Marketing homework

Consumer Behavior Building Marketing Strategy

David L. Mothersbaugh University of Alabama

Del I. Hawkins University of Oregon

T H I R T E E N T H E D I T I O N

Contributing Authors Linda L. Mothersbaugh Integrated Solutions, LLC

Gail Tom California State University, Sacramento

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CONSUMER BEHAVIOR: BUILDING MARKETING STRATEGY, THIRTEENTH EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2016 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2013, 2010, and 2007. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

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ISBN 978-1-259-23254-1 MHID 1-259-23254-9

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Library of Congress Cataloging-in-Publication Data Hawkins, Del I. Consumer behavior : building marketing strategy / David L. Mothersbaugh, University of Alabama, Del I. Hawkins, University of Oregon.—Thirteenth edition. pages cm Hawkins’s name appears first on earlier editions. ISBN 978-1-259-23254-1 (alk. paper) 1. Consumer behavior—United States. 2. Market surveys—United States. 3. Consumer behavior—United States—Case studies. I. Mothersbaugh, David L. II. Title. HF5415.33.U6H38 2016 658.8’3420973—dc23 2015003823

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.

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paintings. If you had certain natural talents, the right teacher, and the right topic, you might even produce a masterpiece. The same approach should be taken by one wishing to become a marketing manager, a sales- person, or an advertising director. The various factors or principles that influence consumer behavior should be thoroughly studied. Then, one should practice applying these principles until acceptable marketing strategies result. However, while knowledge and prac- tice can in general produce acceptable strategies, great marketing strategies, like masterpieces, require special talents, effort, timing, and some degree of luck (what if Mona Lisa had not wanted her portrait painted?).

The art analogy is useful for another reason. All of us, professors and students alike, tend to ask, “How can I use the concept of, say, social class to develop a successful marketing strategy?” This makes as much sense as an artist asking, “How can I use blue to cre- ate a great picture?” Obviously, blue alone will sel- dom be sufficient for a great work of art. Instead, to be successful, the artist must understand when and how to use blue in conjunction with other elements in the picture. Likewise, the marketing manager must under- stand when and how to use a knowledge of social class in conjunction with a knowledge of other factors in designing a successful marketing strategy.

This book is based on the belief that knowledge of the factors that influence consumer behavior can, with practice, be used to develop sound marketing strat- egy. With this in mind, we have attempted to do three things. First, we present a reasonably comprehensive description of the various behavioral concepts and theories that have been found useful for understand- ing consumer behavior. This is generally done at the beginning of each chapter or at the beginning of major subsections in each chapter. We believe that a person must have a thorough understanding of a concept in order to successfully apply that concept across differ- ent situations.

Second, we present examples of how these con- cepts have been utilized in the development of mar- keting strategy. We have tried to make clear that these examples are not “how you use this concept.” Rather, they are presented as “how one organization facing a particular marketing situation used this concept.”

Marketing attempts to influence the way consumers behave. These attempts have implications for the orga- nizations making them, the consumers they are trying to influence, and the society in which these attempts occur. We are all consumers and we are all members of society, so consumer behavior, and attempts to influ- ence it, is critical to all of us. This text is designed to provide an understanding of consumer behavior. This understanding can make us better consumers, better marketers, and better citizens.

MARKETING CAREERS AND CONSUMER BEHAVIOR A primary purpose of this text is to provide the student with a usable, managerial understanding of consumer behavior. Most students in consumer behavior courses aspire to careers in marketing management, sales, or advertising. They hope to acquire knowledge and skills that will be useful to them in these careers. Unfortu- nately, some may be seeking the type of knowledge gained in introductory accounting classes; that is, a set of relatively invariant rules that can be applied across a variety of situations to achieve a fixed solution that is known to be correct. For these students, the uncertainty and lack of closure involved in dealing with living, breathing, changing, stubborn consumers can be very frustrating. However, if they can accept dealing with endless uncertainty, utilizing an understanding of con- sumer behavior in developing marketing strategy will become tremendously exciting.

It is our view that the utilization of knowledge of consumer behavior in the development of marketing strategy is an art. This is not to suggest that scientific principles and procedures are not applicable; rather, it means that the successful application of these prin- ciples to particular situations requires human judgment that we are not able to reduce to a fixed set of rules.

Let us consider the analogy with art in some detail. Suppose you want to become an expert artist. You would study known principles of the visual effects of blending various colors, of perspective, and so forth. Then you would practice applying these principles until you developed the ability to produce acceptable

Preface

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Prefaceiv

groups. As educated citizens, we have a responsibility to take part in these sorts of debates and work toward posi- tive solutions. However, developing sound positions on these issues requires an understanding of such factors as information processing as it relates to advertising— an important part of our understanding of consumer behavior.

The debates described above are just a few of the many that require an understanding of consumer behav- ior. We present a number of these topics throughout the text. The objective is to develop the ability to apply consumer behavior knowledge to social and regulatory issues as well as to business and personal issues.

FEATURES OF THE THIRTEENTH EDITION Marketing and consumer behavior, like the rest of the world, are changing at a rapid pace. Both the way consumers behave and the practices of studying that behavior continue to evolve. In order to keep up with this dynamic environment, the thirteenth edition includes a number of important features.

Internet, Mobile, and Social Media The Internet, mobile marketing, and social media are dramatically changing the way in which consum- ers shop and buy. This edition integrates the latest research, practices, and examples concerning technol- ogy throughout the text and the cases.

Global Marketing Previous editions have included a wealth of global material, and this edition is no exception. Most chap- ters contain multiple global examples woven into the text. In addition, Chapter 2 and several of the cases are devoted to global issues.

Ethnic Subcultures This edition continues our emphasis on the exciting issues surrounding marketing to ethnic subcultures. Ethnic diversity is increasing and we draw in the lat- est research and emerging trends to shed light on this important topic.

Third, at the end of each chapter and each major section, we present a number of questions, activities, or cases that require the student to apply the concepts.

CONSUMING AND CONSUMER BEHAVIOR The authors of this book are consumers, as is everyone reading this text. Most of us spend more time buying and consuming than we do working or sleeping. We consume products such as cars and fuel, services such as haircuts and home repairs, and entertainment such as television and concerts. Given the time and energy we devote to consuming, we should strive to be good at it. A knowledge of consumer behavior can be used to enhance our ability to consume wisely.

Marketers spend billions of dollars attempting to influence what, when, and how you and I consume. Marketers not only spend billions attempting to influ- ence our behavior but also spend hundreds of millions of dollars studying our behavior. With a knowledge of consumer behavior and an understanding of how mar- keters use this knowledge, we can study marketers. A television commercial can be an annoying interrup- tion of a favorite program. However, it can also be a fascinating opportunity to speculate on the commer- cial’s objective, its target audience, and the underly- ing behavior assumptions. Indeed, given the ubiquitous nature of commercials, an understanding of how they are attempting to influence us or others is essential to understand our environment.

Throughout the text, we present examples that illustrate the objectives of specific marketing activi- ties. By studying these examples and the principles on which they are based, one can develop the ability to discern the underlying logic of the marketing activities encountered daily.

SOCIAL RESPONSIBILITY AND CONSUMER BEHAVIOR What are the costs and benefits of regulating the mar- keting of food to children? How much more needs to be done to protect the online privacy of children? Of adults? What is the appropriate type and size of warn- ing label for cigarettes that should be mandated by the federal government? These issues are currently being debated by industry leaders and consumer advocacy

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Preface v

many segmentation schemes that provide insights into the development of marketing strategy. The opening examples, in-text examples, and consumer insights provide additional strategic insight by showing how specific companies utilize various consumer behavior concepts in developing effective marketing strategies. Finally, cases provide an opportunity to apply con- sumer behavior concepts to real-world problems.

Strategic Application This edition continues our emphasis on the application of consumer behavior concepts and theory to exciting marketing problems and important emerging trends. We do this through our heavy emphasis on segmenta- tion schemes, as well as opening examples, featured consumer insights, and cases. This edition contains

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2 Cross-Cultural Variations In Consumer Behavior chapter

Chapter Features

Walkthrough

Each chapter contains a variety of features designed to enhance students’ understanding of the material as well as to make the material more fun.

Learning Objectives We are dedicated to making this text a valuable learning and teaching resource. We believe the learning objectives aid both students and instructors. Each chapter starts with a set of learning objectives linked to key learning out- comes that are then integrated throughout the text and in other learning and teaching resources.

Define the concept of culture.

Describe core values that vary across culture and influence behaviors.

Understand cross-cultural variations in non- verbal communications.

LO1

LO2

LO3

Summarize key aspects of the global youth culture.

Understand the role of global demographics

List the key dimensions in deciding to enter a foreign market.

LO4

LO5

LO6

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

CHANGES IN AMERICAN CULTURAL VALUES Observable shifts in behavior, including consumption behavior, often reflect shifts in cultural values, widely held beliefs that affirm what is desirable. Therefore, it is neces- sary to understand the underlying value shifts to understand current and future consumer behavior. Although we discuss American values as though every American has the same values, in fact there is substantial variance in values across individuals and groups. In addi- tion, changes in values tend to occur slowly and unevenly across individuals and groups. While traumatic events such as the 9/11 attacks and the recent major recession can produce value shifts, a slow evolution is more common. Caution should be used in assuming that short-term behavioral or attitudinal changes in response to such events represent long- lasting value shifts.

Figure 3–1 presents our estimate of how American values are changing. These are the same values used to describe different cultures in Chapter 2. It must be emphasized that Figure 3–1 is based on the authors’ subjective interpretation of the American society. You should feel free, indeed compelled, to challenge these judgments.

LO1

r Areas in the chapter that deal with a learn- ing objective are tagged for easy reference.

r The summary section in the end-of-chapter material is organized around the learning objectives to provide additional clarity.

r The student quizzes on the student online learning center (Student OLC) are tagged by these learning objectives.

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Four-Color Illustrations Print ads, web pages, storyboards, and pho- tos of point-of-purchase displays and pack- ages appear throughout the text. Each is directly linked to the text material both by text references to each illustration and by the descriptive comments that accompany each illustration. These illustrations, which we’ve continued to update with the thir- teenth edition, provide vivid examples and applications of the concepts and theories presented in the text.

�r� Global agnostics (9 percent)—Don’t base decisions on global brand name; evaluate as they would local brands; don’t see global brands as special. Higher in the United States and South Africa. Lower in Japan, Indonesia, China, and Turkey.

Corporate responsibility and ethical issues can span from labor policies to influences on consumption of products linked to negative consequences. One example is American tobacco companies, which are aggressively marketing their products in the developing countries of Asia, Latin America, Africa, and Eastern Europe. Smoking-related deaths are now a leading killer in Asia, where increases in female smoking are a major concern.8 As one World Health Organization (WHO) official notes:

Integrated Coverage of Ethical/Social Issues Marketers face numerous ethical issues as they apply their understanding of consumer behavior in the marketplace. We describe and discuss many of these issues. These discus- sions are highlighted in the text via an “ethics” icon in the margin. In addition, Chapter 20 is devoted to social and regulation issues relating to marketing practice. Several of the cases are also focused on ethical or regulatory issues, including all of the cases following Part Six.

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Define the concept of culture.

Describe core values that vary across culture and influence behaviors.

Understand cross-cultural variations in non- verbal communications.

LO1

LO2

LO3

Summarize key aspects of the global youth culture.

Understand the role of global demographics

List the key dimensions in deciding to enter a foreign market.

LO4

LO5

LO6

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

Firms often aspire to be global. The benefits can be significant, but the challenges are stag- gering. The adaptations, adjustments, and considerations necessary when doing busi- ness across country and cultural borders are numerous. The following examples (Target, Bunnies, and Apple) illustrate the branding and logo issues created by global trademark law.

Target: United States versus Australia— Target, the 1,800-store Minneapolis-based retailer, recently established its first non-U.S. stores in Canada.1 Although this is Target’s first venture beyond its American borders, since 1968 there have been Target depart- ment stores in Australia. Target Australia (300 stores, $3.8 B annual revenue) bears an uncanny resemblance to the U.S. Target, with the same (a) “Target” name in the same font; (b) red and white bulls’-eye logo on its store- front, website, and ads; (c) tagline “Expect more, Pay less”; as well as a mix of products that consumers likely would find indistinguish- able from those offered in Target U.S.

The explanation for this seemingly odd occurrence can be found in trademark law and the historical development of regional and local brands at a time when globalization was less prevalent. Trademarks for the most part can be established only in one country at a time. A company doing business in multiple

countries must obtain trademarks for its name separately for each country (Target U.S. did so in 1966–67; Target Australia did so in 1968). Why Target U.S. would have allowed this is speculative, but one expert suggests:

.  .  . the two Targets [likely] had some sort of

informal, handshake agreement. Fifty years ago,

retail was primarily a local business and there

were very few, if any, truly global brands. The

idea that Target U.S. and Target Australia would

somehow cross paths seemed remote at best.

Currently, Target U.S. and Target Australia are not directly competing. But the globalized nature of consumer buying, the permeability of country boundaries provided by Internet access, and Target U.S.’s desire to grow beyond its borders paints a scenario that could create challenges and conflict moving forward.

Pink Bunnies: Energizer versus Duracell— The localized nature of trademark laws also explains the existence of two battery bunnies, the Energizer Bunny in the United States and Canada and the Duracell Bunnies in Europe and Australia. In 1973, Duracell created the Duracell Bunny to personify the long life of its batteries. In a worldwide advertisement cam- paign from 1973 to 1980, the drum-beating bunny powered by Duracell batteries outlasted

Opening Vignettes Each chapter begins with a practical example that introduces the material in the chapter. These involve situations in which businesses, government units, or nonprofit organiza- tions have used or misused consumer behavior principles. Many of the opening vignettes are new to the thirteenth edition.

This ad campaign

uses a global youth

appeal to target style

leaders around the

world.

ILLUSTRATION 2-7

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Tables Other-Oriented Values

r� Individual/Collective.�"SF�JOEJWJEVBM�BDUJWJUZ�BOE�JOJUJBUJWF�WBMVFE�NPSF�IJHIMZ�UIBO�DPMMFDUJWF�BDUJWJUZ�BOE�DPOGPSNJUZ r� �Youth/Age.�*T�GBNJMZ�MJGF�PSHBOJ[FE�UP�NFFU�UIF�OFFET�PG�UIF�DIJMESFO�PS�UIF�BEVMUT �"SF�ZPVOHFS�PS�PMEFS�QFPQMF�WJFXFE�BT�MFBEFST�BOE�SPMF�NPEFMT r� Extended/Limited family.�5P�XIBU�FYUFOU�EPFT�POF�IBWF�B�MJGFMPOH�PCMJHBUJPO�UP�OVNFSPVT�GBNJMZ�NFNCFST r� Masculine/Feminine.�5P�XIBU�FYUFOU�EPFT�TPDJBM�QPXFS�BVUPNBUJDBMMZ�HP�UP�NBMFT r� Competitive/Cooperative.�%PFT�POF�PCUBJO�TVDDFTT�CZ�FYDFMMJOH�PWFS�PUIFST�PS�CZ�DPPQFSBUJOH�XJUI�UIFN r� �Diversity/Uniformity.�%PFT�UIF�DVMUVSF�FNCSBDF�WBSJBUJPO�JO�SFMJHJPVT�CFMJFG �FUIOJD�CBDLHSPVOE �QPMJUJDBM�WJFXT �BOE�PUIFS�JNQPSUBOU�CFIBWJPST� BOE�BUUJUVEFT

Environment-Oriented Values

r� Cleanliness.�5P�XIBU�FYUFOU�JT�DMFBOMJOFTT�QVSTVFE�CFZPOE�UIF�NJOJNVN�OFFEFE�GPS�IFBMUI r� Performance/Status.�*T�UIF�DVMUVSF�T�SFXBSE�TZTUFN�CBTFE�PO�QFSGPSNBODF�PS�PO�JOIFSJUFE�GBDUPST�TVDI�BT�GBNJMZ�PS�DMBTT r� Tradition/Change.�"SF�FYJTUJOH�QBUUFSOT�PG�CFIBWJPS�DPOTJEFSFE�UP�CF�JOIFSFOUMZ�TVQFSJPS�UP�OFX�QBUUFSOT�PG�CFIBWJPS r� �Risk taking/Security.�"SF�UIPTF�XIP�SJTL�UIFJS�FTUBCMJTIFE�QPTJUJPOT�UP�PWFSDPNF�PCTUBDMFT�PS�BDIJFWF�IJHI�HPBMT�BENJSFE�NPSF�UIBO�UIPTF� XIP�EP�OPU

r� Problem solving/Fatalistic.�"SF�QFPQMF�FODPVSBHFE�UP�PWFSDPNF�BMM�QSPCMFNT �PS�EP�UIFZ�UBLF�B�iXIBU�XJMM�CF �XJMM�CFu�BUUJUVEF r� Nature.�*T�OBUVSF�SFHBSEFE�BT�TPNFUIJOH�UP�CF�BENJSFE�PS�PWFSDPNF

Self-Oriented Values

r� Active/Passive.�*T�B�QIZTJDBMMZ�BDUJWF�BQQSPBDI�UP�MJGF�WBMVFE�NPSF�IJHIMZ�UIBO�B�MFTT�BDUJWF�PSJFOUBUJPO r� Sensual gratification/Abstinence.�5P�XIBU�FYUFOU�JT�JU�BDDFQUBCMF�UP�FOKPZ�TFOTVBM�QMFBTVSFT�TVDI�BT�GPPE �ESJOL �BOE�TFY r� Material/Nonmaterial.�)PX�NVDI�JNQPSUBODF�JT�BUUBDIFE�UP�UIF�BDRVJTJUJPO�PG�NBUFSJBM�XFBMUI r� Hard work/Leisure.�*T�B�QFSTPO�XIP�XPSLT�IBSEFS�UIBO�FDPOPNJDBMMZ�OFDFTTBSZ�BENJSFE�NPSF�UIBO�POF�XIP�EPFT�OPU r� Postponed gratification/Immediate gratification.�"SF�QFPQMF�FODPVSBHFE�UP�iTBWF�GPS�B�SBJOZ�EBZu�PS�UP�iMJWF�GPS�UPEBZu r� Religious/Secular.�5P�XIBU�FYUFOU�BSF�CFIBWJPST�BOE�BUUJUVEFT�CBTFE�PO�UIF�SVMFT�TQFDJGJFE�CZ�B�SFMJHJPVT�EPDUSJOF

2-1Cultural Values of Relevance to Consumer Behavior TABLE

Consumer Insights These boxed discussions provide an in-depth look at a particularly interesting consumer study or marketing practice. Each has sev- eral questions within it that are designed to encourage critical thinking by the students. Many of the consumer insights are new to the thirteenth edition.

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CONSUMER INSIGHT 2-1 Unilever Adapts to Sell Laundry Products Globally

Unilever is highly successful in marketing its laundry products outside of the United States. The reason is it continually adapts to existing and emerging factors both within and across the countries where it does business. A stunning statistic is that “[e]very half hour 7 million people in the world wash their cloths with Unilever prod- ucts, and 6 million of them do so by hand.” Below we touch on each of the seven global considerations as they relate to Unilever’s global strategy.138

�t� Cultural Homogeneity. In the global laundry market, heterogeneity, even within a country, can occur. For example, Brazil’s Northeast and South- east regions are very different. One difference is that in the poorer Northeast region, most laundry is done by hand and more bar soap than powder is used. In the more affluent Southeast region, most laundry is done in a washing machine and more powder detergent is used than bar soap in the process.

�t� Needs. Hand washing versus machine washing leads to different laundry product needs. In addi- tion, in developing countries that are an important focus for Unilever, products must be adapted to meet strength of cleaning needs related to removing sweat, odors, and tough stains due to physical labor.

�t� Affordability. Clearly affordability is a component in pricing the laundry detergents themselves to be competitive. However, Unilever also faces the situa- tion that a transition from hand washing to washing machines depends in large part on the economic prosperity of a country or region, as this determines the affordability of washing machines. Adoption of washing machines, in turn, changes the type and amounts of laundry products used, as we saw earlier.

�t� Relevant Values. One source indicates that cleanliness, convenience, and sustainability are key value aspects in laundry products that vary across cultures. In many countries where Unilever oper- ates, there are segments of kids dubbed “Nintendo Kids” who don’t tend to go outside and play and thus don’t get dirty. A core strategy for a number of their brands in these markets is the “dirt is good” campaign that stresses that playing and getting dirty

are part of a healthy child’s development and “let Unilever worry about getting their clothes clean.”

�t� Infrastructure. A broad infrastructure issue in laundry is access to hot water. Many in developing countries don’t have access to hot water or large quantities of water. Unilever responded in India with Surf Excel Quick Wash, an enzyme-based product that uses less water and works under lower water temperatures.

�t� Communication. Europeans have traditionally cleaned their clothes in much hotter water with the logic being that “boiling clothes” is the only real way to get them clean and kill germs. This trend is revers- ing as Unilever pushes more environmental-friendly products and as Europeans have begun to wash in cooler temperatures to save energy. An interesting consequence of the shift is that antibacterial addi- tives are now demanded by European customers to kill the germs.

�t� Ethical Implications. While conversion of the world’s consumers to fully automated washing machines would help standardize Unilever’s approach, it has major implications for water usage. This is because compared to hand washing, machine wash- ing can, depending critically on the number of rinse cycles needed, use more water. Continued innovation in products toward lower water use will be a key ethical and performance issue for Unilever moving forward.

As you can see, Unilever has and must continue to innovate and adjust as its target markets evolve along these critical dimensions.

Critical Thinking Questions 1. How might generational influences affect the adop-

tion of washing machines even after economic condi- tions make them affordable?

2. What other features beyond price and form (bar ver- sus powder) do you think Unilever has had to adjust to meet different needs/wants/preferences across different markets?

3. Which core value is related to sustainability and green marketing? Does this value vary across countries and cultures?

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1. What are some of the ethical issues involved in cross-cultural marketing?

2. What is meant by the term culture? 3. What does the statement “Culture sets boundaries

on behaviors” mean? 4. What is a norm? From what are norms derived? 5. What is a cultural value? 6. What is a sanction? 7. Cultural values can be classified as affecting one of

three types of relationships—other, environment, or self. Describe each of these, and differentiate each one from the others.

8. How does the first of the following paired orientations differ from the second?

a. Individual/Collective b. Performance/Status

c. Tradition/Change d. Limited/Extended family e. Active/Passive f. Material/Nonmaterial g. Hard work/Leisure h. Risk taking/Security i. Masculine/Feminine j. Competitive/Cooperative k. Youth/Age l. Problem solving/Fatalistic m. Diversity/Uniformity n. Postponed gratification/Immediate

gratification o. Sensual gratification/Abstinence p. Religious/Secular 9. What is meant by nonverbal communications? Why

is this a difficult area to adjust to?

