffany’s sold a cheaper line of silver jewelry to a lot of customers. However, the company later worried that its reputation was being tarnished by the line. In addition, a product’s price is to some extent determined by supply and demand. Luxury brands therefore try to keep the supply of their products in check so their prices remain high.

Some companies, such as Johnnie Walker, have managed to capture market share by introducing “lower echelon” brands without damaging their luxury brands. The company’s whiskeys come in bottles with red, green, blue, black, and gold labels. The blue label is the company’s best product. Every blue-label bottle has a serial number and is sold in a silk-lined box, accompanied by a certificate of authenticity.[35]

Reference Groups, Opinion Leaders, and Influencers

Reference groups are groups (social groups, work groups, family, or close friends) a consumer identifies with and may want to join. They influence consumers’ attitudes and behavior. If you have ever dreamed of being a professional player of basketball or another sport, you have an aspirational reference group. That’s why, for example, Nike hires celebrities such as LeBron James to pitch the company’s products. Dissociative ref- erence groups are groups a consumer does not want to be associated with. Perhaps you have declined to purchase something because it seemed like an item people who aren’t “cool” are purchasing.

Opinion leaders are people with expertise in certain areas. Consumers respect these people and often ask their opinions before they buy goods and services. An in- formation technology (IT) specialist with a great deal of knowledge about computer brands is an example. These people’s purchases often lie at the forefront of leading trends. The IT specialist is probably a person who has the latest and greatest tech products, and his opinion of them is likely to carry more weight with you than any sort of advertisement.

In consumer markets, influencers are people who aren’t necessarily celebrities or experts but who have a significant amount of influence over what people purchase, of-

ten because of what they post online about products. Bloggers are an example. Companies often try to develop relationships with bloggers who are influencers to keep them aware of their products in the hopes that they will talk positively about them online. People with large numbers of subscribers on their YouTube channels are also influencers. So, for example, to build interest in its products, a com- pany might provide a skateboarder who has a great YouTube channel with free skateboarding products the firm hopes the person will show in upcoming videos.

Companies also directly pay influencers to promote their products on the Web. Rather than pay- ing Pinterest to post, or “pin,” products on the social networking site, Tommy Hilfiger and the paint- maker Benajamin Moore found it more cost-effective to hire influencers (a.k.a. “pinfluencers”) to post their products for them. Keep in mind that to prevent consumers from being misled, the U.S. Federal Trade Commission (FTC) requires paid influencers to prominently disclose in their posts the fact that they are being compensated by the maker of the products discussed in the posts. [36]

Marketing professionals refer to celebrities, opinion leaders, and influencers who actively promote a company’s products by letting others know how much they like them as “brand ambassadors.” Firms use different techniques, including tools to mine social networking sites, to reach these people in an effort to turn them into brand ambassadors. Orgnet is a company that has developed software de- signed to do so based on sophisticated techniques that unearthed the links between Al Qaeda terrorists. Explains Valdis Krebs, the company’s founder: “Pharmaceutical firms want to identify who the key opinion leaders are. They don’t want to sell a new drug to everyone. They want to sell to the 60 key on- cologists.”[37]

Of course, not all opinion leaders, influencers, and celebrities (unless they are hired to do so) end up being brand ambassadors. If they don’t like a firm or its products, these people can negatively im- pact a brand by what they say about it.

Family

Most market researchers consider a person’s family to be one of the most important influences on their buying behavior. Like it or not, you are more like your parents than you think, at least in terms of your consumption patterns. Many of the things you buy and don’t buy are a result of what your parents bought when you were growing up. Products such as the brand of soap and toothpaste your parents bought and used, and even the “brand” of politics they leaned toward (Democratic or Republican) are examples of the products you are likely to favor as an adult.