REVIEW QUESTIONS

Cultural values 41 Culture 40 Demographics 63 Environment-oriented values 43 Glocalization 64 Guanxi 58 Instrumental materialism 52

Monochronic time perspective 55 Nonverbal communication

systems 54 Norms 41 Other-oriented values 43 Personal space 56 Polychronic time perspective 55

Power distance 49 Purchasing power parity (PPP) 64 Sanctions 41 Self-oriented values 43 Terminal materialism 52 Verbal communication systems 53

KEY TERMS

LO1: Define the concept of culture Culture is defined as the complex whole that includes knowledge, beliefs, art, law, morals, customs, and any other capabilities acquired by humans as members of society. It includes almost everything that influ- ences an individual’s thought processes and behaviors. Culture operates primarily by setting boundaries for individual behavior and by influencing the function- ing of such institutions as the family and mass media. The boundaries, or norms, are derived from cultural values. Values are widely held beliefs that affirm what is desirable.

LO2: Describe core values that vary across culture and influence behaviors Cultural values are classified into three categories: other, environment, and self. Other-oriented values reflect a society’s view of the appropriate relationships between individuals and groups within that society. Relevant values of this nature include individual/ collective, youth/age, extended/limited family,

masculine/feminine, competitive/cooperative, and diversity/uniformity. Environment-oriented values prescribe a society’s relationships with its economic, technical, and physical environments. Examples of environment values are cleanliness, performance/status, tradition/change, risk taking/security, problem solving/ fatalistic, and nature. Self-oriented values reflect the objectives and approaches to life that individual mem- bers of society find desirable. These include active/ passive, sensual gratification/abstinence, material/ nonmaterial, hard work/leisure, postponed gratification/ immediate gratification, and religious/secular.

LO3: Understand cross-cultural variations in nonverbal communications Nonverbal communication systems are the arbitrary meanings a culture assigns actions, events, and things other than words. Major examples of nonverbal com- munication variables that affect marketers are time, space, symbols, relationships, agreements, things, and etiquette.

SUMMARY

End of Chapter Material Summary

The summary section integrates material organized around the learning objectives to provide additional clarity.

Key Terms

Discussion Questions

These questions can be used to help develop or test the students’ understanding of the material in the chapter. Answering these questions requires the student to utilize the material in the chapter to reach a recommendation or solution. However, they can generally be answered without external activities such as customer interviews; therefore, they can be assigned as in-class activities.

Review Questions

The review questions at the end of each chapter allow stu- dents or the instructor to test the acquisition of the facts contained in the chapter. The questions require memoriza- tion, which we believe is an important, though insufficient, part of learning.

19. Why should we study foreign cultures if we do not plan to engage in international or export marketing?

20. Is a country’s culture more likely to be reflected in its art museums or its television commercials? Why?

21. Are the cultures of the world becoming more similar or more distinct?

22. Why do values differ across cultures? 23. The text lists 18 cultural values (in three

categories) of relevance to marketing practice. Describe and place into one of the three categories

d. Fast food e. Luxury cars f. Cell phones 27. Why is materialism higher in Korea than in the

United States, where given their collectivist culture one might expect materialism to be lower?

28. What values underlie the differences between Fiji Island and U.S. children in terms of the strategies they use to influence their parents’ decisions? What marketing implications emerge?

DISCUSSION QUESTIONS

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OTHER LEARNING AIDS IN THE TEXT Three useful sets of learning material are presented outside the chapter format—cases, an overview of consumer research methods, and a format for a consumer behavior audit.

Cases

There are cases at the end of each major section of the text except the first. Many of the cases are new to the 13e. Many of the cases can be read in class and used to generate discussion of a particular topic. Students like this approach, and many instructors find it a useful way to motivate class discussion.

Other cases are more complex and data intense. They require several hours of effort to analyze. Still others can serve as the basis for a term project. We have used several cases in this manner with success (the assignment is to develop a marketing plan clearly identi- fying the consumer behavior constructs that underlie the plan).

Each case can be approached from a variety of angles. A number of discussion ques- tions are provided with each case. However, many other questions can be used. In fact, while the cases are placed at the end of the major sections, most lend themselves to dis- cussion at other points in the text as well.

Consumer Research Methods Overview

Appendix A provides a brief overview of the more commonly used research methods in consumer behavior. While not a substitute for a course or text in marketing research, it is a useful review for students who have completed a research course. It can also serve to provide students who have not had such a course with relevant terminology and a very basic understanding of the process and major techniques involved in consumer research.

Consumer Behavior Audit

Appendix B provides a format for doing a consumer behavior audit for a proposed mar- keting strategy. This audit is basically a list of key consumer behavior questions that should be answered for every proposed marketing strategy. Many students have found it particularly useful if a term project relating consumer behavior to a firm’s actual or pro- posed strategy is required.

42. Interview two students from two different cultures. Determine the extent to which the following are used in those cultures and the variations in the values of those cultures that relate to the use of these products:

a. Gift cards b. Energy drinks (like Red Bull) c. Fast-food restaurants d. Exercise equipment e. Music f. Internet 43. Interview two students from two different foreign

46. Interview two students from Southeast Asia regarding their perceptions of materialism and conspicuous consumption. Report on how their responses reinforce or conflict with the traditional value systems found in their countries.

47. Imagine you are a consultant working with your state’s or province’s tourism agency. You have been asked to advise the agency on the best promotional themes to use to attract foreign

APPLICATION ACTIVITIES Application Activities

The final learning aid at the end of each chapter is a set of application exercises. These require the students to utilize the material in the chapter in conjunction with external activities such as visiting stores to observe point-of-purchase displays, interviewing customers or managers, or evaluating television ads. They range in complexity from short evening assign- ments to term projects.

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Connect Marketing Less Managing. More Teaching. Greater Learning.

Connect® Marketing is McGraw-Hill’s web-based assignment and assessment platform that connects you and your students to the coursework. Interactive applications pro- vided for each chapter of the textbook allow instructors to assign application-focused interactive activities, engage students to “do” marketing, stimulate critical thinking, and reinforce key concepts. Students apply what they’ve learned and receive immediate feed- back. Instructors can customize these activities and monitor student progress. Connect Marketing for Consumer Behavior includes:

Simple Assignment Management and Grading

With Connect Marketing, creating assignments is easier than ever, so you can spend more time teaching and less time managing. The assignment management function enables you to:

r Create and deliver assignments easily with selectable test bank items. r Streamline lesson planning, student progress reporting, and assignment grading to

make classroom management more efficient than ever.

r Go paperless with the eBook and online submission and grading of student assignments.

New! LearnSmart and SmartBook™

LearnSmart is an adaptive study tool proven to strengthen memory recall, increase class retention, and boost grades. Students are able to study more efficiently because they are made aware of what they know and don’t know. Real-time reports quickly identify the concepts that require more attention from individual students—or the entire class. SmartBook is the first and only adaptive reading experience designed to change the way students read and learn. It creates a personalized reading experience by highlighting the most impactful concepts a student needs to learn at that moment in time. As a student engages with SmartBook, the reading experience continuously adapts by highlighting content based on what the student knows and doesn’t know. This ensures that the focus is on the content he or she needs to learn, while simultaneously promoting long-term retention of material. Use SmartBook’s real-time reports to quickly identify the concepts that require more attention from individual students—or the entire class. The end result? Students are more engaged with course content, can better prioritize their time, and come to class ready to participate.

Instructor Features

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Instructor Library

The Connect Marketing Instructor Library is your repository for additional resources to improve student engagement in and out of class. You can select and use any asset that enhances your lecture. The Connect Marketing Instructor Library includes:

r The Instructor’s Manual r Test Bank r PowerPoint r Video Cases—A set of video cases are available to adopters. These videos describe

firm strategies or activities that relate to material in the text. A guide for teaching from the videos is contained in the Instructor’s manual.

r Searchable Video Links Database—This database, is organized by chapter and searchable by topic. It contains links and classroom discussion guides for commercials and concept-based news items found in such locations as YouTube and ABC News online. This video links database provides instructors with a powerful set of teaching materials that can be used to customize PPT lectures quickly and easily.

r Searchable CB Press Highlights Database—This database, is organized by chapter and searchable by topic. CB Press Highlights provide short summaries of a current concept, company situation, regulatory issue, and so forth. These short summaries are accompanied by an in-class discussion guide. CB Press Highlights are an excellent and easy way for instructors to add value to the classroom experience with examples that are not in the text. Or instructors can assign the articles to students prior to class to generate in-class discussion.

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Responding to Learning Needs CREATE Instructors can now tailor their teaching resources to match the way they teach! With McGraw-Hill Create, www.mcgrawhillcreate.com, instructors can easily rearrange chapters, combine material from other content sources, and quickly upload and integrate their own content, like course syllabi or teaching notes. Find the right content in Create by searching through thousands of leading McGraw-Hill textbooks. Arrange the material to fit your teaching style. Order a Create book and receive a complimentary print review copy in three to five business days or a complimentary electronic review copy via e-mail within one hour. Go to www.mcgrawhillcreate.com today and register.

TEGRITY CAMPUS Tegrity makes class time available 24/7 by automatically capturing every lec- ture in a searchable format for students to review when they study and com- plete assignments. With a simple one-click start-and-stop process, you capture all computer screens and corresponding audio. Students can replay any part of any class with easy-to-use browser-based viewing on a PC or Mac. Educators know that the more students can see, hear, and experience class resources, the better they learn. In fact, studies prove it. With patented Tegrity “search anything” technology, students instantly recall key class moments for replay online, or on iPods and mobile devices. Instructors can help turn all their students’ study time into learning moments immediately supported by their lecture. To learn more about Tegrity, watch a two-minute Flash demo at http:// tegritycampus.mhhe.com.

BLACKBOARD® PARTNERSHIP McGraw-Hill Education and Blackboard have teamed up to simplify your life. Now you and your students can access Connect and Create right from within your Blackboard course—all with one single sign-on. The grade books are seamless, so when a student completes an integrated Connect assignment, the grade for that assignment automatically (and instantly) feeds your Blackboard grade center. Learn more at www.domorenow.com.

MCGRAW-HILL CAMPUS™ McGraw-Hill Campus is a new one-stop teaching and learning experience available to users of any learning management system. This institutional service allows faculty and students to enjoy single sign-on (SSO) access to

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all McGraw-Hill Higher Education materials, including the award-winning McGraw-Hill Connect platform, from directly within the institution’s web- site. With McGraw-Hill Campus, faculty receive instant access to teaching materials (e.g., eBooks, test banks, PowerPoint slides, animations, learning objects), allowing them to browse, search, and use any instructor ancillary content in our vast library at no additional cost to instructor or students.

ASSURANCE OF LEARNING READY Many educational institutions today focus on the notion of assurance of learning, an important element of some accreditation standards. Consumer Behavior: Building Marketing Strategy is designed specifically to support instructors’ assurance of learning initiatives with a simple yet powerful solu- tion. Each test bank question maps to a specific chapter learning objective listed in the text. Instructors can use our test bank software, EZ Test and EZ Test Online, to easily query for learning objectives that directly relate to the learning outcomes for their course. Instructors can then use the reporting fea- tures of EZ Test to aggregate student results in similar fashion, making the col- lection and presentation of assurance of learning data simple and easy.

AACSB TAGGING McGraw-Hill Education is a proud corporate member of AACSB International. Understanding the importance and value of AACSB accreditation, Consumer Behavior: Building Marketing Strategy recognizes the curricula guidelines detailed in the AACSB standards for business accreditation by connecting selected questions in the text and the test bank to the six general knowledge and skill guidelines in the AACSB standards. The statements contained in Consumer Behavior: Building Marketing Strategy are provided only as a guide for the users of this textbook. The AACSB leaves content coverage and assessment within the purview of individual schools, the mission of the school, and the faculty. While the Consumer Behavior: Building Marketing Strategy teaching package makes no claim of any specific AACSB qualification or evaluation, we have labeled selected questions according to the six general knowledge and skills areas.

MCGRAW-HILL CUSTOMER EXPERIENCE GROUP CONTACT INFORMATION At McGraw-Hill Education, we understand that getting the most from new technology can be challenging. That’s why our services don’t stop after you purchase our products. You can e-mail our Product Specialists 24 hours a day to get product training online. Or you can search our knowledge bank of Frequently Asked Questions on our support website. For Customer Support, call 800-331-5094 or visit www.mhhe.com/support. One of our Technical Support Analysts will be able to assist you in a timely fashion.

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Acknowledgments We enjoy studying, teaching, consulting, and writing about consumer behavior. Most of the faculty we know feel the same. As with every edition of this book, our goal for the thirteenth edition has been to make a book that students enjoy reading and that excites them about a fascinating topic.

Numerous individuals and organizations helped us in the task of writing this edition. We are grateful for their assistance. At the risk of not thanking all who deserve credit, we would like to thank Martin Horn at DDB, Tom Spencer at Claritas, Sucharita Mulpuru and Becky Anzalone at Forrester Research, Dr. Sijun Wang at Loyola Marymount University, Dr. Junwu Dong at Guangdong University, Matt Bailey at Site Logic, Ted Hornbein at Richco China, Inc., and Hyunju Shin and Woojung Chang at The University of Alabama. Thanks also to Polly Ricketts and Rachel Minor at The University of Alabama for their research assistance.

We would also like to thank the many members of the McGraw-Hill Higher Education team, including Kim Leistner, brand manager; Heather Darr, product developer; Laura Vogel, marketing manager; Jessica Portz, content project manager; Tara McDermott, designer; DeAnna Dausener, content licensing specialist, Keri Johnson, lead photo researcher.

Finally, to our colleagues at Alabama and Oregon—Thanks for your ongoing support, encouragement, and friendship.

David L. Mothersbaugh Del I. Hawkins

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Part One Introduction 2

CHAPTER ONE

Consumer Behavior and Marketing Strategy 4

Part Two External Influences 34

CHAPTER TWO

Cross-Cultural Variations in Consumer Behavior 36

CHAPTER THREE

The Changing American Society: Values 76

CHAPTER FOUR

The Changing American Society: Demographics and Social Stratification 108

CHAPTER FIVE

The Changing American Society: Subcultures 146

CHAPTER SIX

The American Society: Families and Households 182

CHAPTER SEVEN

Group Influences on Consumer Behavior 214

PART TWO CASES Cases 2–1 through 2–8 254

Part Three Internal Influences 270

CHAPTER EIGHT

Perception 272

CHAPTER NINE

Learning, Memory, and Product Positioning 312

CHAPTER TEN

Motivation, Personality, and Emotion 352

CHAPTER ELEVEN

Attitudes and Influencing Attitudes 382

CHAPTER TWELVE

Self-Concept and Lifestyle 418

PART THREE CASES Cases 3–1 through 3–9 444

Part Four Consumer Decision Process 468

CHAPTER THIRTEEN

Situational Influences 470

CHAPTER FOURTEEN

Consumer Decision Process and Problem Recognition 496

CHAPTER FIFTEEN

Information Search 518

CHAPTER SIXTEEN

Alternative Evaluation and Selection 550

CHAPTER SEVENTEEN

Outlet Selection and Purchase 580

CHAPTER EIGHTEEN

Postpurchase Processes, Customer Satisfaction, and Customer Commitment 620

PART FOUR CASES Cases 4–1 through 4–8 654

Brief Contents

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Brief Contents xvii

PART SIX CASES Cases 6–1 and 6–2 731

Appendix A Consumer Research Methods 734 Appendix B Consumer Behavior Audit 745

Photo Credits 751

Indexes 754

Part Five Organizations as Consumers 670

CHAPTER NINETEEN

Organizational Buyer Behavior 672

PART FIVE CASES Cases 5–1 and 5–2 701

Part Six Consumer Behavior and Marketing Regulation 704

CHAPTER TWENTY

Marketing Regulation and Consumer Behavior 706

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The Meaning of Consumption 27 Summary 29

Part Two External Influences 34

CHAPTER TWO Cross-Cultural Variations In Consumer Behavior 36

The Concept of Culture 40

Variations in Cultural Values 43

Other-Oriented Values 44

Environment-Oriented Values 49

Self-Oriented Values 51

Cultural Variations in Nonverbal Communications 53

Time 54

Space 56

Symbols 56

Relationships 57

Agreements 58

Things 59

Etiquette 59

Conclusions on Nonverbal Communications 60

Global Cultures 60

A Global Youth Culture? 61

Global Demographics 62

Cross-Cultural Marketing Strategy 64

Considerations in Approaching a Foreign Market 65

Summary 68

CHAPTER THREE The Changing American Society: Values 76

Changes in American Cultural Values 78

Self-Oriented Values 78

Environment-Oriented Values 82

Other-Oriented Values 86

Part One Introduction 2

CHAPTER ONE Consumer Behavior and Marketing Strategy 4

Applications of Consumer Behavior 8 Marketing Strategy 8

Regulatory Policy 8

Social Marketing 8

Informed Individuals 9

Marketing Strategy and Consumer Behavior 9 Market Analysis Components 11

The Consumers 12

The Company 12

The Competitors 12

The Conditions 13

Market Segmentation 13 Product-Related Need Sets 14

Customers with Similar Need Sets 15

Description of Each Group 16

Attractive Segment(s) to Serve 16

Marketing Strategy 17 The Product 17

Communications 18

Price 19

Distribution 20

Service 20

Consumer Decisions 20 Outcomes 21

Firm Outcomes 21

Individual Outcomes 22

Society Outcomes 23

The Nature of Consumer Behavior 24 External Influences (Part II) 24

Internal Influences (Part III) 25

Self-Concept and Lifestyle 26

Consumer Decision Process (Part IV) 27

Organizations (Part V) and Regulation (Part VI) 27

Contents

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Asian Americans 162 Consumer Segments and Characteristics 164 Marketing to Asian Americans 165

Native Americans 166 Asian Indian Americans 168 Arab Americans 168 Religious Subcultures 169

Christian Subcultures 169 Non-Christian Subcultures 172

Regional Subcultures 174 Summary 175

CHAPTER SIX The American Society: Families and Households 182

The Nature and Influence of American Households 184 The Influence of Households 184 Types of Households 185

The Household Life Cycle 186 Marketing Strategy Based on the Household Life Cycle 196 Family Decision Making 198

The Nature of Family Purchase Roles 198 Determinants of Family Purchase Roles 200 Conflict Resolution 201

Marketing Strategy and Family Decision Making 202 Consumer Socialization 203

The Ability of Children to Learn 203 The Content of Consumer Socialization 204 The Process of Consumer Socialization 205 The Supermarket as a Classroom 206

Marketing to Children 207 Summary 208

CHAPTER SEVEN Group Influences on Consumer Behavior 214

Types of Groups 216 Consumption Subcultures 217 Brand Communities 220 Online Communities and Social Networks 222

Reference Group Influences on the Consumption Process 224

The Nature of Reference Group Influence 224 Degree of Reference Group Influence 226

Marketing Strategy and Values 88 Green Marketing 88 Cause-Related Marketing 89 Marketing to Gay and Lesbian Consumers 91 Gender-Based Marketing 95

Summary 100

CHAPTER FOUR The Changing American Society: Demographics and Social Stratification 108

Demographics 110 Population Size and Distribution 110 Occupation 112 Education 112 Income 114 Age 115

Understanding American Generations 117 Pre-Depression Generation 118 Depression Generation 118 Baby Boom Generation 120 Generation X 121 Generation Y 124 Generation Z 125

Social Stratification 128 Social Structure in the United States 129

Upper Americans 129 Middle Americans 132 Lower Americans 134

The Measurement of Social Class 136 Social Stratification and Marketing Strategy 137 Summary 140

CHAPTER FIVE The Changing American Society: Subcultures 146

The Nature of Subcultures 148 Ethnic Subcultures 150 African Americans 151

Consumer Segments and Characteristics 152 Media Usage 152 Marketing to African Americans 154

Hispanics 156 Acculturation, Language, and Generational

Influences 157 Marketing to Hispanics 160

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Interpretation 289 Individual Characteristics 290 Situational Characteristics 293 Stimulus Characteristics 293 Consumer Inferences 296

Perception and Marketing Strategy 298 Retail Strategy 298 Brand Name and Logo Development 299 Media Strategy 301 Advertisements 302 Package Design and Labeling 302

Summary 303

CHAPTER NINE Learning, Memory, and Product Positioning 312

Nature of Learning and Memory 314 Memory’s Role in Learning 315

Short-Term Memory 315 Long-Term Memory 317

Learning Under High and Low Involvement 320 Conditioning 321 Cognitive Learning 325 Learning to Generalize and Differentiate 326 Summary of Learning Theories 327

Learning, Memory, and Retrieval 327 Strength of Learning 329 Memory Interference 335 Response Environment 336

Brand Image and Product Positioning 337 Brand Image 337 Product Positioning 338 Product Repositioning 340

Brand Equity and Brand Leverage 341 Summary 344

CHAPTER TEN Motivation, Personality, and Emotion 352

The Nature of Motivation 354 Maslow’s Hierarchy of Needs 354 McGuire’s Psychological Motives 355

Motivation Theory and Marketing Strategy 360 Discovering Purchase Motives 361 Marketing Strategies Based on Multiple

Motives 362

Marketing Strategies Based on Reference Group Influences 227

Personal Sales Strategies 228 Advertising Strategies 228

Communications within Groups and Opinion Leadership 229

Situations in Which WOM and Opinion Leadership Occur 233

Characteristics of Opinion Leaders 234 Marketing Strategy, WOM, and Opinion

Leadership 235 Diffusion of Innovations 238

Categories of Innovations 239 Diffusion Process 242 Marketing Strategies and the Diffusion Process 245

Summary 247

PART TWO CASES 2–1 BMW Taps the Emerging Chinese Luxury

Market 254 2–2 CVS Caremark Discontinues the Sale of

Tobacco Products 255 2–3 Beats by Dre Rise to the Top 258 2–4 How Social Media Nearly Brought

Down United Airlines 259 2–5 Rich, Angry Birds 261 2–6 American Beagle Outfitters: April Fool’s Joke

Turned Reality 263 2–7 Tide Goes After Green With New Pods 265 2–8 Hispanic Marketing in Online and Mobile

Formats 267

Part Three Internal Influences 270

CHAPTER EIGHT Perception 272

The Nature of Perception 274 Exposure 275

Selective Exposure 275 Voluntary Exposure 279

Attention 279 Stimulus Factors 280 Individual Factors 286 Situational Factors 287 Nonfocused Attention 287

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CHAPTER TWELVE Self-Concept and Lifestyle 418

Self-Concept 420 Interdependent/Independent Self-Concepts 420 Possessions and the Extended Self 421 Measuring Self-Concept 423 Using Self-Concept to Position Products 424 Marketing Ethics and the Self-Concept 425

The Nature of Lifestyle 427 Measurement of Lifestyle 428 General versus Specific Lifestyle Schemes 429

The VALS™ System 430 The VALS™ Segments 431

Geo-Lifestyle Analysis (Nielsen PRIZM®) 434 PRIZM Social and Life Stage Groups 434 Sample PRIZM Segments 435 An Application of PRIZM 436

International Lifestyles 437 Summary 438

PART THREE CASES 3–1 Patagonia’s Eco-Fashion Push 444 3–2 Domino’s Reformulation 447 3–3 Let’s Move! Campaign Celebrities Endorsing

Soda?! 448 3–4 Attention Millennials! Automobile Manufacturers

Adapt for You 452 3–5 Is Your Dog a Cheesehead? Targeting the

Premium Pet Market 456 3–6 Hello Kitty Mania 457 3–7 Xerox’s Ongoing Battle to Reposition 461 3–8 Dell Takes an Emotional Approach 463 3–9 Campbell’s Targets Growing Male Grocery

Shoppers 465

Part Four Consumer Decision Process 468

CHAPTER THIRTEEN Situational Influences 470

The Nature of Situational Influence 472 The Communications Situation 472 The Purchase Situation 473 The Usage Situation 474 The Disposition Situation 474

Motivation and Consumer Involvement 363

Marketing Strategies Based on Motivation Conflict 363

Marketing Strategies Based on Regulatory Focus 364

Personality 365 Multitrait Approach 366

Single-Trait Approach 367

The Use of Personality in Marketing Practice 368 Communicating Brand Personality 369

Emotion 370 Types of Emotions 371

Emotions and Marketing Strategy 372 Emotion Arousal as a Product and Retail Benefit 372

Emotion Reduction as a Product and Retail Benefit 373

Consumer Coping in Product and Service Encounters 373

Emotion in Advertising 374

Summary 376

CHAPTER ELEVEN Attitudes and Influencing Attitudes 382

Attitude Components 384 Cognitive Component 384

Affective Component 387

Behavioral Component 388

Component Consistency 390

Attitude Change Strategies 392 Change the Cognitive Component 392

Change the Affective Component 393

Change the Behavioral Component 395

Individual and Situational Characteristics That Influence Attitude Change 395

Cue Relevance and Competitive Situation 397

Consumer Resistance to Persuasion 397

Communication Characteristics That Influence Attitude Formation and Change 397

Source Characteristics 398

Appeal Characteristics 400

Message Structure Characteristics 406

Market Segmentation and Product Development Strategies Based on Attitudes 407

Market Segmentation 407

Product Development 407

Summary 409

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Marketing Strategies Based on Information Search Patterns 539

Maintenance Strategy 539 Disrupt Strategy 539 Capture Strategy 540 Intercept Strategy 541 Preference Strategy 541 Acceptance Strategy 542

Summary 543

CHAPTER SIXTEEN Alternative Evaluation and Selection 550

Consumer Choice and Types of Choice Process 552 Types of Consumer Choice Processes 553

Evaluative Criteria 556 Nature of Evaluative Criteria 557 Measurement of Evaluative Criteria 559

Individual Judgment and Evaluative Criteria 561 Accuracy of Individual Judgments 561 Use of Surrogate Indicators 562 The Relative Importance and Influence

of Evaluative Criteria 563 Evaluative Criteria, Individual Judgments,

and Marketing Strategy 563 Decision Rules for Attribute-Based Choices 564

Conjunctive Decision Rule 565 Disjunctive Decision Rule 566 Elimination-by-Aspects Decision Rule 567 Lexicographic Decision Rule 568 Compensatory Decision Rule 569 Summary of Decision Rules 571

Summary 573

CHAPTER SEVENTEEN Outlet Selection and Purchase 580

The Evolving Retail Scene 583 Internet Retailing 584 Store-Based Retailing 586 The Internet as Part of a Multi-Channel Strategy 587 Mobile as Part of an Omni-Channel Strategy 590

Attributes Affecting Retail Outlet Selection 591 Outlet Image 591 Retailer Brands 594 Retail Advertising 595 Outlet Location and Size 597

Situational Characteristics and Consumption Behavior 475 Physical Surroundings 475 Social Surroundings 480 Temporal Perspectives 482 Task Definition 482 Antecedent States 483

Ritual Situations 485 Situational Influences and Marketing Strategy 486 Summary 489

CHAPTER FOURTEEN Consumer Decision Process and Problem Recognition 496

Types of Consumer Decisions 498 Nominal Decision Making 500 Limited Decision Making 500 Extended Decision Making 501

The Process of Problem Recognition 501 The Nature of Problem Recognition 502 Types of Consumer Problems 504

Uncontrollable Determinants of Problem Recognition 505 Marketing Strategy and Problem Recognition 506

Discovering Consumer Problems 507 Responding to Consumer Problems 509 Helping Consumers Recognize Problems 510 Suppressing Problem Recognition 513

Summary 514

CHAPTER FIFTEEN Information Search 518

The Nature of Information Search 520 Types of Information Sought 521

Evaluative Criteria 521 Appropriate Alternatives 521 Alternative Characteristics 524

Sources of Information 524 Internet Search 526 Mobile Search 532 Marketing Strategy and Mobile Search 533

Amount of External Information Search 534 Costs Versus Benefits of External Search 536

Market Characteristics 536 Product Characteristics 537 Consumer Characteristics 537 Situation Characteristics 538

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4–7 Gilt Groupe’s Innovative Approach to Loyalty Programs 665

4–8 Albertsons Ditches Self-Checkout in Favor of Human Contact 667

Part Five Organizations as Consumers 670

CHAPTER NINETEEN Organizational Buyer Behavior 672

Organizational Purchase Process 674 Decision-Making Unit 674 Purchase Situation 676 Steps in the Organizational Decision Process 678 The Internet’s Role in the Organizational

Decision Process 684 Organizational Culture 684 External Factors Influencing Organizational Culture 685

Firmographics 685 Culture/Government 688 Reference Groups 688

Internal Factors Influencing Organizational Culture 689 Organizational Values 689 Perception 690 Learning 691 Motives and Emotions 692

Organizational Buyer Segments and Marketing Strategy 692 Summary 695

PART FIVE CASES 5–1 RAEX LASER Steel 701 5–2 Paccar—More Than Shiny Trucks 702

Part Six Consumer Behavior and Marketing Regulation 704

CHAPTER TWENTY Marketing Regulation and Consumer Behavior 706

Regulation and Marketing to Children 708 Concerns about the Ability of Children to Comprehend

Commercial Messages 709 Concerns about the Effects of the Content

of Commercial Messages on Children 711

Consumer Characteristics and Outlet Choice 598 Perceived Risk 598 Shopping Orientation 599

In-Store and Online Influences on Brand Choices 601 The Nature of Unplanned Purchases 601 Point-of-Purchase Materials 603 Price Reductions and Promotional Deals 604 Outlet Atmosphere 605 Stockouts 607 Website Functioning and Requirements 607 Mobile and Mobile Apps 608 Sales Personnel 608

Purchase 609 Summary 610

CHAPTER EIGHTEEN Postpurchase Processes, Customer Satisfaction, and Customer Commitment 620

Postpurchase Dissonance 622 Product Use and Nonuse 624

Product Use 624 Product Nonuse 625

Disposition 627 Product Disposition and Marketing Strategy 628

Purchase Evaluation and Customer Satisfaction 630 The Evaluation Process 630

Dissatisfaction Responses 633 Marketing Strategy and Dissatisfied Consumers 634

Customer Satisfaction, Repeat Purchases, and Customer Commitment 637

Repeat Purchasers, Committed Customers, and Profits 639

Repeat Purchasers, Committed Customers, and Marketing Strategy 642

Summary 645

PART FOUR CASES 4–1 Scent Marketing Reaches Consumers’

Emotions 654 4–2 Amazon Prime Air Prepares for Takeoff 656 4–3 Target Resists the Christmas Creep 658 4–4 Netflix Continues to Change the Face of In-Home

Movies around the Globe 660 4–5 Macy’s Embraces Beacon Technology 661 4–6 Tesla’s Novel and Environmental Approach Drives

Amazing Brand Loyalty 663

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PART SIX CASES 6–1 Abercrombie Sells Ashley Push-Up Triangle Bikini

Tops to Tweens 731 6–2 Children’s Online Privacy Protection 732

Appendix A Consumer Research Methods 734

Appendix B Consumer Behavior Audit 745

Photo Credits 751

Indexes 754

Controversial Marketing Activities Aimed at Children 713

Children’s Online Privacy Issues 715 Regulation and Marketing to Adults 716

Consumer Privacy 716 Marketing Communications 718 Product Issues 724 Pricing Issues 725

Summary 725

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Consumer Behavior

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2

part

I INTRODUCTION

Experiences and Acquisitions

Perception Learning Memory Motives

Personality Emotions Attitudes

Expe riences

and Acq uisitions

Culture Subculture

Demographics Social Status

Reference Groups Family

Marketing Activities

Internal Influences

S e l f - C o n c e p t a n d

L i f e s t y l e

External Influences

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3

What is consumer behavior? Why should we

study it? Do marketing managers, regulators,

and consumer advocates actually use knowl-

edge about consumer behavior to develop

strategies and policy? How? Will a sound

knowledge of consumer behavior help you in

your career? Will it enable you to be a better

citizen? How does consumer behavior impact

the quality of all of our lives and of the envi-

ronment? How can we organize our knowl-

edge of consumer behavior to understand

and use it more effectively?

Chapter 1 addresses these and a number

of other interesting questions, describes the

importance and usefulness of the material

to be covered in this text, and provides an

overview of the text. Chapter 1 also explains

the logic of the model of consumer behavior

shown below, which is presented again in

Figure 1–3 and discussed toward the end of

the chapter.

Situations

Problem Recognition

Information Search

Alternative Evaluation

and Selection

Outlet Selection and Purchase

Postpurchase Processes

Needs

Desires

Decision Process

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4

1 Consumer Behavior and Marketing Strategy chapter

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5

Define consumer behavior.

Summarize the applications of consumer behavior.

Explain how consumer behavior can be used to develop marketing strategy.

LO1

LO2

LO3

Explain the components that constitute a conceptual model of consumer behavior.

Discuss issues involving consumption meanings and firm attempts to influence them.

LO4

LO5

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

Marketers face exciting and daunting chal- lenges as the forces that drive and shape con- sumer behavior rapidly evolve. Here are just a few examples.

Evolution of Marketing and Customer Experience—Marketers offer different ways for consumers to get their cup of coffee. Con- sumers can buy coffee beans and make a cup of coffee. They can buy a package of ground coffee and make a cup of coffee. They can opt to go to a coffee shop and buy a cup of coffee. Or they can go to Starbucks and buy a cup of coffee. Which option do you think is more expensive? Likely you would say that the first option is the least expensive and the final option the most expensive—and gener- ally you would be correct! But why is that so? The answer lies in the layers of value that mar- keters can add to “commodity-like” products. These layers include services and experiences that consumers have indicated are of value to them. Thus, as products move from being a commodity to a good to a service to an expe- rience, consumers are likely to pay more. The success of Starbucks attests to consumer willingness to pay more for a cup of coffee from Starbucks that layers the core product with service and experience. And Starbucks is going further. For example, it recently opened a store in New Orleans that is one of

its portfolios of “local relevancy” stores. These hyper local stores are designed to provide intense experiential aspects that reflect the historical and cultural ambience of the store’s locale.1 A Starbucks in Philadelphia pictured at the beginning of this chapter is another example of this hyper local approach.

Marketing 2 Consumers versus Marketing 4 Consumers—Marketing has evolved not only in its offerings, but also in its relationship to consumers. A power shift away from market- ers to consumers has changed the landscape. Succinctly stated, Marketing 2 Consumers has shifted to Marketing 4 Consumers. Marketing 2 Consumers used mass marketing, a scat- tered approach to reach as many consum- ers as possible including unavoidably wasting resources on consumers who have no interest in the product offering. Marketing 2 Consum- ers saturated consumers with advertisements, repeatedly and frequently, in an effort to gain consumer attention. In contrast, Marketing 4 Consumers uses a more targeted approach in an effort more likely to reach only the consum- ers who want the marketer’s offering. Market- ing 4 Consumers recognizes that consumers have the power to choose whether or not they will allow marketers’ permission (say with a click on the Internet) to start a dialog. Product cre- ation is no longer exclusively in the hands of

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Part One Introduction6

marketers. Consumers can initiate and participate in product innovation by pitching an idea and/or fund- ing a pitch (e.g., Kickstarter, Etsy). Consumers can verify marketers’ promises of competitive prices for all nature of things from air fare (e.g., Kayak ) to prod- ucts (e.g., Fat Wallet). And consumers do not have to take marketers at their word because they can easily access customer reviews (e.g., Amazon.com).2

Social Media—The power shift from market- ers to consumers has been further amplified by the rise of social media—Facebook, Pinterest, Tumblr, Twitter—which place user-generated, consumer- to-consumer(s) communication outside of the direct control and influence of marketers. A humorous example is the more than 8,000 Tweets (on Twitter) reporting the abnormally long receipts CVS gives its customers. Tweets show photos of consumers hold- ing up CVS receipts that stretch above their heads and wrap around their waists. The motivation behind these long receipts is big data. CVS collects data on each customer purchase via the customer’s CVS card. When customers check out, the cash register

prints out on each consumer’s receipt custom cou- pons mined from the history of previous purchases. CVS was both fortunate and savvy. They noticed the trend (social media allow for this to be done quickly and efficiently), noted the negativity (consumers’ per- ception of waste and lack of environmental concern), and are reacting (moving more of their coupons and rewards direct to consumer cards). Such “real-time” trend tracking was simply not possible in most cases prior to social and digital media.

This shift in power from Marketing 2 Consumers to Marketing 4 Consumers and the rise of social media have made it all the more crucial for market- ers to understand consumer behavior. Marketers’ use of crowdsourcing to give voice to their con- sumers’ needs and wants exemplifies marketers’ understanding of the need to place consumers at the center of marketing. Examples of online crowd- sourcing include Nike’s Nikeidea, Nokia’s Betalabs, and Dell’s Ideastorm. These examples show how valuable it can be when marketers talk “with” their customers rather than simply talk “to” them.3

The field of consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experi- ences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. This view of consumer behavior is broader than the traditional one, which focused more narrowly on the buyer and the immediate antecedents and consequences of the purchasing process. Our broader view will lead us to examine more indirect influences on consumption decisions as well as far-reaching consequences that involve more than just the purchaser and the seller.

The opening examples above summarize some attempts to apply an understanding of consumer behavior in a rapidly evolving environment that includes changes in technology and how consumers interact and communicate with firms. Throughout this text, we will explore the factors and trends shaping consumer behavior and the ways marketers and regulators can use this information. Four key aspects regarding consumer behavior are highlighted in this text.

�r� Consumer behavior is a complex, multidimensional process. Consumer decisions often involve numerous steps and are influenced by a host of factors including demograph- ics, lifestyle, and cultural values. Consumer decisions are further complicated when the needs and wants of multiple individuals or groups are considered, as when families must make decisions about where to eat for dinner or where to go on vacation.

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Chapter One Consumer Behavior and Marketing Strategy 7

�r� Successful marketing decisions by firms, nonprofit organizations, and regulatory agen- cies require an understanding of the processes underlying consumer behavior. This relates to understanding theories about when and why consumers act in certain ways. Whether they realize it or not, organizations are making decisions every day based on explicit or implicit assumptions about what processes drive consumer behavior. Exam- ine Illustration  1–1. What assumptions about consumer behavior underlie each ad? Which approach is best? Why?

�r� Successful marketing decisions require organizations to collect information about the specific consumers involved in the marketing decision at hand. Consumer decisions are heavily influenced by situation and product category. Thus, consumer research is nec- essary to understand how specific consumers will behave in a specific situation for a given product category. Appendix A examines various consumer research approaches.

�r� Marketing practices designed to influence consumer behavior involve ethical issues that affect the firm, the individual, and society. The issues are not always obvious and many times involve trade-offs at different levels. The fast-food industry is currently dealing with such issues. While their products are highly desirable to many consumers in terms of taste and affordability, they also tend to be high in calories, fat, and sodium. These health-related issues have gotten the attention of government and consumer groups.

Sufficient knowledge of consumer behavior exists to provide usable guidelines. How- ever, applying these guidelines effectively requires monitoring the environment for changes and factoring those changes into marketing decisions. It also requires practice. We provide a variety of such opportunities in the form of (a) questions and exercises at the end of each chapter, (b) short cases at the end of each main part of the text, and (c) a consumer behavior audit for developing marketing strategy (Appendix B) at the end of the text.

These advertise-

ments are targeting

the same consum-

ers with very similar

products, yet they

use two very different

approaches. Why?

They are based on

different assumptions

about consumer

behavior and how to

influence it.

ILLUSTRATION 1-1

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Part One Introduction8

APPLICATIONS OF CONSUMER BEHAVIOR Marketing Strategy Marketing decisions based on explicit consumer behavior theory, assumptions, and research are more likely to be successful than those based on hunches or intuition, and thus create a competitive advantage. An accurate understanding of consumer behavior can greatly reduce the odds of failures such as:

S.C. Johnson pulled the plug on its Ziploc TableTops, a line of semi-disposable plates. Table- Tops was one of the company’s most expensive launches with $65 million spent on marketing. A number of factors appear to have contributed to the failure including relatively high prices (which made consumers less likely to throw them away) and the fact that the products really weren’t all that disposable. As one retailer explained, “There are no repeat purchases. The things last forever.”4

Thus, a primary goal of this book is to help you obtain a usable managerial understand- ing of consumer behavior to help you become a more effective marketing manager. Before we take a look at marketing strategy and consumer behavior, let’s examine regulatory policy, social marketing, and the importance of being an informed individual.

Regulatory Policy Various regulatory bodies exist to develop, interpret, and/or implement policies designed to protect and aid consumers. For example, the Food and Drug Administration (FDA) administers the Nutrition Labeling and Education Act (NLEA). Among other things, NLEA requires that packaged foods prominently display nutrition information in the form of the Nutrition Facts panel.

Has NLEA succeeded? A recent study suggests that it depends. For example, the Nutri- tion Facts panel is of most benefit to highly motivated consumers who are low in nutritional knowledge. Demonstrating such benefits is important in light of the estimated $2 billion in compliance costs. However, such cost–benefit comparisons are complicated since placing a dollar value on individual and societal benefits is often difficult.5

Clearly, effective regulation of many marketing practices requires an extensive knowl- edge of consumer behavior. We will discuss this issue throughout the text and provide a detailed treatment in Chapter 20.

Social Marketing Social marketing is the application of marketing strategies and tactics to alter or create behaviors that have a positive effect on the targeted individuals or society as a whole.6 Social marketing has been used in attempts to reduce smoking, to increase the percentage of children receiving their vaccinations in a timely manner, to encourage environmentally sound behaviors such as recycling, to reduce behaviors potentially leading to AIDS, to enhance support of charities, to reduce drug use, and to support many other important causes.

Just as for commercial marketing strategy, successful social marketing strategy requires a sound understanding of consumer behavior. For example, Oakley’s “For Strength: Not Surrender” campaign (see Illustration 1–2) uses an emotional-based appeal. In Chapter 11, we will analyze the conditions under which such campaigns are likely to succeed.

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Chapter One Consumer Behavior and Marketing Strategy 9

Informed Individuals Most economically developed societies are legitimately referred to as consumption societ- ies. Most individuals in these societies spend more time engaged in consumption than in any other activity, including work or sleep (both of which also involve consumption). In addition, marketers spend billions to influence consumer decisions. These attempts occur in ads, in websites, on packages, as product features, in sales pitches, and in store environ- ments. They also occur in the content of many TV shows, in the brands that are used in movies, and in the materials presented to children in schools.

It is important that consumers accurately understand the strategies and tactics being used so they can be more effective consumers. It is equally important that, as citizens, we understand the consumer behavior basis of these strategies so we can set appropriate limits when required. That is, an understanding of consumer behavior can establish a foundation for reasoned business ethics.

MARKETING STRATEGY AND CONSUMER BEHAVIOR The applications of consumer behavior involve the development, regulation, and effects of marketing strategy. We now examine marketing strategy in more depth.

Marketing strategy, as described in Figure 1–1, is conceptually very simple. It begins with an analysis of the market the organization is considering. On the basis of the consumer anal- ysis undertaken in this step, the organization identifies groups of individuals, households, or

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Nonprofits as well

as commercial firms

such as Oakley as

shown here attempt

to influence con-

sumption patterns.

Both types of orga-

nizations must base

their efforts on knowl-

edge of consumer

behavior to maximize

their chances of

success.

ILLUSTRATION 1-2

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Part One Introduction10

firms with similar needs. These market segments are described in terms of demographics, media preferences, geographic location, and so forth. Management then selects one or more of these segments as target markets on the basis of the firm’s capabilities relative to those of its competition (given current and forecasted economic and technological conditions).

Next, marketing strategy is formulated. To survive in a competitive environment, an organization must provide its target customers more value than is provided to them by its competitors. Customer value is the difference between all the benefits derived from a total product and all the costs of acquiring those benefits. It is critical that a firm consider value from the customer’s perspective. Ziploc’s TableTops failed because consumers felt the benefit of being semi-disposable did not outweigh the cost of the product itself or the guilt they felt about eventually throwing it away. Thus, marketing strategy seeks to provide the customer with more value than the competition while still producing a profit for the firm.

Marketing strategy is formulated in terms of the marketing mix; that is, it involves determining the product features, price, communications, distribution, and services that will provide customers with superior value. This entire set of characteristics is often

Outcomes Individual

Firm Society

Marketing strategy Product, Price, Distribution,

Promotion, Service

Market segmentation Identify product-related need sets

Group customers with similar need sets Describe each group

Select attractive segment(s) to target

Market analysis Company

Competitors Conditions Consumers

Consumer decision process Problem recognition Information search

Alternative evaluation Purchase

Use Evaluation

1-1 Marketing Strategy and Consumer BehaviorFIGURE

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Chapter One Consumer Behavior and Marketing Strategy 11

referred to as the total product. The total product is presented to the target market, which is consistently engaged in processing information and making decisions designed to main- tain or enhance its lifestyle (individuals and households) or performance (businesses and other organizations).

Look at Illustration 1–3. What is the total product? Clearly, it is much more than food and beverages. It also involves an experience. Increasingly, marketers sell experiences as much as or more than actual products and services. An “experience” occurs when a com- pany intentionally creates a memorable event for customers. While products and services are to a large extent external to the customer, an experience is largely internal to each customer. The experience exists in the mind of an individual who has been engaged on an emotional, physical, intellectual, or even spiritual level.

Outcomes based on the execution of a marketing strategy occur for the firm, the indi- vidual, and society. Firms expect to establish an image or position in the marketplace among target customers, generate sales, and ultimately create satisfied customers who are the key to long-term profits. For the individual, the process results in some level of need satisfaction, financial expenditure, attitude creation or change, and/or behavioral changes. Note that some of these behaviors may involve injurious consumption. For society, the cumulative effect of the marketing process affects economic growth, pollution, and social welfare, the latter of which creates many ethical implications.

We detail each phase of Figure 1–1 next.

MARKET ANALYSIS COMPONENTS Market analysis requires a thorough understanding of the consumption process of poten- tial customers; the organization’s own capabilities; the capabilities of current and future competitors; and the economic, physical, and technological environment in which these elements will interact.

What do you buy

when you go to a

restaurant or coffee

shop? The experi-

ence is the product

as much as or more

than the actual food

and beverage.