56 PRINCIPLES OF MARKETING VERSION 3.0

Companies are interested in which family members have the most influence over certain pur- chases. Children have a great deal of influence over many household purchases. IKEA has used this knowledge to design its showrooms. The children’s bedrooms feature fun beds with appealing comfort- ers so children will be prompted to identify and ask for what they want.[38]

Marketing to children has come under increasing scrutiny. Critics of the practice accuse compan- ies of deliberately manipulating kids to nag their parents for certain products. For example, even though tickets for the Jonas Brothers’ concerts can range from hundreds to thousands of dollars, the concerts are often still sold out. However, as one writer put it, exploiting “pester power” is not always ultimately in the long-term interests of advertisers if it alienates kids’ parents.[39]

In addition, different local, state, and national laws restrict on how children can legally be mar- keted to. For example, in the United States, the Children’s Online Privacy Protection Act (COPPA) re- quires websites that collect or use personal information about children under the age of 13 to obtain verifiable parental consent.

K E Y T A K E A W A Y S

< Situational influences are temporary conditions that affect how buyers behave. They include physical factors such as a store’s buying locations, layout, music, lighting, and even scent. Companies try to make the physical factors in which consumers shop as favorable as possible. If they can’t, they utilize other tactics such as discounts. The consumer’s social situation, time factors, the reason for their purchases, and their moods also affect their buying behavior.

< Your personality describes your disposition as other people see it. Market researchers believe people buy products to enhance how they feel about themselves. Your gender also affects what you buy and how you shop. Women shop differently than men. However, there’s some evidence that this is changing. Younger men and women are beginning to shop more alike. People buy different things based on their ages and life stages. A person’s cognitive age is how old one “feels” oneself to be. To further understand consumers and connect with them, companies have begun looking more closely at their lifestyles (what they do, how they spend their time, what their priorities and values are, and how they see the world).

< Psychologist Abraham Maslow theorized that people have to fulfill their basic needs—like the need for food, water, and sleep—before they can begin fulfilling higher-level needs. Perception is how you interpret the world around you and make sense of it in your brain. To be sure their advertising messages get through to you, companies often resort to repetition. Shock advertising and product placement are two other methods. Learning is the process by which consumers change their behavior after they gain information about or experience with a product. Consumers’ attitudes are the “mental positions” people take based on their values and beliefs. Attitudes tend to be enduring and are often difficult for companies to change.

< Culture prescribes the way in which you should live and affects the things you purchase. A subculture is a group of people within a culture who are different from the dominant culture but have something in common with one another—common interests, vocations or jobs, religions, ethnic backgrounds, sexual orientations, and so forth. To some degree, consumers in the same social class exhibit similar purchasing behaviors. Most market researchers consider a person’s family to be one of the biggest determinants of buying behavior. Reference groups are groups that a consumer identifies with and wants to join. Companies often hire celebrities to endorse their products to appeal to people’s reference groups. Opinion leaders are people with expertise in certain areas. Consumers respect these people and often ask their opinions before they buy goods and services. Influencers are people who aren’t necessarily celebrities or experts but who have a great deal of influence over what people purchase, often because of what they post online about products.

CHAPTER 3 CONSUMER BEHAVIOR: HOW PEOPLE MAKE BUYING DECISIONS 57

routine response behavior

When consumers make automatic purchase decisions based on limited information or information they have gathered in the past.

impulse buying

Purchases that occur with no planning or forethought.

Low-involvement decisions

Products that carry a low risk of failure or have a low price tag for a specific individual or group making the decision.

R E V I E W Q U E S T I O N S

1. Explain what physical factors, social situations, time factors, and/or moods have affected your buying behavior for different products.

2. Explain how someone’s personality differs from his or her self-concept. How does the person’s ideal self- concept come into play in a consumer behavior context?

3. Describe how buying patterns and purchase decisions may vary by age, gender, and stage of life.

4. Why are companies interested in consumers’ cognitive ages and lifestyle factors?

5. How does the process of perception work and how can companies use it to their advantage in their marketing?

6. How do Maslow’s hierarchy of needs and learning affect how companies market to consumers?

7. Why do people’s cultures and subcultures affect what they buy?

8. How do subcultures differ from cultures? Can you belong to more than one culture or subculture?

9. How are companies trying to reach opinion leaders?

2. LOW-INVOLVEMENT VERSUS HIGH-INVOLVEMENT BUYING DECISIONS AND THE CONSUMER’S DECISION- MAKING PROCESS

L E A R N I N G O B J E C T I V E S

1. Distinguish between low-involvement and high-involvement buying decisions. 2. Understand what the stages of the buying process are and what happens in each stage.