ILLUSTRATION 1-3

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Part One Introduction12

The Consumers It is not possible to anticipate and react to customers’ needs and desires without a complete understanding of consumer behavior. Discovering customers’ needs is a complex process, but it can often be accomplished by marketing research. For exam- ple, Target wanted to tap into the $210 billion college market. In particular, Tar- get was looking at the furnishings and accessories market and was interested in the specific needs and motivations of students making the transition from home to col- lege dorm life. Jump Associates conducted the research for Target and took a unique approach:

[Jump Associates] sponsored a series of “game nights” at high school grads’ homes, inviting incoming college freshmen as well as students with a year of dorm living under their belts. To get teens talking about dorm life, Jump devised a board game that involved issues associated with going to college. The game naturally led to informal conversations—and questions—about col- lege life. Jump researchers were on the sidelines to observe, while a video camera recorded the proceedings.

On the basis of this research (which is a variation of focus groups—see Appendix A), Target successfully launched the Todd Oldham Dorm Room line, which included such products as Kitchen in a Box and Bath in a Box—all-in-one assortments of the types of products needed by college freshmen.7 Target continues to appeal to the college market with logo merchandise and other dorm products.

Knowing the consumer requires understanding the behavioral principles that guide con- sumption behaviors. These principles are covered in depth in the remainder of this text.

The Company A firm must fully understand its own ability to meet customer needs. This involves evalu- ating all aspects of the firm, including its financial condition, general managerial skills, production capabilities, research and development capabilities, technological sophistica- tion, reputation, and marketing skills. Marketing skills would include new-product devel- opment capabilities, channel strength, advertising abilities, service capabilities, marketing research abilities, market and consumer knowledge, and so forth.

Failure to fully understand strengths and weaknesses can cause serious problems. IBM’s first attempt to enter the home computer market, with the PC Jr., was a failure in part for that reason. Although IBM had an excellent reputation with large business custom- ers and a very strong direct sales force for serving them, these strengths were not relevant to the household consumer market. Its more recent move into high-end business consult- ing, through IBM Global Business Services, has been a major success and, interestingly, moves IBM back to a focus on its earlier core strengths.

The Competitors It is not possible to consistently do a better job than the competition of meeting customer needs without a thorough understanding of the competition’s capabilities and strategies. This understanding requires the same level of knowledge of a firm’s key competitors that

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Chapter One Consumer Behavior and Marketing Strategy 13

is required of one’s own firm. In addition, for any significant marketing action, the follow- ing questions must be answered:

1. If we are successful, which firms will be hurt (lose sales or sales opportunities)? 2. Of those firms that are injured, which have the capability (financial resources, market-

ing strengths) to respond? 3. How are they likely to respond (reduce prices, increase advertising, introduce a new

product)? 4. Is our strategy (planned action) robust enough to withstand the likely actions of our

competitors, or do we need additional contingency plans?

The Conditions The state of the economy, the physical environment, government regulations, and tech- nological developments affect consumer needs and expectations as well as company and competitor capabilities. The deterioration of the physical environment has produced not only consumer demand for environmentally sound products but also government regula- tions affecting product design and manufacturing.

International agreements such as NAFTA (North American Free Trade Agreement) have greatly reduced international trade barriers and raised the level of both competition and consumer expectations for many products. And technology is changing the way people live, work, deal with disease, and so on. Corporate websites, social media such as Twitter and Facebook, and mobile apps are just some of the ways technology is changing the way consumers communicate and access media.

Clearly, a firm cannot develop a sound marketing strategy without anticipating the con- ditions under which that strategy will be implemented.

MARKET SEGMENTATION Perhaps the most important marketing decision a firm makes is the selection of one or more market segments on which to focus. A market segment is a portion of a larger market whose needs differ somewhat from the larger market. Since a market segment has unique needs, a firm that develops a total product focused solely on the needs of that seg- ment will be able to meet the segment’s desires better than a firm whose product or service attempts to meet the needs of multiple segments.

To be viable, a segment must be large enough to be served profitably. However, it should be noted that technology advances such as flexible manufacturing and cus- tomized media are allowing for mass customization such that firms can target smaller segments and even individuals profitably. Behavioral targeting, in which consumers’ online activity is tracked and specific banner ads are delivered based on that activity, is another example of how technology is making individualized communication increas- ingly cost-effective.

Market segmentation involves four steps:

1. Identifying product-related need sets. 2. Grouping customers with similar need sets. 3. Describing each group. 4. Selecting an attractive segment(s) to serve.

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Part One Introduction14

Product-Related Need Sets Organizations approach market segmentation with a set of current and potential capabili- ties. These capabilities may be a reputation, an existing product, a technology, or some other skill set. The first task of the firm is to identify need sets that the organization is capable, or could become capable, of meeting. The term need set is used to reflect the fact that most products in developed economies satisfy more than one need. Thus, a watch can meet more needs than just telling time. Some customers purchase watches to meet status needs, while others purchase them to meet style needs, and so on. Illustration 1–4 shows two watch ads; one for Lumi Nox, the other for Tudor. Even though these ads are for the same general product, what needs are these different ads appealing to?

Identifying the various need sets that the firm’s current or potential product might sat- isfy typically involves consumer research, particularly focus groups and depth interviews, as well as logic and intuition. These need sets are often associated with other variables such as age, stage in the household life cycle, gender, social class, ethnic group, or lifestyle, and many firms start the segmentation process focusing first on one or more of the groups defined by one of these variables. Thus, a firm might start by identifying various ethnic groups and then attempt to discover similarities and differences in consumption-related needs across these groups. While better-defined segments will generally be discovered by focusing first on needs and then on consumer characteristics associated with those needs, both approaches are used in practice and both provide a useful basis for segmentation.

Need sets exist for products and services and can include needs related to various shopping venues. Consumer Insight 1–1 examines the need sets of mall and factory outlet shoppers.

Both the Lumi Nox

and Tudor ads are for

the same basic prod-

uct. Yet, as these

ads show, the prod-

ucts are designed to

meet different sets of

needs beyond their

basic function.

ILLUSTRATION 1-4

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15

Customers with Similar Need Sets The next step is to group consumers with similar need sets. For example, the need for mod- erately priced, fun, sporty automobiles appears to exist in many young single individuals, young couples with no children, and middle-aged couples whose children have left home. These consumers can be grouped into one segment as far as product features and per- haps even product image are concerned despite sharply different demographics. Consumer Insight 1–1 provides an additional example of “clustering” or grouping consumers with similar need sets. For example, those who are basic shoppers are all similar in that their most critical need set is mall essentials.

This step generally involves consumer research, including focus group interviews, surveys, and product concept tests (see Appendix A). It could also involve an analysis of current consumption patterns.

CONSUMER INSIGHT 1-1 Need Sets of Mall and Factory Outlet Shoppers

What do you look for in a retail experience? Entertain- ment? Branded merchandise? Convenient parking? It turns out that all of these are important, but not all of them are important to every consumer. Thus, retailers must know what need sets exist and what segments exist around those need sets. One research study that gives some insight into this found four basic need sets for traditional malls and factory outlets:8

1. Mall Essentials—basic requirements including � t� $MFBOMJOFTT � t� %ÏDPS � t� &NQMPZFF�TFSWJDF�BOE�GSJFOEMJOFTT � t� 4BGFUZ�BOE�TFDVSJUZ � t� 1BSLJOH

2. Entertainment—fun extras such as � t� 'BTU�GPPE � t� .PWJF�UIFBUSFT � t� 0UIFS�TFSWJDFT�TVDI�BT�CBOLT�BOE�IBJS�TQFDJBMJTUT � t� 'SJFOET�XIP�TIPQ�UIF�SFUBJMFS

3. Convenience—factors that make shopping easier including

� t� $MPTF�UP�XPSL�BOE�PS�IPNF � t� "DDFTTJCMF�UP�IPNF�BOE�PS�XPSL

4. Brand-name Merchandise—brand availability as follows:

� t� #SBOE�OBNF�TUPSFT � t� $VSSFOU�GBTIJPOT

� t� /FX�QSPEVDUT � t� .PSF�TUPSFT

As you can see, each need set represents a related cluster of characteristics. In addition, however, con- sumers can be grouped (segmented) in terms of their similarity regarding the importance they place on the dif- ferent need sets. For example, there is the “Basic” shop- per segment that only cares about mall essentials; an “Enthusiast” shopper segment that cares about all the need sets, with a particularly high emphasis on entertain- ment; a “serious shopper” who cares about brand-name merchandise and convenience; a “Destination” shopper who cares about mall essentials and brand-name mer- chandise; and a “Brand” shopper who only cares about brand-name merchandise. Clearly all shoppers are not the same, and retailers must work hard to adapt to the differing need sets of different shopper segments.

Critical Thinking Questions 1. Think of various retailers you are aware of. Can you

match these different retailers to the different shop- per segments?

2. Can you characterize the different shopper segments in terms of various demographic traits such as age, gender, income, family role, and so on?

3. What do you think the need sets are for online retailers?

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Part One Introduction16

Description of Each Group Once consumers with similar need sets are identified, they should be described in terms of their demographics, lifestyles, and media usage. Designing an effective marketing pro- gram requires having a complete understanding of the potential customers. It is only with such a complete understanding that we can be sure we have correctly identified the need set. In addition, we cannot communicate effectively with our customers if we do not under- stand the context in which our product is purchased and consumed, how it is thought about by our customers, and the language they use to describe it. Thus, while many young single individuals, young couples with no children, and middle-aged couples whose children have left home may want the same features in an automobile, the media required to reach each group and the appropriate language and themes to use with each group would likely differ.

Attractive Segment(s) to Serve Once we are sure we have a thorough understanding of each segment, we must select our target market—the segment(s) of the larger market on which we will focus our market- ing effort. This decision is based on our ability to provide the selected segment(s) with superior customer value at a profit. Thus, the size and growth of the segment, the intensity of the current and anticipated competition, the cost of providing the superior value, and so forth are important considerations. Table 1–1 provides a simple worksheet for use in evaluating and comparing the attractiveness of various market segments.

As Table 1–1 indicates, segments that are sizable and growing are likely to appear attrac- tive. However, profitability cannot be ignored. After all, a large unprofitable segment is still

Criterion Score*

Segment size ____________

Segment growth rate ____________

Competitor strength ____________

Customer satisfaction with existing products ____________

Fit with company image ____________

Fit with company objectives ____________

Fit with company resources ____________

Distribution available ____________

Investment required ____________

Stability/predictability ____________

Cost to serve ____________

Sustainable advantage available ____________

Communications channels available ____________

Risk ____________

Segment profitability ____________

Other (________) ____________

*Score on a 1–10 scale, with 10 being most favorable.

Market Segment Attractiveness Worksheet1-1TABLE

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Chapter One Consumer Behavior and Marketing Strategy 17

unprofitable. Finding profitable segments means identifying a maximal fit between customer needs and the firm’s offerings. This means that some customers and segments will be unprof- itable to serve and may need to be “fired.” While firing customers may be difficult, it can lead to greater profits, as ING Direct has found. ING Direct is a bare-bones bank. It has limited offerings (no checking) and does most of its transactions online. ING Direct wants “low- maintenance” customers who are attracted by its higher interest rates. As their CEO notes:

The difference between ING Direct and the rest of the financial industry is like the difference between take-out food and a sit-down restaurant. The business isn’t based on relationships; it’s based on a commodity product that’s high-volume and low-margin. We need to keep expenses down, which doesn’t work when customers want a lot of empathetic contact.9

ING Direct keeps costs lower and profits higher by identifying high-cost customers and (nicely) letting them go by suggesting they might be better served by a “high-touch” com- munity bank. Can you think of any potential risks of “firing” customers?

It is important to remember that each market segment requires its own marketing strat- egy. Each element of the marketing mix should be examined to determine if changes are required from one segment to another. Sometimes each segment will require a completely different marketing mix, including the product. At other times, only the advertising mes- sage or retail outlets may need to differ.

MARKETING STRATEGY It is not possible to select target markets without simultaneously formulating a general marketing strategy for each segment. A decisive criterion in selecting target markets is the ability to provide superior value to those market segments. Because customer value is delivered by the marketing strategy, the firm must develop its general marketing strategy as it evaluates potential target markets.

Marketing strategy is basically the answer to the question, How will we provide superior customer value to our target market? The answer to this question requires the formulation of a consistent marketing mix. The marketing mix is the product, price, com- munications, distribution, and services provided to the target market. It is the combination of these elements that meets customer needs and provides customer value. For example, in the chapter opener, we see that Starbucks creates value through a combination of products, service, and a superior experience.

The Product A product is anything a consumer acquires or might acquire to meet a perceived need. Consumers are generally buying need satisfaction, not physical product attributes.10 As the former head of Revlon said, “in the factory we make cosmetics, in the store we sell hope.” Thus, consumers don’t purchase quarter-inch drill bits but the ability to create quarter-inch holes. Federal Express lost much of its overnight letter delivery business not to UPS or Airborne but to fax machines and the Internet because these technologies could meet the same consumer needs faster, cheaper, or more conveniently.

We use the term product to refer to physical products and primary or core services. Thus, an automobile is a product, as is a transmission overhaul or a ride in a taxi. Packaged goods alone (food, beverages, pet products, household products) account for over 30,000 new prod- uct introductions each year.11 Obviously, many of these will not succeed. To be successful, a product must meet the needs of the target market better than the competition’s product does.

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Part One Introduction18

Product-related decisions also include issues of packaging, branding, and logos, which have functional and symbolic dimensions. When Starbucks changed its logo by eliminat- ing the words “Starbucks Coffee” and the circle around their emblematic “Siren,” there was some consumer backlash on social media against this new logo. Do you think Star- bucks’ new logo is effective? What factors underlie your judgment?

Communications Marketing communications include advertising, the sales force, public relations, pack- aging, and any other signal that the firm provides about itself and its products. An effec- tive communications strategy requires answers to the following questions:

1. With whom, exactly, do we want to communicate? While most messages are aimed at the target-market members, others are focused on channel members, or those who influence the target-market members. For example, pediatric nurses are often asked for advice concerning diapers and other nonmedical infant care items. A firm market- ing such items would be wise to communicate directly with the nurses.

Often it is necessary to determine who within the target market should receive the marketing message. For a children’s breakfast cereal, should the communications be aimed at the children or the parents, or both? The answer depends on the target market and varies by country.

2. What effect do we want our communications to have on the target audience? Often a manager will state that the purpose of advertising and other marketing communica- tions is to increase sales. While this may be the ultimate objective, the behavioral objective for most marketing communications is often much more immediate. That is, it may seek to have the audience learn something about the product, seek more information about the product, like the product, recommend the product to others, feel good about having bought the product, or a host of other communications effects.

3. What message will achieve the desired effect on our audience? What words, pictures, and symbols should we use to capture attention and produce the desired effect? Mar- keting messages can range from purely factual statements to pure symbolism. The best approach depends on the situation at hand. Developing an effective message requires a thorough understanding of the meanings the target audience attaches to words and symbols, as well as knowledge of the perception process. Consider Illustration 1–5. Many older consumers may not relate to the approach of this ad. However, it commu- nicates clearly to its intended youth market.

4. What means and media should we use to reach the target audience? Should we use personal sales to provide information? Can we rely on the package to provide needed information? Should we advertise in mass media, use direct mail, or rely on consum- ers to find us on the Internet? If we advertise in mass media, which media (televi- sion, radio, magazines, newspapers, Internet) and which specific vehicles (television programs, specific magazines, websites, banner ads, and so forth) should we use? Is it necessary or desirable to adjust the language used? With respect to the media and language issues, MasterCard’s approach is instructive. They indicate that

Hispanics are the largest and fastest growing ethnic group in the U.S. . . . As we continue to bring value to Hispanic consumers, it is important for MasterCard to be speaking their language in the channels that are relevant to them.12

5. When should we communicate with the target audience? Should we concentrate our communications near the time that purchases tend to be made or evenly throughout

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Chapter One Consumer Behavior and Marketing Strategy 19

the week, month, or year? Do consumers seek information shortly before purchasing our product? If so, where? Answering these questions requires knowledge of the deci- sion process used by the target market for this product.

Price Price is the amount of money one must pay to obtain the right to use the product. One can buy ownership of a product or, for many products, limited usage rights (i.e., one can rent or lease the product, as with a video). Economists often assume that lower prices for the same product will result in more sales than higher prices. However, price sometimes serves as a signal of quality. A product priced “too low” might be perceived as having low quality. Owning expensive items also provides information about the owner. If nothing else, it indicates that the owner can afford the expensive item. This is a desirable feature to some consumers. Starbucks charges relatively high prices for its coffee. Yet it understands that the Starbucks brand allows consumers to “trade up” to a desired image and lifestyle with- out breaking the bank. Therefore, setting a price requires a thorough understanding of the symbolic role that price plays for the product and target market in question.

It is important to note that the price of a product is not the same as the cost of the prod- uct to the customer. Consumer cost is everything the consumer must surrender in order to receive the benefits of owning/using the product. As described earlier, the cost of owning/

All aspects of the

marketing mix should

be designed around

the needs and char-

acteristics of the

target audience.

Many segments

would not appreciate

this ad, but it works

with the targeted

segment.

ILLUSTRATION 1-5

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Part One Introduction20

using an automobile includes insurance, gasoline, maintenance, finance charges, license fees, parking fees, time and discomfort while shopping for the car, and perhaps even dis- comfort about increasing pollution, in addition to the purchase price. One of the ways firms seek to provide customer value is to reduce the nonprice costs of owning or operat- ing a product. If successful, the total cost to the customer decreases while the revenue to the marketer stays the same or even increases.

Distribution Distribution, having the product available where target customers can buy it, is essen- tial to success. Only in rare cases will customers go to much trouble to secure a particu- lar brand. Obviously, good channel decisions require a sound knowledge of where target customers shop for the product in question. Today’s distribution decisions also require an understanding of cross-channel options. Savvy retailers are figuring out ways to let each distribution channel (e.g., online versus offline) do what it does best. For exam- ple, retailers are often challenged to balance appropriate types and levels of in-store inventory with internet kiosks. Obviously, retailers who adopt this approach have to choose an appropriate merchandising strategy where fast-moving, high-profit, seasonal items are in-store to attract customers while other merchandise is available online.13 Finally, retailer characteristics such as those examined in Consumer Insight 1–1 need to be understood and delivered upon. Disney is in the process of renovating its stores to be more interactive, and this has driven increased store visits and sales. The remodel seems to focus on entertainment that is especially appropriate in light of their brand and customer. Specifically

[t]he new [Disney] retail format sports more features to entertain shoppers, such as a table where kids can assemble cars from the popular Disney-Pixar “Cars” movie to a two-story princess castle that kids can enter.14

Service Earlier, we defined product to include primary or core services such as haircuts, car repairs, and medical treatments. Here, service refers to auxiliary or peripheral activities that are performed to enhance the primary product or primary service. Thus, we would consider car repair to be a product (primary service), while free pickup and delivery of the car would be an auxiliary service. Although many texts do not treat service as a separate component of the marketing mix, we do because of the critical role it plays in determin- ing market share and relative price in competitive markets. A firm that does not explicitly manage its auxiliary services is at a competitive disadvantage.

Auxiliary services cost money to provide. Therefore, it is essential that the firm fur- nish only those services that provide value to the target customers. Providing services that customers do not value can result in high costs and high prices without a corresponding increase in customer value.

CONSUMER DECISIONS As Figure  1–1 illustrated, the consumer decision process intervenes between the mar- keting strategy (as implemented in the marketing mix) and the outcomes. That is, the outcomes of the firm’s marketing strategy are determined by its interaction with the

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Chapter One Consumer Behavior and Marketing Strategy 21

consumer decision process. The firm can succeed only if consumers see a need that its product can solve, become aware of the product and its capabilities, decide that it is the best available solution, proceed to buy it, and become satisfied with the results of the purchase. A significant part of this text is devoted to the understanding of the consumer decision process.

OUTCOMES Firm Outcomes Product Position The most basic outcome of a firm’s marketing strategy is its product position—an image of the product or brand in the consumer’s mind relative to competing products and brands. This image consists of a set of beliefs, pictorial representations, and feelings about the product or brand. It does not require purchase or use for it to develop. It is determined by communications about the brand from the firm and other sources, as well as by direct experience with it. Most marketing firms specify the product position they want their brands to have and measure these positions on an ongoing basis. This is because a brand whose position matches the desired position of a target market is likely to be pur- chased when a need for that product arises.

The ad in Illustration 1–6 is positioning the brand as a fun brand. This image and per- sonality are facilitated and enhanced by the color and imagery used.

Sales and Profits Sales and profits are critical outcomes, as they are necessary for the firm to continue in business. Therefore, virtually all firms evaluate the success of their marketing programs in terms of sales revenues and profits. As we have seen, sales and profits are likely to occur only if the initial consumer analysis was correct and if the mar- keting mix matches the consumer decision process.

This ad positions the

brand as fun.

ILLUSTRATION 1-6

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Part One Introduction22

Customer Satisfaction Marketers have discovered that it is generally more profitable to maintain existing customers than to replace them with new customers. Retaining current customers requires that they be satisfied with their purchase and use of the product. Thus, customer satisfaction is a major concern of marketers.

As Figure  1–2 indicates, convincing consumers that your brand offers superior value is necessary in order to make the initial sale. Obviously, one must have a thorough under- standing of the potential consumers’ needs and of their information acquisition processes to succeed at this task. However, creating satisfied customers, and thus future sales, requires that customers continue to believe that your brand meets their needs and offers superior value after they have used it. You must deliver as much or more value than your customers initially expected, and it must be enough to satisfy their needs. Doing so requires an even greater understanding of consumer behavior.

Individual Outcomes Need Satisfaction The most obvious outcome of the consumption process for an indi- vidual, whether or not a purchase is made, is some level of satisfaction of the need that initiated the consumption process. This can range from no satisfaction (or even a negative level if a purchase increases the need rather than reduces it) to complete satisfaction. Two key processes are involved: the actual need fulfillment and the perceived need fulfillment. These two processes are closely related and are often identical. However, at times they differ. For example, people might take food supplements because they believe the supple- ments are enhancing their health, while in reality they could have no direct health effects or even negative effects. One objective of government regulation and a frequent goal of consumer groups is to ensure that consumers can adequately judge the extent to which products are meeting their needs.

Injurious Consumption Although we tend to focus on the benefits of con- sumption, we must remain aware that consumer behavior has a dark side. Injurious consumption occurs when individuals or groups make consumption decisions that have negative consequences for their long-run well-being. Examples can include (a) overspending due to aggressive marketing efforts and cheap credit; (b) consump- tion of products that are not healthy including fast foods, cigarettes, alcohol, and so on; and (c) engaging in activities such as gambling that can have devastating financial consequences for some.