As you have seen, many factors influence a consumer’s behavior. Depending on a consumer’s experi- ence and knowledge, some consumers may be able to make quick purchase decisions and other con- sumers may need to get information and be more involved in the decision process before making a purchase. The level of involvement reflects how personally important or interested you are in consum- ing a product and how much information you need to make a decision. The level of involvement in buying decisions consists of a continuum, from decisions that are fairly routine (consumers are not very involved) to decisions that require extensive thought and a high level of involvement.

You have probably thought about many products you want or need but never did much more than that. At other times, you’ve probably looked at dozens of products, compared them, and then decided not to purchase any one of them. When you run out of products such as milk or bread that you buy on a regular basis, you may buy the product as soon as you recognize the need because you do not need to search for information or evaluate alternatives. As Nike would put it, you “just do it.” Low-involvement decisions are, however, typically products that are relatively inexpensive and pose a low risk to the buy- er if she makes a mistake by purchasing them.

Consumers often engage in routine response behavior when they make low-involvement de- cisions—that is, they make automatic purchase decisions based on limited information or information they have gathered in the past. For example, if you always order a Diet Coke at lunch, you’re engaging in routine response behavior. You may not even think about other drink options at lunch because your routine is to order a Diet Coke, and you simply do it. Similarly, if you run out of Diet Coke at home, you may buy more without any information search.

Some low-involvement purchases are made with no planning or previous thought. These buying decisions are called impulse buying. While you’re waiting to check out at the grocery store, perhaps you see a magazine with Taylor Swift on the cover and buy it on the spot simply because you want it. You might see a roll of tape at a check-out stand and remember you need one or you might see a bag of chips and realize you’re hungry or just want them. These are items that are typically low-involvement decisions. Low-involvement decisions aren’t necessarily products purchased on impulse, although they can be.

58 PRINCIPLES OF MARKETING VERSION 3.0

high-involvement decisions

Products that carry a high price tag or high level of risk to the individual or group making the decision.

extended problem solving

Purchasing decisions in which a consumer gathers a significant amount of information before making a decision.

F I G U R E 3 . 7

Allstate’s “You’re in Good Hands” advertisements are designed to convince consumers that the insurance company won’t let them down.

Source: © Jupiterimages Corporation

limited problem solving

Purchasing decisions made based on consideration of some outside information.

By contrast, high-involvement decisions carry a higher risk to buyers if they fail, are complex, and/or have high price tags. A car, a house, and an insurance policy are examples. These items are not purchased often but are relevant and important to the buyer. Buyers don’t engage in routine response behavior when purchasing high-involvement products. Instead, consumers engage in what’s called extended problem solving, where they spend a lot of time comparing different aspects such as the features of the products, prices, and warranties.

High-involvement decisions can cause buyers a great deal of anxiety if they are unsure about their purchases or if they had a difficult time deciding between two alternatives. Companies that sell high-in- volvement products are aware that this can be a problem. Frequently, they try to offer consumers a lot of information about their products, including why they are superior to competing brands and how they won’t let the consumer down. Salespeople may be utilized to answer questions and do a lot of customer “hand-holding.”

Keep in mind that what is a high-involvement decision for one person may not be to another. The first car a person buys is likely to be a high-involvement decision for the consumer. But for someone who has purchased many cars over the years it may not be.

Limited problem solving falls somewhere between low-involvement (routine) and high-involve- ment (extended problem solving) decisions. Consumers engage in limited problem solving when they already have some information about a good or service but continue to search for a little more in- formation. Assume you need a new backpack for a hiking trip. While you are familiar with backpacks, you know that new features and materials are available since you purchased your last backpack. You’re going to spend some time looking for one that’s decent because you don’t want it to fall apart while you’re traveling and dump everything you’ve packed on a hiking trail. You might do a little research online and come to a decision relatively quickly. You might consider the choices available at your fa- vorite retail outlet, but not look at every backpack at every outlet before making a decision. Or you might rely on the advice of a person you know who’s knowledgeable about backpacks or online reviews of them. In some way you shorten or limit your involvement and the decision-making process.