One product that caught the attention of the FDA was caffeinated alcohol beverages. They tend to be large in volume and also contain high levels of alcohol and caffeine. It is estimated that one can of these new caffeinated alcohol beverages has the same impact on people as drinking five to six beers. These beverages also increase the chances that people

1-2 Creating Satisfied CustomersFIGURE Our total product

Competitors’ total products

Customer satisfaction

Perceived value

delivered Sales

Superior value

expected

Consumer decision process

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Chapter One Consumer Behavior and Marketing Strategy 23

engage in dangerous behaviors such as driving under the influence, in part because the caf- feine causes them to misgauge how intoxicated they are.15

Although these are issues we should be concerned with, and we will address them throughout this text, we should also note that alcohol consumption seems to have arisen simultaneously with civilization and evidence of gambling is nearly as old. Consum- ers smoked and chewed tobacco long before mass media or advertising as we know it existed, and illegal drug consumption continues to grow worldwide despite the absence of large-scale marketing, or at least advertising. Thus, though marketing activities based on knowledge of consumer behavior undoubtedly exacerbate some forms of injurious con- sumption, they are not the sole cause and, as we will see shortly, such activities may be part of the cure.

Society Outcomes Economic Outcomes The cumulative impact of consumers’ purchase decisions, including the decision to forgo consumption, is a major determinant of the state of a given country’s economy. Consumers’ decisions on whether to buy or to save affect economic growth, the availability and cost of capital, employment levels, and so forth. The types of products and brands purchased influence the balance of payments, industry growth rates, and wage levels. Decisions made in one society—particularly large, wealthy societies such as those of the United States, Western Europe, and Japan—have a major impact on the economic health of many other countries.

Physical Environment Outcomes Consumers make decisions that have a major impact on the physical environments of both their own and other societies. The cumula- tive effect of U.S. consumers’ decisions to rely on relatively large private cars rather than mass transit results in significant air pollution in American cities as well as the consumption of nonrenewable resources from other countries. The decisions of people in most developed and in many developing economies to consume meat as a primary source of protein result in the clearing of rain forests for grazing land; the pollution of many watersheds due to large-scale feedlots; and an inefficient use of grain, water, and energy to produce protein. It also appears to produce health problems for many consumers. Similar effects are being seen as ethanol (made from corn, sugar cane, or rice) becomes a more popular alternative to oil as a source of fuel for automobiles. The high cost of fuel, along with the diversion of grain from food to fuel, is driving up food costs and threatens to increase poverty levels around the world.16 Such outcomes attract substantial negative publicity. However, these resources are being used because of consumer demand, and consumer demand consists of the decisions you and I and our families and our friends make!

As we will see in Chapter 3, many consumers now recognize the indirect effects of consumption on the environment and are altering their behavior to minimize environ- mental harm.

Social Welfare Consumer decisions affect the general social welfare of a society. Deci- sions concerning how much to spend for private goods (personal purchases) rather than public goods (support for public education, parks, health care, and the like) are gener- ally made indirectly by consumers’ elected representatives. These decisions have a major impact on the overall quality of life in a society.

Injurious consumption, as described above, affects society as well as the individuals involved. The social costs of smoking-induced illnesses, alcoholism, and drug abuse are

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Part One Introduction24

staggering. To the extent that marketing activities increase or decrease injurious consump- tion, they have a major impact on the social welfare of a society. Consider the following:

According to the U.S. Public Health Service, of the 10 leading causes of death in the United States, at least 7 could be reduced substantially if people at risk would change just 5 behaviors: compliance (e.g., use of antihypertensive medication), diet, smoking, lack of exercise, and alco- hol and drug abuse. Each of these behaviors is inextricably linked with marketing efforts and the reactions of consumers to marketing campaigns. The link between consumer choices and social problems is clear.17

However, the same authors conclude: “Although these problems appear daunting, they are all problems that are solvable through altruistic [social] marketing.” Thus, marketing and consumer behavior can both aggravate and reduce serious social problems.

THE NATURE OF CONSUMER BEHAVIOR Figure  1–3 shows the model that we use to capture the general structure and process of consumer behavior and to organize this text. It is a conceptual model. It does not contain sufficient detail to predict particular behaviors; however, it does reflect our beliefs about the general nature of consumer behavior. Individuals develop self-concepts (their view of themselves) and subsequent lifestyles (how they live) based on a variety of internal (mainly psychological and physical) and external (mainly sociological and demographic) influences. These self-concepts and lifestyles produce needs and desires, many of which require consumption decisions to satisfy. As individuals encounter relevant situations, the consumer decision process is activated. This process and the experiences and acquisitions it produces in turn influence the consumers’ self-concept and lifestyle by affecting their internal and external characteristics.

Of course, life is rarely so structured as Figure  1–3 and our discussion of it so far may seem to suggest. Consumer behavior is hardly ever so simple, structured, conscious, mechanical, or linear. A quick analysis of your own behavior and that of your friends will reveal that, on the contrary, consumer behavior is frequently complex, disorganized, non- conscious, organic, and circular. Remember—Figure 1–3 is only a model, a starting point for our analysis. It is meant to aid you in thinking about consumer behavior. As you look at the model and read the following chapters based on this model, continually relate the descriptions in the text to the rich world of consumer behavior that is all around you.

The factors shown in Figure 1–3 are given detailed treatment in the subsequent chap- ters of this book. Here we provide a brief overview so that you can initially see how they work and fit together. Our discussion here and in the following chapters moves through the model from left to right.

External Influences (Part II) Dividing the factors that influence consumers into categories is somewhat arbitrary. For example, we treat learning as an internal influence despite the fact that much human learn- ing involves interaction with, or imitation of, other individuals. Thus, learning could also be considered a group process. In Figure 1–3, the two-directional arrow connecting inter- nal and external influences indicates that each set interacts with the other.

We organize our discussion of external influences from large-scale macrogroups to smaller, more microgroup influences. Culture is perhaps the most pervasive influence on consumer behavior. We begin our consideration of culture in Chapter 2 by examining

LO4

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Chapter One Consumer Behavior and Marketing Strategy 25

differences in consumption patterns across cultures. In Chapters 3 through 7, we focus on American culture in detail. In Chapter 3, we examine cultural values. As we will see, while Americans share many values and consumption behaviors, there are also rich diversity and ongoing change in this society that create both marketing opportunities and unique social energy. Illustration 1–7 shows how marketers are embracing this diversity in their advertisements.

Chapter 4 continues our examination of American society by analyzing its demographics (the number, education, age, income, occupation, and location of individuals in a society) and social stratification. Chapter 5 considers ethnic, religious, and regional subcultures. Chapter 6 analyzes families, households, and household decision making. Finally, in Chapter 7, we look at the processes by which groups influence consumer behavior and group communica- tion, including the role of groups in the acceptance of new products and technologies. Taken together, Chapters 2 through 7 provide a means of comparing and contrasting the vari- ous external factors that influence consumer behavior in America—and around the world. Cross-cultural variations are highlighted when possible throughout the text.

Internal Influences (Part III) Internal influences begin with perception, the process by which individuals receive and assign meaning to stimuli (Chapter 8). This is followed by learning—changes in the con- tent or structure of long-term memory (Chapter 9). Chapter 10 covers three closely related

Internal Influences

Perception Learning Memory Motives

Personality Emotions Attitudes

Exp erien

ces and Acquisitions

Experiences and Acquisition s

Needs

Desires

Situations

Problem Recognition

Information Search

Alternative Evaluation

and Selection

Outlet Selection and Purchase

Postpurchase Processes

S e l f - C o n c e p t a n d

L i f e s t y l e

External Influences

Culture Subculture

Demographics Social Status

Reference Groups Family

Marketing Activities

Decision Process

1-3Overall Model of Consumer Behavior FIGURE

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Part One Introduction26

topics: motivation—the reason for a behavior; personality—an individual’s characteris- tic response tendencies across similar situations; and emotion—strong, relatively uncon- trolled feelings that affect our behavior. We conclude our coverage of internal influences by examining attitudes in Chapter 11. An attitude is an enduring organization of motiva- tional, emotional, perceptual, and cognitive processes with respect to some aspect of our environment. In essence, an attitude is the way a person thinks, feels, and acts toward some aspect of his or her environment, such as a retail store, television program, or product. As such, our attitudes are heavily influenced by the external and internal factors that we will have discussed in the preceding chapters.

Self-Concept and Lifestyle Chapter 12 concludes Part III with a detailed discussion of the key concepts of self- concept and lifestyle around which our model revolves. As a result of the interaction of the internal and external variables described earlier, individuals develop a self-concept that is reflected in a lifestyle. Self-concept is the totality of an individual’s thoughts and feelings about him- or herself. Lifestyle is, quite simply, how one lives, including the products one buys, how one uses them, what one thinks about them, and how one feels about them. Lifestyle is the manifestation of the individual’s self-concept, the total image the person has of him- or herself as a result of the culture he or she lives in and the individual situations and experiences that comprise his or her daily existence. It is the sum of the person’s past deci- sions and future plans.

Both individuals and families exhibit distinct lifestyles. We often hear of “career- oriented individuals,” “outdoor families,” or “devoted parents.” One’s lifestyle is deter- mined by both conscious and unconscious decisions. Often we make choices with full awareness of their impact on our lifestyle, but generally we are unaware of the extent to which our decisions are influenced by our current or desired lifestyle. Our model shows that consumers’ self-concepts and lifestyles produce needs and desires that interact with the situations in which consumers find themselves to trigger the consumer decision process.

We do not mean to imply that consumers think in terms of lifestyle. None of us con- sciously think, “I’ll have an Evian bottled water in order to enhance my lifestyle.” Rather, we make decisions consistent with our lifestyles without deliberately considering lifestyle.

America is increas-

ingly diverse. Ads

such as this one

reflect and embrace

such diversity.

ILLUSTRATION 1-7

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Chapter One Consumer Behavior and Marketing Strategy 27

Most consumer decisions involve very little effort or thought on the part of the consumer. They are what we call low-involvement decisions. Feelings and emotions are as important in many consumer decisions as logical analysis or physical product attributes. Nonethe- less, most consumer purchases involve at least a modest amount of decision making, and most are influenced by the purchaser’s current and desired lifestyle.

Consumer Decision Process (Part IV) Consumer decisions result from perceived problems (“I’m thirsty”) and opportunities (“That looks like it would be fun to try”). We will use the term problem to refer both to problems and to opportunities. Consumer problems arise in specific situations and the nature of the situation influences the resulting consumer behavior. Therefore, we pro- vide a detailed discussion of situational influences on the consumer decision process in Chapter 13.

As Figure 1–3 indicates, a consumer’s needs/desires may trigger one or more levels of the consumer decision process. It is important to note that for most purchases, consumers devote very little effort to this process, and emotions and feelings often have as much or more influence on the outcome as do facts and product features. Despite the limited effort that consumers often devote to the decision process, the results have important effects on the individual consumer, the firm, and the larger society. Therefore, we provide detailed coverage of each stage of the process: problem recognition (Chapter 14); information search (Chapter 15); alternative evaluation and selection (Chapter 16); outlet selection and purchase (Chapter 17); and use, disposition, and purchase evaluation (Chapter 18). The increasing role of technology, particularly the Internet, in consumer decision making is highlighted throughout these chapters.

Organizations (Part V) and Regulation (Part VI) Organizations or businesses can also be consumers as when Mercedes-Benz purchases dashboard subcomponents from a supplier. This type of marketing is often termed busi- ness-to-business (B2B) marketing to differentiate it from business-to-consumer (B2C) marketing that is the focus of much of this text. The special nature of organizations and how they behave warrant special attention. In Chapter 19, we show how our model of indi- vidual and household consumer behavior can be modified to help understand the consumer behavior of organizations.

Regulation is an aspect of consumer behavior that permeates marketer actions relating to all parts of our model and it warrants special attention as well. Chapter 20 focuses our attention on the regulation of marketing activities, especially those targeting children. We pay particular attention to the role that knowledge of consumer behavior plays or could play in regulation.

THE MEANING OF CONSUMPTION As we proceed through this text, we will describe the results of studies of consumer behav- ior, discuss theories about consumer behavior, and present examples of marketing pro- grams designed to influence consumer behavior. While reading this material, however, do not lose sight of the fact that consumer behavior is not just a topic of study or a basis for developing marketing or regulatory strategy. Consumption frequently has deep meaning for the consumer.18

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CONSUMER INSIGHT 1-2 Consumption Meaning and Motivation

Consumer behavior is the study of why consumers buy. Understanding consumer behavior is at the heart of marketing strategy and a major focus of this text. Government agencies must “sell” ideas and services (e.g., The Affordable Care Act, tax increases) to citizens. Nonprofits must convince consumers to contribute to their organizations (e.g., Salvation Army). Companies must persuade consumers to buy their products and services. Some products and services are essential. However, much of consumption is not need-based, at least in a functional sense. Many companies spend considerable money and effort convincing consumers to buy products, services, or brands they don’t really need. And consumers often want products and services they cannot afford, which, if acted on, can lead to negative financial consequences such as crushing credit card debt. In this insight we explore some of the factors driv- ing consumer purchases that drive at the deeper mean- ing of consumption beyond mere function and necessity.

Meaning in the mundane—Sometimes consumers know what they want—from simple and relatively inex- pensive everyday things like milk, bread, and socks, which require little decision effort, to more expensive items such as cars, TVs, and homes, which require considerable decision effort. Even in these situations

where products meet basic needs, there can be far more meaning in the objects purchased than might meet the eye. Cars and homes can take on important meanings over time when they are associated with major events such as a first date, a child’s first step, and so on. Even truly mundane products can attain height- ened meaning if associated with important events or people in one’s life. Chapter 12 deals with this idea of products becoming a part of the extended self and as a consequence taking on much deeper meanings than might initially seem possible.

Meaning in avoidance—Consumers often know what they don’t want—at least at the broadest level—and make consumption choices accordingly. Consumers don’t want fear of physical harm in their lives—so they buy cars with safety enhancements and products such as smoke alarms and carbon monoxide detectors to reduce physical risk. Consumers don’t want financial risk in their lives—so they buy insurance and extended warranties, and hire financial planners. Risk and risk avoidance are an important part of consumer behavior and decision mak- ing, as discussed in Chapter 3 and Chapter 16.

Meaning in innovative brands—The iPhone is unquestionably a marketing success. It has helped to make Apple one of the most profitable companies in the

Consider the example of a man named Andre. Andre, just escaping homelessness, proudly states that he was able to save for and buy a pair of Nikes. He could undoubtedly have purchased a different brand that would have met his physical needs just as well as the Nikes for much less money. Although Andre does not state why he bought the more expensive Nikes, a reasonable interpretation is that they serve as a visible symbol that Andre is back as a successful member of society. In fact, Nike is sometimes criticized for creating, through its marketing activities, symbols of success or status that are unduly expensive. Consider this issue as you read about the various meanings and motives under- lying Consumer Insight 1–2.19

As you read the chapters that follow, keep in mind that the decisions consumers make are the result of a complex set of forces, often reflecting meaning and motivations that are powerful, nuanced, and beyond mere function.

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29

world.20 Consumers willingly wait in long lines for hours to have the chance to buy a new version of the iPhone. And yet, consumers didn’t know they wanted that prod- uct until it already existed. The iPhone is clearly more than just a phone. It has many meanings to consumers— including innovative, cutting-edge, sophisticated, intellectual—that consumers buy as much or more than the phone. In fact, a brand’s personality can be as much a driver of purchase as how well it meets functional requirements, as discussed in Chapter 10.

The more radical the innovation, the more marketers must be able to see the match between customer core needs and the possibilities created by emerging technol- ogy. Below are a few quotes about the challenges of innovating ahead of the customer.

You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.21

—Steve Jobs

It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.22

—Steve Jobs

The iPhone is a marketer’s dream. However, most new products do not succeed. Why this is so and how

marketers can adapt their strategies is a key aspect of Chapter 7.

Meaning beyond function—Women’s hair removal is highly popular in the United States and has led to a thriving industry including razors, chemical depilatories, and electrolysis. However, women in other parts of the world—France, Italy, China—do not shave.23 Crest’s introduction of “Whitestrips” in 2001 created a new over-the-counter product to whiten teeth that has since grown to a multimillion-dollar market.24 Such examples highlight the fact that “needs” come in various forms. While being hair-free under one’s arms or having whiter teeth may not improve one’s physical well-being, in many countries and cultures, such attributes are related to the need to belong or to be respected, as discussed in Chapter 10. Some consumer groups argue that mar- keters create unnecessary needs on the part of the con- sumer and worry about their consequences for both the individual and society, as discussed in Chapter 20.

Critical Thinking Questions 1. How and why do you think products acquire mean-

ing to consumers?

2. Can you see any potential negative consequences to marketing attempts to encourage purchases of prod- ucts consumers don’t need?

3. Do marketers create needs?

LO1: Define consumer behavior. The field of consumer behavior is the study of individu- als, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.

LO2: Summarize the applications of consumer behavior. Consumer behavior can be applied in four areas: (a) marketing strategy, (b) regulatory policy, (c) social

marketing, and (d) creation of informed individuals. Developing marketing strategy involves setting levels of the marketing mix based on an understanding of the market and segments involved to create desirable outcomes. Developing regulatory guidelines involves developing policies, guidelines, and laws to protect and aid consumers. Social marketing is the application of marketing strategies and tactics to alter or create behaviors that have a positive effect on the targeted individuals or society as a whole. Creating more informed individuals involves educating consumers

SUMMARY

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Part One Introduction30

about their own consumption behaviors as well as mar- keters’ efforts to influence them in such a way as to create a more sound citizenship, effective purchasing behavior, and reasoned business ethics.

LO3: Explain how consumer behavior can be used to develop marketing strategy. The interplay between consumer behavior and market- ing strategy involves five stages. First is market analy- sis, which involves gathering data and tracking trends related to the company, competitors, conditions, and consumers. Second is market segmentation. A market segment is a portion of a larger market whose needs differ somewhat from the larger market. Firms segment their markets and choose a segment or segments that best fit their capabilities and market conditions. Third is marketing strategy, which involves setting appropri- ate levels for the marketing mix as a function of the segments being targeted and the market conditions that exist. Fourth is the consumer decision process, which is a series of steps starting with problem recognition and moving through information search, alternative evaluation, purchase, use, and post-purchase evalua- tion. Marketing efforts can be targeted to these differ- ent stages. Fifth is outcomes at the individual, firm, and societal levels. And while profit maximization is often a goal at the firm level, possible adverse effects at the individual and societal level are of importance to firms, government organizations, and regulators. An understanding of consumer behavior theory and concepts is critical at each stage as marketers gather information, develop marketing strategies to influence consumer decisions, and evaluate the effects of their marketing efforts.

LO4: Explain the components that constitute a conceptual model of consumer behavior. The conceptual model of consumer behavior devel- oped here can be broken into four interrelated parts. External and internal influences affect the consumer’s

self-concept and lifestyle, which, in turn, affects the decision process. External influences (Part II of the text) include culture, reference groups, demographics, and marketing activities. Internal influences (Part III) include perception, emotions, attitudes, and person- ality. Self-concept is the totality of an individual’s thoughts and feelings about him- or herself. Lifestyle is, quite simply, how one lives, including the products one buys, how one uses them, what one thinks about them, and how one feels about them. External and internal factors operate to influence self-concept and lifestyle, which, in turn, influences the decision pro- cess (Part IV). Overlaying these basic components is organizations (Part V) and regulation (Part VI). Orga- nizations or businesses can also be consumers, as when Mercedes-Benz purchases dashboard subcomponents from a supplier. This type of marketing is often termed business-to-business (B2B) marketing to differentiate it from business-to-consumer (B2C) marketing, which is the focus of much of this text. The special nature of organizations and how they behave warrant special attention. Regulation is an aspect of consumer behavior that permeates marketer actions relating to all parts of our model and it warrants special attention as well.

LO5: Discuss issues involving consumption meanings and firm attempts to influence them. Consumption has meaning beyond the satisfaction of minimum or basic consumer needs. Thus, consumers might purchase Nike sneakers not only to satisfy the functional needs associated with safety and support, but also for symbolic needs associated with status, identity, and group acceptance. Some criticize marketers for their attempts to instill in, or amplify, consumer desires for products beyond minimum functional aspects. And while this criticism may hold true, it also seems likely that such desires and symbolic meanings are naturally assigned to objects even in the relative absence of mar- keting. Nonetheless, the ethical implications of market- ers’ actions in this regard are important to consider.

Conceptual model 24 Consumer behavior 6 Consumer cost 19 Customer satisfaction 22 Customer value 10 Distribution 20 Injurious consumption 22

Lifestyle 26 Marketing communications 18 Marketing mix 17 Marketing strategy 17 Market segment 13 Need set 14 Price 19

Product 17 Product position 21 Self-concept 26 Service 20 Social marketing 8 Target market 16 Total product 11

KEY TERMS

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Chapter One Consumer Behavior and Marketing Strategy 31

1. How is the field of consumer behavior defined? 2. What conclusions can be drawn from the examples

at the beginning of this chapter? 3. What are the four major uses or applications of an

understanding of consumer behavior? 4. What is social marketing? 5. What is customer value, and why is it important to

marketers? 6. What is required to provide superior customer

value? 7. What is a total product? 8. What is involved in the consumer analysis phase of

market analysis in Figure 1–1? 9. What is involved in the company analysis phase of

market analysis in Figure 1–1? 10. What is involved in the competitor analysis phase

of market analysis in Figure 1–1? 11. What is involved in the conditions analysis phase

of market analysis in Figure 1–1? 12. Describe the process of market segmentation.

13. What is marketing strategy? 14. What is a marketing mix? 15. What is a product? 16. What does an effective communications strategy

require? 17. What is a price? How does the price of a product

differ from the cost of the product to the consumer? 18. How is service defined in the text? 19. What is involved in creating satisfied customers? 20. What are the major outcomes for the firm of the

marketing process and consumers’ responses to it? 21. What are the major outcomes for the individual

of the marketing process and consumers’ responses to it?

22. What are the major outcomes for society of the marketing process and consumers’ responses to it?

23. What is product position? 24. What is meant by injurious consumption? 25. What is meant by consumer lifestyle? 26. Describe the consumer decision process.

REVIEW QUESTIONS

27. Why would someone shop on the Internet? Buy an iPod? Eat at TGI Friday’s frequently?

a. Why would someone else not make those purchases?

b. How would you choose one outlet, brand, or model over the others? Would others make the same choice in the same way?

28. Respond to the questions in Consumer Insight 1–1. 29. Of what use, if any, are models such as the one in

Figure 1–3 to managers? 30. What changes would you suggest in the model in

Figure 1–3? Why? 31. Describe your lifestyle. How does it differ from

your parents’ lifestyle? 32. Do you anticipate any changes in your lifestyle

in the next five years? What will cause these changes? What new products or brands will you consume because of these changes?

33. Describe a recent purchase you made. To what extent did you follow the consumer

decision-making process described in this chapter? How would you explain any differences?

34. Describe several total products that are more than their direct physical features.

35. Describe the needs that the following items might satisfy and the total cost to the consumer of obtaining the benefits of the total product.

a. Digital video recorder (e.g., TiVo) b. Lasik eye surgery c. Motorcycle d. SUV 36. How would you define the product that the

Hard Rock Cafe provides? What needs does it meet?

37. To what extent, if any, are marketers responsible for injurious consumption involving their products?

38. How could social marketing help alleviate some of society’s problems?

39. Respond to the questions in Consumer Insight 1–2.

DISCUSSION QUESTIONS

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Part One Introduction32

42. Interview the manager or marketing manager of a retail firm. Determine how this individual develops the marketing strategy. Compare this person’s process with the approach described in the text.

43. Interview the managers of a local charity. Determine what their assumptions about the consumer behavior of their supporters are. To what extent do they use marketing strategy to increase support for the organization or compliance with its objectives?

44. Interview five students. Have them describe the last three restaurant meals they consumed and the situations in which they were consumed. What can you conclude about the impact of the situation on consumer behavior? What can you conclude about the impact of the individual on consumer behavior?

45. Visit one or more stores that sell the following items. Report on the sales techniques used (point- of-purchase displays, store design, salesperson comments, and so forth). What beliefs concerning consumer behavior appear to underlie these techniques? It is often worthwhile for a male and

a female student to visit the same store and talk to the same salesperson at different times. The variation in salesperson behavior is sometimes quite revealing.

a. Books and magazines b. Cellular phones c. Pet supplies d Expensive art e. Expensive jewelry f. Personal computers 46. Interview individuals who sell the items listed

below. Try to discover their personal models of consumer behavior for their products.

a. Expensive jewelry b. Pets c. Golfing equipment d. Plants and garden supplies e. Flowers f. Car insurance 47. Interview three individuals who recently made

a major purchase and three others who made a minor purchase. In what ways were their decision processes similar? How were they different?

APPLICATION ACTIVITIES

1. Sources for “Evolution of Marketing” section: J. B. Pine and J. H. Gilmore, The Experience Economy (Boston, MA: Harvard Business Press, 1999); and M. Rhodes, “Starbucks Channels Old- World Mysticism in New Big Easy Store,” FastCompany.com, December 13, 2013, www.fastcodesign.com, accessed July 13, 2014.

2. Sources for “Marketing 2 Consumers” section: S. Godin, Permission Marketing (New York: Simon & Schuster, 1999); P. Fuller and K. Hein, “A Two-Way Conversation,” Brandweek, February 24, 2002, pp. 20–28.

3. Sources for the “Social Media” section: J. Howe, “The Rise of Crowdsourcing,” Wired Magazine, June 2006, http://archive. wired.com/wired/archive/14.06/crowds.html, accessed July 13, 2014; J. Howe, Crowdsourcing (New York: Three Rivers Press, 2008); T. Smith, “The Social Media Revolution,” International

Journal of Market Research 51, no. 4 (2009), pp. 559–61; H. Simula, A. Tollinen, and H. Karjaluoto, “Crowdsourcing in the Social Media Era,” Journal of Marketing Development and Competitiveness, May 2013, pp. 122–37; T. Luna, “Long CVS Receipts Spark Social Media Sensation,” The Boston Globe, August 31, 2013, www.bostonglobe.com, accessed July 13, 2014.

4. J. Neff, “S.C. Johnson Likely to Bag Ziploc TableTops,” Advertising Age, November 25, 2002, p. 3; and J. Neff, “S.C. Johnson Faces a Clean-up Job,” Advertising Age, November 29, 2004, p. 8.

5. See W. I. Ghani and N. M. Childs, “Wealth Effects of the Passage of the Nutrition Labeling and Education Act of 1990 for Large U.S. Multinational Food Corporations,” Journal of Public Policy and Marketing, Fall 1999, pp. 147–58; and

REFERENCES

40. Is the criticism of Nike for creating a shoe that is symbolic of success to some groups valid? Why or why not?

41. Robert’s American gourmet snack foods produces herbal-based snacks such as Spirulina Spirals and

St. John’s Wort Tortilla Chips. According to the company president, “We’re selling like crazy. We don’t do research. We react as sort of a karma thing.”25 How would you explain the firm’s success? What are the advantages and risks of this approach?

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Chapter One Consumer Behavior and Marketing Strategy 33

S.  K. Balasubramanian and C. Cole, “Consumers’ Search and Use of Nutrition Information,” Journal of Marketing, July 2002, pp. 112–27.

6. See A. R. Andreasen, “Social Marketing,” Journal of Public Policy & Marketing, Spring 1994, pp. 108–14; and P. Kotler, N. Roberto, and N. Lee, Social Marketing (Thousand Oaks, CA: Sage, 2002).

7. A. S. Wellner, “The New Science of Focus Groups,” American Demographics, March 2003, pp. 29–33.

8. Insight based on K. E. Reynolds, J. Ganesh, and M. Luckett, “Traditional Malls vs. Factory Outlets,” Journal of Business Research, 55 (2002), pp. 687–96.

9. E. Esfahani, “How to .  .  . Get Tough with Bad Customers,” Business 2.0, October 2004, p. 52.

10. T. F. McMahon, “What Buyers Buy and Sellers Sell,” Journal of Professional Services Marketing, 2 (1996), pp. 3–16.

11. “‘Build a Better Mousetrap’: 2004 New Product Innovations of the Year,” Productscan Online (press release), December 27, 2004 (www.productscan.com).

12. “MasterCard Launches Marketing, Education Campaign for Hispanics,” Payment News, May 18, 2009.

13. See, e.g., J. Weber and A. T. Palmer, “How the Net Is Remaking the Mall,” BusinessWeek Online, May 9, 2005.

14. “Disney Hits New Markets with Retail Makeover,” Reuters, January 11, 2011.

15. P. Wingert, “Why It’s So Risky,” Newsweek, November 22, 2010, p. 14.

16. “Price Rises Threaten Progress on Poverty,” Financial Times, April 10, 2008, p. 8.

17. R. E. Petty and J. T. Cacioppo, “Addressing Disturbing and Disturbed Consumer Behavior,” Journal of Marketing Research, February 1996, pp. 1–8.

18. See M. L. Richins, “Special Possessions and the Expression of Material Values,” Journal of Consumer Research, December 1994, pp. 522–33.

19. C. Miller, “The Have-Nots,” Marketing News, August 1, 1994, pp. 1–2; P. Mergenhagen, “What Can Minimum Wage Buy?,” American Demographics, January 1996, pp. 32–36; and A. Hank, “Hank Finds Two Families,” StreetWise, May 16–31, 1996, p. 7. See also R. P. Hill, “Disadvantaged Consumers,” Journal of Business Ethics 80 (2008), pp. 77–83.

20. “Apple Becomes Most Valuable Company Ever,” CBS News (online), August 20, 2012, www.cbsnews.com/news/apple-becomes- most-valuable-company-ever/, accessed July 21, 2014.

21. B. Burlingham and G. Gendron, “The Entrepreneur of the Decade,” Inc. Magazine, April 1, 1989, www.inc.com/magazine/ 19890401/5602.html/7, accessed July 21, 2014.

22. A. Reinhart, “Steve Jobs on Apple’s Resurgence,” BusinessWeek, May 25, 1998, www.businessweek.com/bwdaily/dnflash/may1998/ nf80512d.htm, accessed July 21, 2014.

23. C. Hope, “Caucasian Female Body Hair and American Culture,” Journal of American Culture, Spring 1982, pp. 93–99.

24. K. Higgins, “P&G Reinvents Itself,” Marketing Management, November/December 2002, pp. 12–15; A. Dutra, J. Frary, and R. Wise, “Higher-Order Needs Drive New Growth in Mature Consumer Markets,” The Journal of Business Strategy, 25, no. 5 (2004), pp. 26–34.

25. M. W. Fellman, “New Age Dawns for Product Niche,” Marketing News, April 27, 1998, p. 1.

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34

EXTERNAL INFLUENCESII part

Experiences and Acquisitions

Internal Influences

Perception Learning Memory Motives

Personality Emotions Attitudes

Expe riences

and Acq uisitions

External Influences

Culture Subculture

Demographics Social Status

Reference Groups Family

Marketing Activities

Self-Concept and

Lifestyle

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35

The external influence area of our model

shown at the left is the focal point of this part

of the text. Any division of the factors that

influence consumer behavior into separate

and distinct categories is somewhat arbitrary.

For example, we will consider learning in

Part III of the text, which focuses on internal

influences. However, a substantial amount of

learning involves interaction with, or imitation

of, other individuals. Thus, learning clearly

involves external influences such as family

and peers. Our focus in this part is on the

functioning of the various external groups, not

the processes by which individuals react to

these groups.

In this part, we begin with large-scale,

macrogroup influences and move to smaller,

more microgroup influences. As we progress,

the nature of the influence exerted changes

from general guidelines to explicit expecta-

tions for specific behaviors. In Chapter 2,

we examine how cultures cause differing

behaviors across countries and other cultural

units. Chapters 3 through 6 focus primar-

ily on the American society, examining its

values, demographics, social stratification,

subcultures, and family structure. Chapter 7

examines the mechanisms by which groups

influence consumer behaviors. In combina-

tion, these chapters allow for a comparison

and contrast of how external influences oper-

ate in America and around the world.

Decision Process

Situations

Problem Recognition

Information Search

Alternative Evaluation

and Selection

Outlet Selection and Purchase

Postpurchase Processes

Needs

Desires

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36

2 Cross-Cultural Variations In Consumer Behavior chapter

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37

Define the concept of culture.

Describe core values that vary across culture and influence behaviors.

Understand cross-cultural variations in non- verbal communications.

LO1

LO2

LO3

Summarize key aspects of the global youth culture.

Understand the role of global demographics

List the key dimensions in deciding to enter a foreign market.

LO4

LO5

LO6

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

Firms often aspire to be global. The benefits can be significant, but the challenges are stag- gering. The adaptations, adjustments, and considerations necessary when doing busi- ness across country and cultural borders are numerous. The following examples (Target, Bunnies, and Apple) illustrate the branding and logo issues created by global trademark law.

Target: United States versus Australia— Target, the 1,800-store Minneapolis-based retailer, recently established its first non-U.S. stores in Canada.1 Although this is Target’s first venture beyond its American borders, since 1968 there have been Target depart- ment stores in Australia. Target Australia (300 stores, $3.8 B annual revenue) bears an uncanny resemblance to the U.S. Target, with the same (a) “Target” name in the same font; (b) red and white bulls’-eye logo on its store- front, website, and ads; (c) tagline “Expect more, Pay less”; as well as a mix of products that consumers likely would find indistinguish- able from those offered in Target U.S.

The explanation for this seemingly odd occurrence can be found in trademark law and the historical development of regional and local brands at a time when globalization was less prevalent. Trademarks for the most part can be established only in one country at a time. A company doing business in multiple

countries must obtain trademarks for its name separately for each country (Target U.S. did so in 1966–67; Target Australia did so in 1968). Why Target U.S. would have allowed this is speculative, but one expert suggests:

.  .  . the two Targets [likely] had some sort of

informal, handshake agreement. Fifty years ago,

retail was primarily a local business and there

were very few, if any, truly global brands. The

idea that Target U.S. and Target Australia would

somehow cross paths seemed remote at best.

Currently, Target U.S. and Target Australia are not directly competing. But the globalized nature of consumer buying, the permeability of country boundaries provided by Internet access, and Target U.S.’s desire to grow beyond its borders paints a scenario that could create challenges and conflict moving forward.

Pink Bunnies: Energizer versus Duracell— The localized nature of trademark laws also explains the existence of two battery bunnies, the Energizer Bunny in the United States and Canada and the Duracell Bunnies in Europe and Australia. In 1973, Duracell created the Duracell Bunny to personify the long life of its batteries. In a worldwide advertisement cam- paign from 1973 to 1980, the drum-beating bunny powered by Duracell batteries outlasted

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Part Two External Influences38

all the drum-beating bunnies powered by rival batter- ies. However, in 1987 when Duracell failed to renew its trademark Duracell Bunny in the United States, Energizer seized the lapse to trademark its Energizer Bunny, sporting sunglasses and wearing flip-flop san- dals with a noticeably brighter shade of pink fur, beat- ing on a noticeably larger drum. Today, consumers in the United States and Canada are familiar with the fuzzy, pink-furred, sunglass-wearing, drum- beating Energizer Bunny that “keeps on going and going” while an equally iconic fuzzy, pink-furred “copper-top” Duracell Bunny exists only in Europe and Australia.2

Apple: Computers and Music—Apple computer, now known as Apple, Inc., is at the apex of the tech- nology world as well as an iconic global brand. Apple Corporation is the holding company for the Beatles. Both Apple Computer and Apple Corporation have

an apple as their logo, and as long as the two com- panies excelled in their own separate realms (com- puters versus music), the two companies were able to work out their trademark differences. How- ever, things became murky when Apple Computer entered the realm of music via iTunes. In 2006, the courts ruled in favor of Apple Computers and the two companies reached a licensing agreement in 2007.3

As we will see throughout this chapter and the remainder of the text, names, signs, and symbols generate imagery, beliefs, and attitudes about brands that are important drivers of consumer behavior. The local and global laws governing how brand names and logos operate across country bor- ders is critical in light of how important the embod- ied meaning of such names and symbols is to the consumers who buy those brands.

As the opening vignette suggests, marketing across country and cultural boundaries is difficult and challenging. As Figure 2–1 indicates, cultures (and countries) may differ in demographics, language, nonverbal communications, and values. The success of global marketers depends on how well they understand and adapt to these differences.

Language

Demographics

Nonverbal communications

Consumer behavior

Marketing strategy

Values

2-1 Cultural Factors Affect Consumer Behavior and Marketing StrategyFIGURE

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Chapter Two Cross-Cultural Variations In Consumer Behavior 39

In this chapter, we focus on cultural variations in values and nonverbal communica- tions. In addition, we briefly describe how demographic variations across countries and cultures influence consumption patterns.

Before dealing with specifics, we must consider the broader issues of cross-cultural market- ing, including globalization, attitudes toward multinational brands, and ethical considerations. Globalization means more than product exports and imports. Globalization can involve export- ing and importing values, lifestyles, and attitudes. Historically, such influence has been thought of as primarily going one way—that is, large American and other Western multinational com- panies and brands influencing the values and lifestyles of the countries they enter. And, no doubt, such effects occur. For example, television advertising in countries such as China and India is extensive and reflects many Western values, such as individualism and an emphasis on youth. Over time, such advertising would be expected to influence not only how many Chinese and Indians choose to live (lifestyle) but also what they value and how they think and feel.4

Increasingly, however, globalization means mutual influence as products, brands, cul- tures, and values move back and forth across the world. So, while Western brands such as Mercedes still have cachet as luxury symbols in Eastern countries such as Japan, Eastern brands such as Japan’s Lexus now have developed similar luxury status in Western coun- tries such as the United States. Additional examples include:5

�r� Soccer is being imported into the United States particularly as symbolized by U.K. star David Beckham, while American-style football (termed olive ball) is being exported to China.

�r� Harajuku, a broad term for the “street” fashion developed by style-conscious Japanese youth, which often incorporates elements of Western style but in unique and creative ways, has become popular around the world, as shown in Illustration 2–1.

�r� Brazilian products and fashion became all the rage in London as “Brazilian chic” was marketed through department stores, cultural events, and positive media coverage. Similar trends are occurring not only in the United States but also all over the world.

Although globalization can influence cultural values, it would be a mistake to think that all cultures are becoming homogenized. While younger generations of consumers appear to be more similar, modern, and, in some cases Western, older consumers in those same

Harajuku style is

popular all over the

world with its creative

combination of tra-

ditional Japanese

influences with more

modern Western

style.

ILLUSTRATION 2-1

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Part Two External Influences40

markets cling to traditional values that must be respected. For example, China appeared to eagerly (and profitably) copy TV contest shows like American Idol (Supergirl is a Chinese version). However, lawmakers there have clamped down with regulations to make the con- testants act more conservatively and to keep the judges from embarrassing the contestants. According to one expert:

The authorities are reacting against the sensationalistic, slightly rebellious nature of the contest programs, which promote individualism and personal achievement. The winners become idols with extreme influence on Chinese citizens. “Supergirl” also introduced Chinese to the concept of voting.6

Beyond elders and authorities attempting to maintain traditional cultural values, con- sumers across the globe often hold strong pride in their local heritage and sometimes mis- trust or resent international brands, seeing them as irresponsible and hurtful to local culture and business. Indeed, a recent study indicates that regardless of country, there are four basic types of world citizens:7

�r� Global citizens (55 percent)—Positive toward international brands and view them as a signal of higher quality; most concerned about corporate responsibility to the local country. Prominent in Brazil, China, and Indonesia. Rare in the United States and the United Kingdom.

�r� Global dreamers (23 percent)—Positive toward international brands and buy into their positive symbolic aspects; less concerned about corporate responsibility to the local country. Equally distributed across countries.

�r� Antiglobals (13 percent)—Negative toward international brands; don’t like brands that preach American values; don’t trust multinationals. Higher in the United Kingdom and China. Lower in Egypt and South Africa.

�r� Global agnostics (9 percent)—Don’t base decisions on global brand name; evaluate as they would local brands; don’t see global brands as special. Higher in the United States and South Africa. Lower in Japan, Indonesia, China, and Turkey.

Corporate responsibility and ethical issues can span from labor policies to influences on consumption of products linked to negative consequences. One example is American tobacco companies, which are aggressively marketing their products in the developing countries of Asia, Latin America, Africa, and Eastern Europe. Smoking-related deaths are now a leading killer in Asia, where increases in female smoking are a major concern.8 As one World Health Organization (WHO) official notes:

Here in Japan we see Western cigarette brands marketed as a kind of liberation tool. We see cigarette companies calling on young Japanese women to assert themselves, shed their inhibitions and smoke.9

Clearly, there are both subtle and direct ethical issues involved in international marketing.

THE CONCEPT OF CULTURE Culture is the complex whole that includes knowledge, belief, art, law, morals, customs, and any other capabilities and habits acquired by humans as members of society.

Several aspects of culture require elaboration. First, culture is a comprehensive concept. It includes almost everything that influences an individual’s thought processes and behav- iors. Although culture does not determine the nature or frequency of biological drives such as hunger or sex, it does influence if, when, and how these drives will be gratified. It influ- ences not only our preferences but how we make decisions10 and even how we perceive the

LO1

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Chapter Two Cross-Cultural Variations In Consumer Behavior 41

world around us. Second, culture is acquired. It does not include inherited responses and predispositions. However, because much of human behavior is learned rather than innate, culture does affect a wide array of behaviors.

Third, the complexity of modern societies is such that culture seldom provides detailed prescriptions for appropriate behavior. Instead, in most industrial societies, culture sup- plies boundaries within which most individuals think and act. Finally, the nature of cul- tural influences is such that we are seldom aware of them. One behaves, thinks, and feels in a manner consistent with that of other members of the same culture because it seems “natural” or “right” to do so.

Imagine sweet corn. Most Americans think of it as a hot side dish. However, uses vary by country. Consider the following:

Instead of being eaten as a hot side dish, the French add it to salad and eat it cold. In Britain, corn is used as a sandwich and pizza topping. In Japan, school children gobble down canned corn as an after-school treat. And in Korea, the sweet corn is sprinkled over ice cream.11

Some of these uses probably seem strange or disgusting to you but are perfectly natural to members of other cultures. This is the nature of culture. We don’t think about the fact that many of our preferences are strongly influenced by our culture.

Culture operates primarily by setting rather loose boundaries for individual behavior and by influencing the functioning of such institutions as the family and mass media. Thus, culture provides the framework within which individual and household lifestyles evolve.

The boundaries that culture sets on behavior are called norms, which are simply rules that specify or prohibit certain behaviors in specific situations. Norms are derived from cultural values, or widely held beliefs that affirm what is desirable. Violation of cultural norms results in sanctions, or penalties ranging from mild social disapproval to banish- ment from the group. Thus, as Figure 2–2 indicates, cultural values give rise to norms and associated sanctions, which in turn influence consumption patterns.

The preceding discussion may leave the impression that people are aware of cultural values and norms and that violating any given norm carries a precise and known sanction. This is seldom the case. We tend to “obey” cultural norms without thinking because to do otherwise would seem unnatural. For example, we are seldom aware of how close we stand to other individuals while conducting business. Yet this distance is well defined and adhered to, even though it varies from culture to culture.

Sanctions

Penalties for violating norms

Norms

Specify ranges of appropriate behavior

Cultural values

Consumption patterns

2-2Values, Norms, Sanctions, and Consumption Patterns FIGURE

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Part Two External Influences42

Cultures are not static. They typically evolve and change slowly over time. Market- ing managers must understand both the existing cultural values and the emerging cultural values of the societies they serve. A failure to understand cultural differences can produce negative consequences, such as the following:

�r� An Indian entrepreneur flew in the Washington Redskin’s cheerleaders for a cricket game. In a sexually conservative culture such as India’s, this did not translate in a positive fashion. Lawmakers pressured the team and it switched to a band of local drummers. Their view was the cheerleaders were “lewd and not appropriate for India’s traditional culture.”12

�r� A U.S. electronics firm landed a major contract with a Japanese buyer. The U.S. firm’s president flew to Tokyo to sign the contract. The head of the Japanese firm read the contract intently for an extraordinary length of time. At last, the U.S. execu- tive offered a price discount. The Japanese executive was surprised but didn’t object. The U.S. executive’s mistake was assuming that the long scrutiny was an attempt to reopen negotiations. Instead, the Japanese executive was demonstrating his concern and authority by closely and slowly examining the document.

�r� Lipton created a line of instant meals named Side Dishes. The meals sold well in the United States but not in Latin America, a large market that Lipton had hoped would fuel growth for the line. Latin American housewives, with more traditional views of their family role, felt that “instant” meals implied they were lazy or poor caretakers for their families.13

Starbucks’ CEO offers this cautionary note for American businesses going global: “The biggest lesson is not to assume that the market or the consumers are just like Ameri- cans, even if they speak English or otherwise behave as if they were.”14 However, with appropriate strategies and an eye toward the needs and wants of local consumers, sophis- ticated retailers and manufacturers can and do succeed throughout the world, as shown in Illustration 2–2.

Many companies

offer a mix of stan-

dard and customized

products in their

locations around the

world.

ILLUSTRATION 2-2

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Chapter Two Cross-Cultural Variations In Consumer Behavior 43

VARIATIONS IN CULTURAL VALUES Cultural values are widely held beliefs that affirm what is desirable. These values affect behavior through norms, which specify an acceptable range of responses to specific situa- tions. A useful approach to understanding cultural variations in behavior is to understand the values embraced by different cultures.

Numerous values vary across cultures and affect consumption. We will present a classification scheme consisting of three broad forms of cultural values: other-oriented, environment-oriented, and self-oriented. The cultural values that have the most impact on consumer behavior can be classified in one of these three general categories.

Other-oriented values reflect a society’s view of the appropriate relationships between individuals and groups within that society. These relationships have a major influence on marketing practice. For example, if the society values collective activity, consumers will look toward others for guidance in purchase decisions and will not respond favorably to promotional appeals to “be an individual.”

Environment-oriented values prescribe a society’s relationship to its economic and technical as well as its physical environment. As a manager, you would develop a very different marketing program for a society that stressed a problem-solving, risk-taking, performance-oriented approach to its environment than you would for a fatalistic, security- and status-oriented society.