Companies that market products such as chewing gum, which is likely to a be low-involvement purchase for many consumers, often use advertising such as commercials and coupons to reach many consumers at once. Firms such as these also try to sell products such as gum in as many locations as possible so people can just grab the products and go without much thought. In contrast, companies that products sell products such as home insurance, which is typically a high-involvement purchases, may use more personal selling to answer consumers’ questions.

Brand names can also be very important regardless of the consumer’s level of purchasing involve- ment. Consider a low- versus high-involvement decision—say, purchasing a tube of toothpaste versus a new car. You might routinely buy your favorite brand of toothpaste, not thinking much about the pur- chase (engage in routine response behavior), but not be willing to switch to another brand either. Hav- ing a brand you like saves you “search time” and eliminates the evaluation period because you know what you’re getting.

When it comes to the car, you might engage in extensive problem solving but, again, only be will- ing to consider a certain brand or brands. For example, in the 1970s, American-made cars had such a poor reputation for quality that buyers joked that a car that’s “not Jap [Japanese made] is crap.” The quality of American cars is very good today, but you get the picture. If you’re purchasing a high-in- volvement product, a good brand name is probably going to be very important to you. That’s why the manufacturers of products that are typically high-involvement decisions can’t become complacent about the value of their brands.

CHAPTER 3 CONSUMER BEHAVIOR: HOW PEOPLE MAKE BUYING DECISIONS 59

Video Clip

For a humorous, tongue-in-cheek look at why the brand reputation of American carmakers suffered in the 1970s, check out this clip.

2.1 Stages in the Buying Process Figure 3.8 outlines the buying stages consumers go through. At any given time, you’re probably in a buying stage for a product or service. You’re thinking about the different types of things you want or need to eventually buy, how you are going to find the best ones at the best price, and where and how will you buy them. Meanwhile, there are other products you have already purchased that you’re evalu- ating. Some might be better than others. Will you discard them, and if so, how? Then what will you buy? Where does that process start?

View the video online at: http://www.youtube.com/embed/pjzpx_jUUA0?rel=0

60 PRINCIPLES OF MARKETING VERSION 3.0

F I G U R E 3 . 8 Stages in the Consumer’s Purchasing Process

Stage 1. Need Recognition

You plan to backpack around the country after you graduate and don’t have a particularly good back- pack. You realize that you must get a new backpack. You may also be thinking about the job you’ve ac- cepted after graduation and know that you must get a vehicle to commute. Recognizing a need may in- volve something as simple as running out of bread or milk or realizing that you must get a new back- pack or a car after you graduate. Marketers try to show consumers how their products and services add value and help satisfy needs and wants they didn’t know they had. Previews at movie theaters are an- other example. How many times have you have heard about a movie and had no interest in it—until you saw the preview? Afterward, you felt like you had to see it. Similarly, do you think it’s a coincid- ence that Gatorade, Powerade, and other beverage makers locate their machines in gymnasiums so you see them after a long, tiring workout?

Stage 2. Search for Information

For products such as milk and bread, you may simply recognize the need, go to the store, and buy more. However, if you are purchasing a car for the first time or need a particular type of backpack, you may need to get information about different alternatives. Maybe you have owned several backpacks and know what you like and don’t like about them. Or there might be a particular brand that you’ve purchased in the past that you liked and want to purchase in the future. This is a great position for the company that owns the brand to be in—something firms strive for. Why? Because it often means you will limit your search and simply buy the firm’s brand again.

If what you already know about backpacks doesn’t provide you with enough information, you’ll probably continue to gather information from various sources. Frequently people ask their friends,

CHAPTER 3 CONSUMER BEHAVIOR: HOW PEOPLE MAKE BUYING DECISIONS 61

Evaluative criteria

Certain characteristics of products consumers consider when they are making buying decisions.