Self-oriented values reflect the objectives and approaches to life that the individual members of society find desirable. Again, these values have strong implications for mar- keting management. For instance, the acceptance and use of credit is very much deter- mined by a society’s position on the value of postponed versus immediate gratification.

Table 2-1 provides a list of 18 values that are important in most cultures. Most of the values are shown as dichotomies (e.g., materialistic versus nonmaterialistic). However,

LO2

Other-Oriented Values

r� Individual/Collective. Are individual activity and initiative valued more highly than collective activity and conformity? r� �Youth/Age. Is family life organized to meet the needs of the children or the adults? Are younger or older people viewed as leaders and role models? r� Extended/Limited family. To what extent does one have a lifelong obligation to numerous family members? r� Masculine/Feminine. To what extent does social power automatically go to males? r� Competitive/Cooperative. Does one obtain success by excelling over others or by cooperating with them? r� �Diversity/Uniformity. Does the culture embrace variation in religious belief, ethnic background, political views, and other important behaviors

and attitudes?

Environment-Oriented Values

r� Cleanliness. To what extent is cleanliness pursued beyond the minimum needed for health? r� Performance/Status. Is the culture’s reward system based on performance or on inherited factors such as family or class? r� Tradition/Change. Are existing patterns of behavior considered to be inherently superior to new patterns of behavior? r� �Risk taking/Security. Are those who risk their established positions to overcome obstacles or achieve high goals admired more than those

who do not? r� Problem solving/Fatalistic. Are people encouraged to overcome all problems, or do they take a “what will be, will be” attitude? r� Nature. Is nature regarded as something to be admired or overcome?

Self-Oriented Values

r� Active/Passive. Is a physically active approach to life valued more highly than a less active orientation? r� Sensual gratification/Abstinence. To what extent is it acceptable to enjoy sensual pleasures such as food, drink, and sex? r� Material/Nonmaterial. How much importance is attached to the acquisition of material wealth? r� Hard work/Leisure. Is a person who works harder than economically necessary admired more than one who does not? r� Postponed gratification/Immediate gratification. Are people encouraged to “save for a rainy day” or to “live for today”? r� Religious/Secular. To what extent are behaviors and attitudes based on the rules specified by a religious doctrine?

2-1Cultural Values of Relevance to Consumer Behavior TABLE

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Part Two External Influences44

this is not meant to represent an either/or situation but a continuum. For example, two societies can each value tradition, but one may value it more than the other. For several of the values, a natural dichotomy does not seem to exist. For a society to place a low value on cleanliness does not imply that it places a high value on dirtiness. These 18 values are described in the following paragraphs.

Other-Oriented Values Individual/Collective Does the culture emphasize and reward individual initiative, or are cooperation with and conformity to a group more highly valued? Are individual differ- ences appreciated or condemned? Are rewards and status given to individuals or to groups? Answers to these questions reveal the individual or collective orientation of a culture. Individualism is a defining characteristic of American culture. Australia, the United King- dom, Canada, New Zealand, and Sweden are also relatively individualistic. Taiwan, Korea, Hong Kong, Mexico, Japan, India, and Russia are more collective in their orientation.15

This value is a key factor differentiating cultures, and it heavily influences the self-con- cept of individuals. Not surprisingly, consumers from cultures that differ on this value differ in their reactions to foreign products,16 advertising,17 and the Internet.18 Examples include:

�r� Consumers in more collectivist countries care more about how they are treated in terms of respect and concern after a service failure than do consumers in more individualistic countries.19

�r� Consumers from more collectivist countries tend to be more imitative and less innova- tive in their purchases than those from individualistic cultures.20 Thus, ad themes such as “be yourself” and “stand out” are often effective in the United States but generally not in Japan, Korea, or China.

�r� Advertising in collectivist countries such as Korea contains more celebrity appeals than does advertising in individualistic countries such as the United States.21

Interestingly, you might expect luxury items to be less important in collectivist cultures. However, they are quite important, but for different reasons. In individualistic cultures, luxury items are purchased as a means of self-expression or to stand out.22 This is often not the case in more collectivist Asian societies. As one expert describes:

Brands take on roles as symbols that extend well beyond the intrinsic features of the category. One is not buying a watch, or even a status brand, one is buying club membership, or an “I am just like you” (symbol).23

Similarly, the notion of conspicuous consumption is often associated with individual- istic societies. However, a recent study finds that brand reputation influences decisions more for conspicuously consumed products in collectivist countries.24 Another study finds that concern for appearance is 40 percent higher for those in collectivist countries. One explanation is that a given behavior is used for different reasons in different cultures. As one expert notes:

Dressing well .  .  . might convey a sense of individuality in individualist cultures. However, it might be interpreted by collectivist-culture consumers as a way to demonstrate their in-group identity, show their concerns with in-group norms, follow in-group trends and avoid loss of face in front of in-group members.25

As useful as such generalizations are, it is important to realize that cultural values can and do evolve. This is particularly true among young, urban consumers in the developed

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Chapter Two Cross-Cultural Variations In Consumer Behavior 45

and developing countries of Asia, where individualism is on the rise.26 For example, 26 percent of Chinese teens consider individuality an important trait, more than double the rate of older Chinese.27 Although this number is substantially lower than that of Western cultures, it represents an important shift. Consider the following description of the new young single woman in Japan:

[T]he young single woman in Japan is now on an odyssey. The stereotyped office lady of the 80s was a junior office clerk. Today, though, Japanese women are climbing higher up the corporate career ladder, which is in turn bringing out a more independent streak. Women now are going out and finding their own path in life . . . and more are saying, “I don’t want to follow the trend all the time, I can find my own way.”28

In the face of such changes, traditional appeals may not work as they once did. For example, in the late 1980s, Shiseido Co. launched its very successful Perky Jean makeup line with the theme, “Everyone is buying it.” “That would never work now,” says a com- pany executive.

The different values held by younger and older Asian consumers illustrate that few cul- tures are completely homogeneous. Marketers must be aware of differences both between cultures and within cultures.29

Youth/Age To what extent do the primary family activities focus on the needs of the children instead of those of the adults? What role, if any, do children play in family deci- sions? What role do they play in decisions that primarily affect the child? Are prestige, rank, and important social roles assigned to younger or older members of society? Are the behavior, dress, and mannerisms of the younger or older members of a society imitated by the rest of the society?

While American society is clearly youth oriented, many Asian cultures have tradition- ally valued the wisdom that comes with age. Thus, mature spokespersons would tend to be more successful in these cultures than would younger ones. However, some Asian cultures are becoming increasingly youth oriented with increases in youth-oriented ads designed to target them.30 Consider the following description of Taiwan:

Taiwan is very, very youth-oriented, and it is a very hip culture. . . . You have a consumer-based economy that is quite potent, and pitching to the youth is a good way of ensuring that your prod- ucts are going to be bought.31

Illustration 2–3 demonstrates 7-Up’s use of a youth theme in China. These unique out- door “light pole” signs are common in China’s major cities.

This youth trend can also be seen in Arab countries. One study of Arab consumers from Saudi Arabia, Bahrain, Kuwait, and the United Arab Emirates shows the rapid emergence of several youth segments. The largest (35 percent) consists of younger, more liberal, indi- vidualistic married couples living in nuclear (versus communal) families in which women are more likely to work outside the home and thus demand a greater voice in family decisions.32 This youth trend may explain why recent research finds numerous similarities in values such as independence and respect for the elderly reflected in Arab and American television ads.33

Children’s influence on purchases and the tactics they use vary according to the youth- versus-age value and this has implications for marketers.34 For example, one study com- pared the tactics used by children in the Fiji Islands with those used in the United States. The Fiji Islands (and other Pacific Island nations) can be characterized as less individu- alistic and higher in respect for authority and seniority. As a consequence, Fiji children were more likely to “request” than “demand” and Fiji parents responded more favorably

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Part Two External Influences46

(i.e.,  bought the item) to “requests.” In contrast, American children were more likely to demand than to request, and American parents responded more positively to demands.35

China’s policy of limiting families to one child has produced a strong focus on the child, a shift toward youth, and increasing Westernization of children’s commercials. In fact, many Chinese children receive so much attention that they are known in Asia as “lit- tle emperors.”36 Consider the following description of the Zhou family and their 10-year- old daughter Bella, who live in Shanghai:

Under traditional Confucian teachings, respecting and obeying one’s elders were paramount. In today’s urban China, it is increasingly children who guide their parents through a fast-changing world. When the Zhous bought a new television set last year, Bella chose the brand. When they go out to eat, Bella insists on Pizza Hut.37

Obviously, while changes to traditional cultures such as those in Asia and the Gulf are occurring, it is important to remember that traditional segments and values still remain and that marketers must adapt not only across but within cultures.

Extended/Limited Family The family unit is the basis for virtually all societies. None- theless, the definition of the family and the rights and obligations of family members vary widely across cultures. As we will see in Chapter 6, our families have a lifelong impact on us, both genetically and through our early socialization, no matter what culture we come from. However, cultures differ widely in the obligations one owes to other family members at various stages of life as well as who is considered to be a member of the family.

In the United States, the family is defined fairly narrowly and is less important than in many other cultures. In general, strong obligations are felt only to immediate family members, and these diminish as family members establish new families. In many other

This outdoor signage

for 7-Up in China

demonstrates the

youth trend that is

emerging in Asian

cultures, which have

historically been quite

traditional with a high

value placed on age

and wisdom.

ILLUSTRATION 2-3

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Chapter Two Cross-Cultural Variations In Consumer Behavior 47

countries and regions, including South America, Fiji, Israel, and Asia, the role of the fam- ily is much stronger. Families, and obligations, often extend to cousins, nieces, nephews, and beyond. The following description indicates the complexity and extent of the extended Chinese family:

The family is critically important in all aspects of Chinese life and there is a distrust of nonfamily members. In response to this, the Chinese have developed family-like links to a greater extent than almost any other culture. It stretches to the furthest horizons, from close family, to slightly distant, to more distant, embracing people who are not really family but are connected to some- one in one’s family and to all their families. As such, the family is really a system of contacts, rather than purely an emotional unit as in the west.38

Clearly, marketers need to understand the role of families in the cultures they serve and adapt accordingly. For example:

�r� Adolescents and young adults in Mexico and Thailand (compared to the United States) are more influenced by parents and family in terms of consumption values and purchases.39

�r� Because Indian consumers tend to shop in groups and with their families, Biyani (a large discounter similar to Walmart) has U- and C-shaped aisles to provide private corners where families can discuss their purchase decisions.40

Masculine/Feminine Are rank, prestige, and important social roles assigned primar- ily to men? Can a female’s life pattern be predicted at birth with a high degree of accuracy? Does the husband, wife, or both make important family decisions? Basically, we live in a masculine-oriented world, yet the degree of masculine orientation varies widely, even across the relatively homogeneous countries of Western Europe.

This value dimension influences both obvious and subtle aspects of marketing. For example, the roles and manner in which one would portray women in ads in Muslim countries would differ from those in the United States.41 Indeed, when the U.S. military worked recently with an Afghan agency to create ads featuring pictures of babies that were designed to promote Afghan pride and discourage suicide bombings, they found that “. . . the babies all had to be boys, and the ad copy focused on males.”42

However, roles of women are changing and expanding throughout much of the world.43 This is creating new opportunities as well as challenges for marketers.44 For example, the increasing percentage of Japanese women who continue to work after marriage has led to increased demand for time-saving products as well as other products targeted at the work- ing woman. And during a recent U.K. election cycle, the major parties heavily targeted edu- cated women through Mumsnet, the largest online parenting site in the United Kingdom, with 1.2 million users who are predominantly higher-income, college-educated women.45

Participation in sports and exercise is another aspect strongly influenced by the mas- culinity dimension. There tends to be a wide disparity between men and women partici- pation rates (men higher) in countries and cultures high in masculine orientation such as South Korea, Mexico, Brazil, and France. However, as always, modern trends must be considered. In Mexico, for example, a strong masculine orientation toward sports is slowly giving way among younger Mexican women. One recent example is runner Ana Guevara, whose TV viewer numbers have sometimes been higher than those of men’s soccer— something unheard of in the history of Mexican sports. One expert points to the “changing status of women in Mexico.”46 And women from South Korea and China are now a domi- nant force in women’s professional golf, winning six of the LPGA’s last 12 major titles. Illustration 2–4 shows the changing role of women as represented by their ever-increasing participation in professional sports.

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Part Two External Influences48

Again, it is important to remember that traditional segments and values certainly do still remain and that marketers must adapt not only across but within cultures. For example, a recent study of women in mainland China found both traditionalist and modern seg- ments.47 In Hong Kong, however, the traditional values are not necessarily giving way when economic and social independence are gained. Instead, the conflict is internalized, as indicated by the following quote:

Women in Hong Kong, who are faced with both traditional Chinese culture and western culture, are at a crossroads of modernism and traditionalism. On one hand, they are having increasing amount of financial and decision power within the family and in the society. On the other hand, they are still under the pressure of traditional expectations on females as being a good wife and mother.48

For marketers, this conflict creates challenges in some cases to segment consumers into modern and traditional markets. In other cases the challenge is to help consumers (through products, positioning, advertising, and so on) deal with tensions between traditional and modern values.

Competitive/Cooperative Is the path to success found by outdoing other individuals or groups, or is success achieved by forming alliances with other individuals or groups? Does everyone admire a winner? Cultures with more masculine and individualistic orientations, such as the United Kingdom, the United States, and Australia, tend to value competitiveness and demonstrate it openly. Collectivist cultures, even if high in masculinity (e.g., Japan), tend to find openly competitive gestures offensive as they cause others to “lose face.”49

Variations on this value can be seen in the ways different cultures react to comparative advertisements. For example, the United States encourages them, while their use in other cultures can lead to consumer (and even legal) backlash. As one would expect, the more collectivist Japanese have historically found comparative ads to be distasteful, as do the Chinese, although Pepsi found Japanese youth somewhat more receptive if comparisons

The changing role of

women around the

world creates new

marketing opportuni-

ties. The popularity

and participation of

women in sports is

increasing in many

cultures.

ILLUSTRATION 2-4

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Chapter Two Cross-Cultural Variations In Consumer Behavior 49

are done in a frank and funny way.50 As a rule, comparative ads should be used with care and only after considerable testing.

Diversity/Uniformity Do members of the culture embrace variety in terms of reli- gions, ethnic backgrounds, political beliefs, and other important behaviors and attitudes? A culture that values diversity not only will accept a wide array of personal behaviors and attitudes but is also likely to welcome variety in terms of food, dress, and other products and services. In contrast, a society valuing uniformity is unlikely to accept a wide array of tastes and product preferences, though such a society may be subject to fads, fashions, and other changes over time.

Collectivist cultures tend to place a strong value on uniformity and conformity,51 whereas more individualistic cultures tend to value diversity. For example, “in-group” influence (e.g., wanting to see the same movies as everyone else) tends to be higher in China and Japan than in the United Kingdom and the United States.52 Obviously, however, economic and social changes associated with the youth movement in many collectivist societies mean relatively more acceptance of diversity than has been traditionally found, even if absolute levels trend lower than in their individualistic counterparts.

Environment-Oriented Values Cleanliness Is cleanliness next to godliness, or is it a rather minor matter? Are homes, offices, and public spaces expected to be clean beyond reasonable health requirements? In the United States, a high value is placed on cleanliness, where germ-fighting liquid soaps alone are a multi-billion-dollar market.53 In fact, people from many other cultures consider Americans to be paranoid on the subject of personal hygiene.

Although there are differences in the value placed on cleanliness among the economi- cally developed cultures, the largest differences are between these cultures and those of many of the underdeveloped nations. In many poorer countries, cleanliness is not valued at a level sufficient to produce a healthy environment. This is true even in large parts of rapidly developing countries such as China and India, where a lack of basic hygiene still causes significant health problems.54 While often criticized for having a negative impact on local cultures, McDonald’s has been credited with introducing more hygienic food preparation and toilets in several East Asian markets, including China.55

Performance/Status Are opportunities, rewards, and prestige based on an individu- al’s performance or on the status associated with the person’s family, position, or class? Do all people have an equal opportunity economically, socially, and politically at the start of life, or are certain groups given special privileges? Are products and brands valued for their ability to accomplish a task or for the reputation or status of the brand?

A status-oriented society is more likely to prefer “quality” or established and presti- gious brand names and high-priced items to functionally equivalent items with unknown brand names or lower prices (e.g., private label or store brands).56 As a result, compared with that in the United States, advertising in Japan, China, and India tends to involve more appeals to status or wealth.57 According to a Levi’s executive in charge of their new global dENiZENTM brand targeting emerging markets:

We’ve realized a new consumer has emerged, status-seekers in rapidly emerging middle classes. This is primarily a developing-market phenomenon—they exist outside the U.S. in markets like China, India, Indonesia, Mexico, and Brazil.58

Performance/status is closely related to the concept of power distance, which refers to the degree to which people accept inequality in power, authority, status, and wealth as

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Part Two External Influences50

natural or inherent in society.59 India, China, Brazil, Mexico, France, Hong Kong, and Japan are relatively high in their acceptance of power. Austria, Denmark, New Zealand, Sweden, and the United States are relatively low. Expert sources in ads have a greater impact in a high-power distance country than in a low one.60 In addition, consumers in high-power distance countries are more likely to seek the opinions of others in making decisions.61

How power is used may depend on other cultural factors, however. In the United States, power is seen in terms of coercion and in Japan as relational. As a consequence, in negotia- tions where the buyer has more power, buyers are more likely to use that power to extract higher prices and profits in the United States, whereas that is not true in Japan. Marketers need to understand such nuances when negotiating with partners in other countries.62

Tradition/Change Is tradition valued simply for the sake of tradition? Is change or “progress” an acceptable reason for altering established patterns? Compared with Ameri- cans, Korean and Chinese consumers have traditionally been much less comfortable dealing with new situations or ways of thinking.63 Britain, too, has a culture laden with tradition. This value is reflected in their advertising, where, compared to ads in America, those in Britain and China are more likely to emphasize tradition and history.64

It is important to note once again that change can and does live alongside traditional values. For example, both the Korean and Chinese cultures are now enthusiastically embracing change. In China, “modernness” (often symbolized by a Western name) is an important product attribute, particularly among younger, urban Chinese. A recent study found that advertisers in China segment their advertising depending on audience. For the mainstream audiences targeted by television, traditional appeals are used more often. In magazines targeted at younger Chinese (e.g., Elle, Cosmopolitan, and Sanlian), modern appeals focusing on technology, fashion, and leisure are used more often.65 Younger urban Korean, Japanese, and more recently Chinese consumers often lead the way in technol- ogy adoption and usage and are highly demanding.66 Vodafone found out just how much after their market share in Japan plummeted when they failed to innovate and stay on the cutting edge.67

Risk Taking/Security Do the “heroes” of the culture meet and overcome obstacles? Is the person who risks established position or wealth on a new venture admired or con- sidered foolhardy? This value relates to tolerance for ambiguity and uncertainty avoid- ance. It has a strong influence on entrepreneurship and economic development as well as new-product acceptance. A society that does not admire risk taking is unlikely to develop enough entrepreneurs to achieve economic change and growth. New-product introduc- tions, new channels of distribution, advertising themes, and reliance on brand name are affected by this value.68

Problem Solving/Fatalistic Do people react to obstacles and disasters as challenges to be overcome, or do they take a “what will be, will be” attitude? Is there an optimistic, “we can do it” orientation? Fatalists tend to feel they don’t have control over the outcome of events. This has been shown to reduce consumer expectations of quality and decrease the likelihood that consumers make formal complaints when faced with an unsatisfactory purchase.69

Western Europe and the United States tend to fall toward the problem-solving end of the continuum, whereas Mexico and most Middle Eastern countries fall toward the fatalis- tic end. As with many of the values we have discussed, traditional and modern approaches can live along side each other. Consider the following examples:70

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Chapter Two Cross-Cultural Variations In Consumer Behavior 51

Traditional: In the Asia-Pacific region, supernatural beliefs traditionally are believed to have a strong influence on product sales performance. In particular, name giving . . . has a strong per- ceived connection to fate. In more than 50 percent of the [brand names] we studied, the creation . . . was based, in part, on a “lucky” number of total strokes drawn in the creation of the characters that spelled out the brand name. [And lucky names] were more common in high-uncertain than low-uncertain market environments.

Modern: Tiger leadership is a new leadership style prowling around Southeast Asia which com- bines the brashness of a Western entrepreneurial style with a tireless Asian work ethic.

Nature Is nature assigned a positive value, or is it viewed as something to be overcome, conquered, or tamed? Americans historically considered nature as something to be over- come or improved. Most northern European countries place a high value on the environ- ment. Packaging and other environmental regulations are stronger in these countries than in America. In fact, a British company recently developed a zero-emissions motorcycle that runs on hydrogen. They worry, however, because it also makes no sound! Would you want a motorcycle that didn’t growl when you revved it up?71

In turn, Americans and Canadians appear to place a higher value on the environment than the southern European countries and most developing countries, though this may reflect variations in the financial ability to act on this value rather than the value itself. These differences in attitudes are reflected in consumers’ purchase decisions, consumption practices, and recycling efforts.72

As with all the values we are discussing, there are wide ranges within as well as between countries, which create market opportunities. For example, overall, China does not have a strong environmental orientation. However, there are segments of the country that do have such an orientation and the means to buy products and services that reflect this focus.73

Self-Oriented Values Active/Passive Are people expected to take a physically active approach to work and play? Are physical skills and feats valued more highly than nonphysical performances? Is emphasis placed on doing? Americans are much more prone to engage in physical activi- ties and to take an action-oriented approach to problems. “Don’t just stand there; do some- thing” is a common response to problems in America. Participation in active exercise varies widely across countries, especially for women, as discussed earlier. While this obviously limits the market for exercise equipment in certain countries, it also affects advertising themes and formats. For example, an exercise or sports theme for bottled water would not be appropriate in a country such as Japan, where two-thirds of the men and three-fourths of the women exercise less than twice a year.

Sensual Gratification/Abstinence Is it acceptable to pamper oneself, to satisfy one’s desires for food, drink, or sex beyond the minimum requirement? Is one who for- goes such gratification considered virtuous or strange? Muslim cultures are extremely con- servative on this value, as are many Asian cultures, including Hong Kong and India. A full 37 percent of Saudis indicated modesty is important, compared with 9 percent in the United States.74 Perhaps not surprisingly, compared with U.S. and Australian ads, ads in Hong Kong and India contain fewer sex appeals.75 And China has put legal restrictions on the use of sex appeals in ads.76

In Arab countries, advertisements, packaging, and products must carefully conform to Muslim standards. Polaroid’s instant cameras gained rapid acceptance because they

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Part Two External Influences52

allowed Arab men to photograph their wives and daughters without fear that a stranger in a film laboratory would see the women unveiled.

In contrast, Brazilian and European advertisements contain nudity and blatant (by U.S. standards) appeals to sensual grati- fication. The Radox ad shown in Illustra- tion  2-5 provides a great example of how marketers make use of sensuality. While quite appropriate for some cultures, it would not be successful in a culture that did not accept sensual gratification.