F I G U R E 3 . 9

Osprey backpacks are known for their durability. The company has a special design and quality control center, and Osprey’s salespeople annually take a “canyon testing” trip to see how well the company’s products perform.

Source: © Jupiterimages Corporation

family, and neighbors and individuals they have become acquainted with on social networks about their experiences with products. Checking out product reviews on Amazon.com or in magazines such as Consumer Reports (considered an objective source of information on many consumer products) might also help. The same is true of cars. People prefer “independent” sources such as this when they are looking for product information. However, they also often consult non-neutral sources of informa- tion, such advertisements, brochures, company websites, and salespeople.

Stage 3. Product Evaluation

Obviously, there are hundreds of different backpacks and cars available. It’s not possible for you to ex- amine all of them. In fact, good salespeople and marketing professionals know that providing you with too many choices can be so overwhelming that you might not buy anything at all. Consequently, people often use heuristics, or “rules of thumb” that provide them with mental shortcuts in the decision-making process. Assuming a high-priced product is well-made and immediately rejecting the cheapest backpacks you see on the shelf as a result is an example of your using heuristics.

In addition to heuristics (quick rules), you also likely to use other evaluative criteria to help you narrow down your choices. Evaluative criteria are certain characteristics that are important to you such as the price of the backpack, the size, the number of compartments, and color. Some of these characteristics are more important than others. For example, the size of the backpack and the price might be more important to you than the color—unless, say, the color is hot pink and you hate pink. You must decide what criteria are most important and how well different alternatives meet the criteria. Backpacks or cars that meet your initial criteria will determine the set of brands you’ll consider for purchase.

Companies want to convince you that the evaluative criteria you are considering reflect the strengths of their products. For example, you might not have thought about the weight or durability of the backpack you want to buy. However, a backpack manu- facturer such as Osprey might remind you through magazine ads, packaging informa- tion, and its website that you should pay attention to these features—features that hap- pen to be key selling points of its backpacks. Automobile manufacturers may have sim- ilar models, so don’t be afraid to add criteria to help you evaluate cars in your consider- ation set.

Stage 4. Product Choice and Purchase

With low-involvement purchases, consumers may go from recognizing a need to pur- chasing the product. However, for backpacks and cars, you decide which one to pur- chase after you have evaluated different alternatives. In addition to which backpack or which car, you are probably also making other decisions at this stage, including where and how to purchase the backpack (or car) and on what terms. Maybe the backpack was cheaper at one store than another, but the salesperson there was rude. Or maybe you decide to order online because you’re too busy to go to the mall.

Other decisions related to the purchase, particularly those related to big-ticket items, are made at this stage as well. For example, if you’re buying a high-definition television, you might look for a store that will offer you credit or a warranty. How people are able to pay for a product can have a huge impact on where and what they

purchase. To encourage large purchases, companies like Sears and Best Buy have programs that allow con-

sumers to pay for big-ticket items over a period of time without paying interest. The retailers do so by signing buyers up for credit cards underwritten by major banks. For low-income consumers on those on fixed budgets, this is a huge selling point. In order to compete with Best Buy and Sears, Amazon.com implemented a similar program. Small firms that aren’t able to partner with major banks to offer customers credit cards can sign up with a online payment service such as PayPal Credit, which provides buyers with similar payment terms.

The ease with which busy consumers are able to pay also has an impact on what and where people buy products. Amazon, Uber, Starbucks, and services like Apple Pay have attracted buyers by making it oh-so-easy to pay with just a click of a button on their computers, tablets, or mobile phones. There’s no need to dig for one’s credit card and type the numbers in online or hand the card to a cashier and wait to have it swiped. Other firms are realizing this and adding “buy” buttons to make it easy to purchase products from mobile phones, including Google, Pinterest, and Instagram. Google is adding a buy but- ton to its shopping search results. Pinterest is offering sellers “buyable pins,” each of which will feature a blue price tag. Click on the price tag, and instead of having to hunt for the product online to buy it, the product is yours.

62 PRINCIPLES OF MARKETING VERSION 3.0

postpurchase dissonance

Situations that occur when experiences do not match expectations and consumers rethink their decisions after purchasing products and wonder if they made the best decision.

F I G U R E 3 . 1 0

The hike up to Mount Everest used to be pristine. Now it looks more like this. Who’s responsible? Are consumers or companies responsible, or both?

planned obsolescence

A deliberate effort by companies to make their products obsolete, or unusable, after a period of time.

Stage 5. Postpurchase Use and Evaluation

At this point in the process you decide whether the backpack you purchased is everything it was cracked up to be. Hopefully it is. If it’s not, you’re likely to suffer what’s called postpurchase dissonance. You might call it buyer’s remorse. Typically, dissonance occurs when a product or service does not meet your expectations. Consumers are more likely to experience dissonance with products that are relatively expensive and that are purchased infrequently.

You want to feel good about your purchase, but you don’t. You begin to wonder whether you should have waited to get a better price, purchased something else, or gathered more information first. Consumers commonly feel this way, which is a problem for sellers. If you don’t feel good about what you’ve purchased from them, you might return the item and never purchase anything from them again. Or, worse yet, you might tell everyone you know how bad the product was.

Companies do various things to try to prevent buyer’s remorse. For smaller items, they might offer a money back guarantee or they might encourage their salespeople to tell you what a great purchase you made. How many times have you heard a salesperson say, “That outfit looks so great on you!” For larger items, companies might offer a warranty, along with instruction booklets, and a toll-free troubleshooting line to call or they might have a salesperson call you to see if you need help with product. Automobile companies may offer loaner cars when you bring your car in for service.

Companies may also try to set expectations in order to satisfy customers. Service companies such as restaurants do this frequently. Think about when the hostess tells you that your table will be ready in 30 minutes. If they seat you in 15 minutes, you are much happier than if they told you that your table would be ready in 15 minutes, but it took 30 minutes to seat you. Similarly, if a store tells you that your pants will be altered in a week and they are ready in three days, you’ll be much more satisfied than if they said your pants would be ready in three days, yet it took a week before they were ready.

Stage 6. Disposal of the Product

There was a time when neither manufacturers nor consumers thought much about how products got disposed of, so long as people bought them. But that’s changed. How products are being disposed of is becoming extremely important to consumers and society in general. Computers and batteries, which leech chemicals into landfills, are a huge problem. Consumers don’t want to degrade the environment if they don’t have to, and companies are becoming more aware of this fact.

Take, for example, Crystal Light, a water-based beverage sold in grocery stores. You can buy it in a bottle. However, many people buy a concentrated form of it, put it in reusable pitchers or bottles, and add water. That way, they don’t have to buy and dis- pose of plastic bottle after plastic bottle, damaging the environment in the process. Windex has done something similar with its window cleaner. Instead of buying new bottles of it all the time, you can purchase a concentrate and add water. Most grocery stores sell cloth bags consumers can reuse instead of continually using and discarding plastic ones.

Other companies are less concerned about conservation than they are about planned obsolescence. Planned obsolescence is a deliberate effort by companies to make their products obsolete, or unusable, after a period of time. The goal is to im- prove a company’s sales by reducing the amount of time between the repeat purchases consumers make of products.

Newer versions of software (that sometimes aren’t better than older ones) are ex- amples. Windows 8 is a case in point. The operating system wasn’t well-received, but consumers were generally forced to buy it because it was preinstalled on the PCs they bought.

CHAPTER 3 CONSUMER BEHAVIOR: HOW PEOPLE MAKE BUYING DECISIONS 63

F I G U R E 3 . 1 1

Disposable lighters came into vogue in the United States in the 1960s. You probably don’t own a cool, nondisposable lighter like one of these, but you don’t have to bother refilling it with lighter fluid either.

Making products made with cheaper plastic parts that break more easily than those with more-ex- pensive metal parts is another way to build planned obsolescence into products. Vacuum cleaners are an example. In decades past they were made largely of metal and lasted a long time. Not anymore. How many vacuum cleaners have you or your family owned over the years? Probably a lot.

Products that are deliberately disposable are another way in which firms have managed to reduce the amount of time between purchases. Disposable lighters are an example. Do you know anyone today that owns a nondisposable lighter? Believe it or not, prior to the 1960s, scarcely anyone could have ima- gined using a cheap disposable lighter. There are many more disposable products today than there were in years past—including everything from bottled water and individually wrapped snacks to single- use eye drops and mobile phones.

K E Y T A K E A W A Y S

Consumer behavior looks at the many reasons why people buy things and later dispose of them. Consumers go through distinct buying phases when they purchase products: (1) realizing the need or wanting something, (2) searching for information about the item, (3) evaluating different products, (4) choosing a product and purchasing it, (5) using and evaluating the product after the purchase, and (6) disposing of the product. A consumer’s level of involvement is how interested he or she is in buying and consuming a product. Low-involvement products are usually inexpensive and pose a low risk to the buyer if he or she makes a mis- take by purchasing them. High-involvement products carry a high risk to the buyer if they fail, are complex, or have high price tags. Limited-involvement products fall somewhere in between.

R E V I E W Q U E S T I O N S

1. How do low-involvement decisions differ from high-involvement decisions in terms of relevance, price, frequency, and the risks their buyers face? Name some products in each category that you’ve recently purchased.

2. What stages do people go through in the buying process for high-involvement decisions? How do the stages vary for low-involvement decisions?

3. What is postpurchase dissonance and what can companies do to reduce it?

64 PRINCIPLES OF MARKETING VERSION 3.0

3. DISCUSSION QUESTIONS AND ACTIVITIES

D I S C U S S I O N Q U E S T I O N S

1. Why do people in different cultures buy different products? Discuss with your class the types of vehicles you have seen other countries. Why are they different, and how do they better meet buyers’ needs in those countries? What types of cars do you think should be sold in the United States today?

2. What is your opinion of companies like Google that gather information about your browsing patterns? What advantages and drawbacks does this pose for consumers? If you were a business owner, what kinds of information would you gather on your customers and how would you use it?

3. Are there any areas in which you consider yourself an opinion leader or an influencer? What are they? How are companies getting information about opinion leaders?

4. What purchasing decisions have you been able to influence in your family and why? Is marketing to children a good idea? If not, what if one of your competitors were successful in doing so? Would it change your opinion?

5. Name some products that have led to postpurchase dissonance on your part. Then categorize them as high- or low-involvement products.

6. Describe the decision process for impulse purchases at the retail level. Would they be classified as high- or low-involvement purchases?

7. How do you think the manufacturers of products sold through infomercials reduce postpurchase dissonance?

8. Explain the relationship between extensive, limited, and routine decision making relative to high- and low- involvement decisions. Identify examples of extensive, limited, and routine decision making based on your personal consumption behavior.

9. Why is understanding consumer behavior so important for companies? Think of examples where you do not think companies understood their consumers.

A C T I V I T I E S

1. Go to http://www.ospreypacks.com and enter the blog site. Does the blog make you more or less inclined to purchase an Osprey backpack?

2. Select three advertisements and describe the needs identified by Abraham Maslow that each ad addresses. Find an international version of an advertisement for one of the products. What differences do you detect in the international version of the ad?

3. Break up into groups and visit an ethnic part of your town that differs from your own ethnicity(ies). Walk around the neighborhood and its stores. What types of marketing and buying differences do you see? Write a report of your findings.

4. Using Maslow’s hierarchy of needs, identify a list of popular advertising slogans that appeal to each of the five levels.

5. Identify how McDonald’s targets both users (primarily children) and buyers (parents, grandparents, etc.). Provide specific examples of strategies used by the fast-food marketer to target both groups. Make it a point to incorporate Happy Meals and Mighty Kids Meals into your discussion.

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CHAPTER 3 CONSUMER BEHAVIOR: HOW PEOPLE MAKE BUYING DECISIONS 65

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66 PRINCIPLES OF MARKETING VERSION 3.0

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