Material/Nonmaterial Is the accumu- lation of material wealth a positive good in its own right? Does material wealth bring more status than family ties, knowledge, or other activities?

There are two types of materialism. Instrumental materialism is the acquisi- tion of things to enable one to do something. Skis can be acquired to allow one to ski.

Terminal materialism is the acquisition of items for the sake of owning the item itself. Art is generally acquired for the pleasure of owning it rather than as a means to another goal. Cultures differ markedly in their relative emphasis on these two types of materialism.77

Increased wealth, exposure to international media and brands, and modernization appear to be increasing materialism in places generally thought to be less materialistic. For example, in more collectivist China, where family and relationships might be thought to trump possessions, Chinese youth now demonstrate greater materialism than their U.S. counterparts.78 Beyond the youth trend, there are also subtle differences in the types of materialism across cultures. For example, while U.S. consumers place a higher value on the importance of obtaining possessions (called the centrality dimension of materialism), Korean consumers place a higher value on possessions as a means for demonstrating suc- cess (the success dimension) because it is seen as uplifting the family unit.79

Hard Work/Leisure Is work valued for itself, independent of external rewards, or is work merely a means to an end? Will individuals continue to work hard even when their minimum economic needs are satisfied, or will they opt for more leisure time? For exam- ple, in parts of Latin America, work has traditionally been viewed as a necessary evil. However, generational gaps exist. For example, in Mexico, 100 percent of the older gen- eration agreed with the statement “Today’s emphasis on work is a bad thing,” compared with only 28 percent of the younger generation. The trend was just the opposite in the United Kingdom, Netherlands, France, Canada, and Australia, where agreement by the older generation was around 55 percent, while agreement by the younger generation was around 80  percent. In the United States and Hong Kong, younger and older generations were roughly the same (about 50 percent agreeing) on this value.80

These attitudes do not necessarily reflect actual work patterns. For example, hours worked per week are highest in Hong Kong (48.6 hours) and Mexico (41.6) and lowest in France (34.1) and Canada (34.8).81 Nonetheless, this value has important consequences for lifestyle and demand for leisure activities.

Cultures differ in

their acceptance of

sensual gratification.

This ad for Radox

would work well in

some cultures but

would not be appro-

priate in cultures that

place a high value on

abstinence.

ILLUSTRATION 2-5

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Chapter Two Cross-Cultural Variations In Consumer Behavior 53

Postponed Gratification/Immediate Gratification Is one encouraged to “save for a rainy day,” or should one “live for today”? Is it better to secure immediate benefits and pleasures, or is it better to suffer in the short run for benefits in the future, or in the here- after, or for future generations? The United States, the United Kingdom, and Australia tend to have short-term orientations, while India, Hungary, Brazil, Hong Kong, and China have long-term orientations. This value has implications for business strategies, efforts to encourage savings, and the use of credit. For example, valued business goals in short-term cultures tend to include “this year’s profits,” while those in long-term cultures included “profits 10 years from now.”82 In addition, use of credit is lower in long-term–oriented cultures, where cash and debit card usage are more common.83

Religious/Secular To what extent are daily activities determined by religious doctrine? The United States is relatively secular. Many Islamic cultures as well as some Catholic cultures are much more religiously oriented.84 In contrast, religion plays a very small role in Chinese culture. However, even in a country such as China, where few are actively involved with a formal religion, many of the culture’s values were formed in part by histori- cal religious influences. The same is true for the secular nations of the West. Understanding the extent and type of religious influences operating in a culture is essential for effectively designing all elements of the marketing mix.85

Clearly, the preceding discussion has not covered all the values operating in the various cultures. However, it should suffice to provide a feel for the importance of cultural values and how cultures differ along value dimensions.

CULTURAL VARIATIONS IN NONVERBAL COMMUNICATIONS Differences in verbal communication systems (languages) are immediately obvious to anyone entering a foreign culture. An American traveling in Britain or Australia will be able to communicate, but differences in pronunciation, timing, and meaning will still occur. For example, Dogpile, a U.S.-based metasearch engine (www.dogpile.com), changed its name in Europe to WebFetch after realizing that in the United Kingdom “pile” refers to hemorrhoids or the result of a dog relieving itself!86

Attempts to translate marketing communications from one language to another can result in ineffective communications, as shown in Table 2-2.

The problems of literal translations and slang expressions are compounded by symbolic meanings associated with words, the absence of some words from various languages, and the difficulty of pronouncing certain words:87

�r� In Japan, a global soft-drink company wanted to introduce a product with the attri- bute “creaminess.” However, research showed that there was no corresponding word in Japan for this attribute, so the company had to find something comparable, which turned out to be “milk feel.”88

�r� Mars addressed the problem of making the M&M’s name pronounceable in France, where neither ampersands nor the apostrophe “s” plural form exists, by advertising extensively that M&M’s should be pronounced “aimainaimze.”

�r� To market its Ziploc food storage bags in Brazil, Dow Chemical had to use extensive advertising to actually create the word zipar, meaning “to zip,” because there was no such term in Portuguese.

Additional communication factors that can cause problems include humor, style, and pace, for which preferences vary across cultures, even those speaking the same basic

LO3

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Part Two External Influences54

language.89 Nonetheless, verbal language translations generally do not present major problems as long as we are careful. What many of us fail to recognize, however, is that each culture also has nonverbal communication systems or languages that, like verbal lan- guages, are specific to each culture. Nonverbal communication systems are the arbitrary meanings a culture assigns actions, events, and things other than words.

The following discussion examines the seven variables shown in Figure 2–3, all of which influence nonverbal communications: time, space, symbols, relationships, agree- ments, things, and etiquette.

Time The meaning of time varies between cultures in two major ways. First is what we call time perspective, that is, a culture’s overall orientation toward time.90 The second is the inter- pretations assigned to specific uses of time.

Time Perspective Most Americans, Canadians, Western Europeans, and Australians tend to view time as inescapable, linear, and fixed in nature. It is a road reaching into the

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“Fly Naked.”

Translation Problems in International Marketing2-2TABLE

Nonverbal communications

Time

Space

Symbols

RelationshipsAgreements

Things

Etiquette

2-3 Factors Influencing Nonverbal CommunicationsFIGURE

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Chapter Two Cross-Cultural Variations In Consumer Behavior 55

future with distinct, separate sections (hours, days, weeks, and so on). Time is seen almost as a physical object; we can schedule it, waste it, lose it, and so forth. Believing that a person does one thing at a time, we have a strong orientation toward the present and the short-term future. This is known as a monochronic time perspective.

Most Latin Americans, Asians, and Indians tend to view time as being less discrete and less subject to scheduling. They view simultaneous involvement in many activities as natural. People and relationships take priority over schedules, and activities occur at their own pace rather than according to a predetermined timetable. Such cultures have an orien- tation toward the present and the past. This is known as a polychronic time perspective.

Some important differences between individuals with a monochronic perspective and those with a polychronic perspective are listed below.91

Individuals in a Monochronic Culture Individuals in a Polychronic Culture

Do one thing at a time Do many things at once Concentrate on the job Are highly distractible and subject to interruptions Take deadlines and schedules seriously Consider deadlines and schedules secondary Are committed to the job or task Are committed to people and relationships Emphasize promptness Base promptness on the relationship Are accustomed to short-term relationships 1SFGFS�MPOH�UFSN�SFMBUJPOTIJQT

How would marketing activities vary between monochronic and polychronic cultures? Personal selling and negotiation styles and strategies would need to differ, as would many advertising themes. Contests and sales with deadlines would generally be more effective in monochronic than in polychronic cultures. Convenience foods frequently fail when posi- tioned in terms of time saving and convenience in polychronic cultures, where “saving time” is not part of the cultural thought processes. For example, in countries like Argen- tina with more polychronic views, fast-food restaurants are often seen as more expensive and modern and as representing modern and liberated value systems. The time-saving aspect is not as prominent there as it is in countries like the United States that are more monochronic.92

Interestingly, even within a culture, time perspectives can vary by age and by situation. For example, in Japan, work is approached in terms of monochronic time whereas leisure is approached, as their culture might suggest, in terms of polychronic time.93 Also, while Americans have tended to be monochronic, younger consumers appear to demonstrate elements of polychronic time. This so-called MTV generation seems to have no attention span and may simultaneously be found doing homework, watching TV, and surfing the net! Not surprisingly, U.S. advertisers find it hard to capture and hold the attention of this audience.

Meanings in the Use of Time Specific uses of time have varying meanings in differ- ent cultures. In much of the world, the time required for a decision is proportional to the importance of the decision. Americans, by being well prepared with ready answers, may adversely downplay the importance of the business being discussed. Likewise, both Japa- nese and Middle Eastern executives are put off by Americans’ insistence on coming to the point directly and quickly in business transactions.

Promptness is considered very important in America and Japan. Furthermore, prompt- ness is defined as being on time for appointments, whether you are the person making the call or the person receiving the caller. According to one expert:

Time is money and a symbol of status and responsibility. To be kept waiting is offensive in monochronic cultures, it is perceived as a message. It is not in polychronic cultures.94

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Part Two External Influences56

What is meant by “being kept waiting” also varies substantially by culture. Thirty min- utes might seem like an eternity in the United States, but it may seem like very little time in other countries, such as those in the Middle East. As you can see, understanding such differences prior to doing business in a given country is critical.

Space The use people make of space and the meanings they assign to their use of space constitute a second form of nonverbal communication.95 In America, “bigger is better.” Thus, office space in corporations generally is allocated according to rank or prestige rather than need. The president will have the largest office, followed by the executive vice president, and so on.

A second major use of space is personal space. It is the nearest that others can come to you in various situations without your feeling uncomfortable. In the United States, normal business conversations occur at distances of 3 to 5 feet and highly personal business from 18 inches to 3 feet. In parts of northern Europe, the distances are slightly longer; in most of Latin America, they are substantially shorter.

An American businessperson in Latin America will tend to back away from a Latin American counterpart in order to maintain his or her preferred personal distance. In turn, the host will tend to advance toward the American in order to maintain his or her personal space. The resulting “chase” would be comical if it were not for the results. Both parties generally are unaware of their actions or the reasons for them. Furthermore, each assigns a meaning to the other’s actions according to what the action means in his or her own culture. Thus, the North American considers the Latin American to be pushy and aggres- sive. The Latin American, in turn, considers the North American to be cold, aloof, and snobbish.

Symbols An American seeing a baby wearing a pink outfit would most likely assume the child to be female. If the outfit were blue, the assumed gender would be male. These assumptions would be accurate most of the time in the United States but not in many other parts of the world, such as Holland. Colors, animals, shapes, numbers, and music have varying mean- ings across cultures. Failure to recognize the meaning assigned to a symbol can cause serious problems:

�r� AT&T had to change its “thumbs-up” ads in Russia and Poland, where showing the palm of the hand in this manner has an offensive meaning. The change was simple. The thumbs-up sign was given showing the back of the hand.

�r� Mont Blanc has a white marking on the end of its pens, meant to represent the snow- capped Alpine mountain peaks. However, Arab consumers reacted negatively because it looked like the “Star of David,” which is Israel’s national symbol. Mont Blanc worked to clear up the misunderstanding.96

�r� In the United States, blond hair color in women is often perceived as a symbol of beauty. In a study of seven European cities, the hair color most symbolic of beauty varied from dark brown (Madrid, Paris, and London), to black (Milan), to blond (Hamburg).97

Table  2-3 presents additional illustrations of varying meanings assigned to symbols across cultures.98 Despite frequent cultural differences in symbols, many symbols work well across a wide range of cultures. Kellogg’s Tony the Tiger works in the United States, China (see Illustration 2–6), and many other cultures.

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Chapter Two Cross-Cultural Variations In Consumer Behavior 57

Relationships The rights and obligations imposed by relationships and friendship are another nonverbal cultural variable. Americans, more so than those in most other cultures, form relationships and make friends quickly and easily and drop them easily also. In large part, this may be because America has always had a great deal of both social and geographic mobility. People who move every few years must be able to form friendships in a short time period and depart from them with a minimum of pain. In many other parts of the world, relation- ships and friendships are formed slowly and carefully because they imply deep and lasting

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Symbol for mourning or death in the Far East; purity in the United States Associated with death in many Latin American countries Connotation of femininity in Holland; masculinity in Sweden, the United States Unlucky or negative in Chad, Nigeria, Germany; positive in Denmark, Rumania, Argentina Sign of death in Mexico; infidelity in France Suggestion of death in England 6OMVDLZ�OVNCFS�JO�(IBOB �,FOZB �4JOHBQPSF��MVDLZ�JO�.PSPDDP �*OEJB �$[FDIPTMPWBLJB �/JDBSBHVB �the United States /FHBUJWF�JO�)POH�,POH �,PSFB �5BJXBO��QPTJUJWF�JO�$PMPNCJB 8JTEPN�JO�6OJUFE�4UBUFT��CBE�MVDL�JO�*OEJB Speed, grace in United States; homosexuality in Brazil

2-3The Meaning of Numbers, Colors, and Other Symbols TABLE

Kellogg’s tiger is an

effective symbol in

many cultures.

ILLUSTRATION 2-6

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Part Two External Influences58

obligations. As the following quote indicates, friendship and business are deeply inter- twined in many cultures around the globe including Latin America and Asia.

In many cultures, the written word is used simply to satisfy legalities. In their eyes, emotion and personal relations are more important than cold facts.99

In addition, long-run success in many cultures involves more than just “getting to know” someone in the Western sense of the expression. For example, Chinese relation- ships are complex and described under the concept of guanxi:

Guanxi is literally translated as personal connections/relationships on which an individual can draw to secure resources or advantages when doing business as well as in the course of social life. Its main characteristics are (1) the notion of a continuing reciprocal relationship over an indefi- nite period of time, (2) favors are banked, (3) it extends beyond the relationship between two parties to include other parties within the social network (it can be transferred), (4) the relation- ship network is built among individuals not organizations, (5) status matters—relationships with a senior will extend to his subordinates but not vice versa, and (6) the social relationship is prior to and a prerequisite to the business relationship.100

It should be quickly noted, however, that in an increasingly intertwined, modern, and global setting, even traditional notions like guanxi are being challenged. The following excerpt suggests the tensions felt by modern professionals in China:

It is a bit strange but even as we almost act the part of the dynamic, modern, assertive business person, we still—underneath—still look for something deeper—far deeper—a more traditional and emotionally driven sense of trust, respect and guanxi—but we realize that in today’s fast paced living (environment), it is often not possible to achieve this deeper level of relationship formation in a business climate—but to us, underneath it all, this is still the ultimate.101

One expert suggests that different approaches may therefore be necessary depending on the depth and length of relationship desired.

Agreements Americans rely on an extensive and, generally, highly efficient legal system for ensuring that business obligations are honored and for resolving disagreements. Many other cul- tures have not developed such a system and rely instead on relationships, friendship, and kinship; local moral principles; or informal customs to guide business conduct. For exam- ple, the Chinese “tend to pay more attention to relationships than contracts.”102 Under the American system, we would examine a proposed contract closely. Under the Chinese system, we would examine the character of a potential trading partner closely. In the words of an American CEO based in China:

Relationships are everything in China, more so than in the United States, which is more focused on business. The Chinese want to know and understand you before they buy from you.103

Americans generally assume that, in almost all instances, prices are uniform for all buy- ers, related to the service rendered, and reasonably close to the going rate. We order many products such as taxi rides without inquiring in advance about the cost. In many Latin American, Asian, and Middle East countries, the procedure is different. Virtually all prices are negotiated prior to the sale, including those for industrial products.104

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Chapter Two Cross-Cultural Variations In Consumer Behavior 59

Things The cultural meaning of things leads to purchase patterns that one would not otherwise predict. One observer noted a strong demand for expensive, status brands whose absolute cost was not too high among those Russians beginning to gain economically under capital- ism. He concluded:

They may stick to their locally produced toothpaste, but they want the Levi’s, the Mont Blanc pens, the Moët & Chandon champagne to establish their self-esteem and their class position.105

The differing meanings that cultures attach to things, including products, make gift giving a particularly difficult task.106 For example, giving a Chinese business customer or distributor a nice desk clock—a common gift in many countries—would be inappropriate. Why? In China, the word for clock is similar to the word for funeral, making clocks inap- propriate gifts. When does receipt of a gift “require” a gift in return? In China this depends on the closeness of the relationship between the parties—the closer the relationship, the less a return gift is required.107

The business and social situations that call for a gift, and the items that are appropri- ate gifts, vary widely. For example, a gift of cutlery is generally inappropriate in Russia, Japan, Taiwan, and Germany. In Japan, small gifts are required in many business situa- tions, yet in China they are less appropriate. In China, gifts should be presented privately, but in Arab countries, they should be given in front of others.

Etiquette Etiquette represents generally accepted ways of behaving in social situations. Assume that an American is preparing a commercial that shows people eating an evening meal, with one person about to take a bite of food from a fork. The person will have the fork in the right hand, and the left hand will be out of sight under the table. To an American audience this will seem natural. However, in many European cultures, a well-mannered individual would have the fork in the left hand and the right hand on the table.

Behaviors considered rude or obnoxious in one culture may be quite acceptable in another. The common and acceptable American habit, for males, of crossing one’s legs while sitting, such that the sole of a shoe shows, is extremely insulting in many Eastern cultures. In these cultures, the sole of the foot or shoe should never be exposed to view. While most Americans are not hesitant to voice dissatisfaction with a service encounter, many Asians are. This also appears to be true of the British, who have traditionally been characterized by their reserved nature. Such factors can lead U.S. managers to misjudge customer response to their services abroad.108

Normal voice tone, pitch, and speed of speech differ among cultures and languages, as does the use of gestures. Westerners often mistake the seemingly loud, volatile speech of some Asian cultures as signifying anger or emotional distress (which it would if it were being used by a Westerner) when it is normal speech for the occasion.

As American trade with Japan increases, we continue to learn more of the subtle aspects of Japanese business etiquette. For example, a Japanese executive will seldom say “no” directly during negotiations; doing so would be considered impolite. Instead, he might say, “That will be very difficult,” which would mean “no.” A Japanese responding “yes” to a request often means, “Yes, I understand the request,” not “Yes, I agree to the request.” Many Japanese find the American tendency to look straight into another’s eyes when talk- ing to be aggressive and rude.

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Part Two External Influences60

Another aspect of Japanese business etiquette is meishi, epitomized by “A man with- out a meishi has no identity in Japan.” The exchange of meishi is the most basic of social rituals in a nation where social ritual matters very much. The act of exchanging meishi is weighted with meaning. Once the social minuet is completed, the two know where they stand in relation to each other and their respective statures within the hierarchy of corpo- rate or government bureaucracy. What is meishi? It is the exchange of business cards when two people meet! A fairly common, simple activity in America, it is an essential, complex social exchange in Japan.

Other cultures also find it necessary to learn about the subtleties of doing business with Westerners. Business leaders in China are developing training programs to help sensi- tize Chinese businesspeople to other cultures. According to Jack Ma, who runs one such program:

Chinese businessmen are shrewd, but they need to learn to be more polished. At a World Economic Forum held in Bejing, Mr. Ma was depressed at how many conducted themselves, noting—Many smoked constantly and held loud cellphone conversations, even during meetings.109

The importance of proper, culture-specific etiquette is obvious. Although people rec- ognize that etiquette varies from culture to culture, there is still a strong emotional feeling that “our way is natural and right.”

Conclusions on Nonverbal Communications Can you imagine yourself becoming upset or surprised because people in a different cul- ture spoke to you in their native language, say Spanish or German, instead of English? Of course not. We all recognize that verbal languages vary around the world. Yet we gener- ally feel that our nonverbal languages are natural or innate. Therefore, we misinterpret what is being “said” to us because we think we are hearing English when in reality it is Japanese, Italian, or Russian. It is this error that marketers can and must avoid.

GLOBAL CULTURES An important issue facing marketers is the extent to which one or more global consumer cultures or segments are emerging. Evidence suggests that there is indeed movement in this direction.110 Such a culture would have a shared set of consumption-related symbols with common meaning and desirability among members. One such proposed global cul- ture is that portion of local cultures that view themselves as cosmopolitan, knowledgeable, and modern. Such individuals share many values and consumption-related behaviors with similar individuals across a range of national cultures.

Such cultures are being created by the globalization of mass media, work, education, and travel. Some product categories (cell phones, Internet) and brands (Sony, Nike) have become symbolically related to this culture. This does not imply that these brands use the same advertising globally but rather that the underlying theme and symbolism may be the same. Thus, a combined shampoo and conditioner could be positioned as a time- saver for the time-pressured modern career woman. The advertisement might portray the shampoo being used in the context of a gym in the United States or Germany, where many females exercise, but in a home context in Japan, where few women visit gyms. Philips Electronic is one firm that has developed a global positioning strategy based on such a global culture.111

Perhaps the closest thing to a global culture today is urban youth, which we examine next.

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Chapter Two Cross-Cultural Variations In Consumer Behavior 61

A Global Youth Culture?

Consider _____, a 19-year-old hip-hop music producer scouting for a new pair of Air Force 1 sneakers at the Nike shop.  .  . . _____, who prefers to be addressed by his street name, “Jerzy King”—moved to _____ three years ago.  .  . . A music school dropout who has never set foot outside of _____, he totes a mini-disc player loaded with Eminem, Puff Daddy, and Fabolous. On this particular day he’s looking phat in a blue-and-white fleece jacket bearing the logo of the Toronto Maple Leafs.112

LO4

Can you fill in the blanks with any degree of confidence? The young man is Wang Qi and he lives in Beijing. However, many of his behaviors and possessions echo those of millions of other teenagers in Europe, North and South America, and Asia. And as we discussed earlier, it is incorrect to think of the youth influence as a one-way street from America to the rest of the world with entities like Levi’s, Coke, and Lady Gaga leading the way:

Now it’s a two-way street. Americans are learning Bollywood dance steps at their local health clubs. M.I.A., an up-and-coming pop singer who has Sri Lankan roots and was brought up in London, intermingles hip-hop, reggae, and South Asian influences. And Japanese anime has swept the globe.113

Similarities and convergence of lifestyles, values, and purchases make this global youth market compelling for companies, particularly given its large size. For example, a recent survey of global youth (age 14–29) across six countries found that 86 percent believe that products help to define and communicate their personality. It also found compelling simi- larities in the top three spending categories, as follows:114

First Category Second Category Third Category

Amsterdam Going out Clothing Food )POH�,POH Clothing Food Transportation Malaysia Transportation Food Going out Singapore Food Clothing Entertainment 4PVUI�,PSFB Food Clothing Entertainment 6OJUFE�,JOHEPN Going out Clothing 1IPOF United States Clothing Food Music

What is causing this convergence? The largest single influence is worldwide mass media, including the Internet, and, more recently, mobile devices. Music, sports, and fashion appear to be major points of convergence, although the convergence often goes far beyond this to underlying values such as independence and risk taking. Marketers are using the similarities among youth across cultures to launch global brands or to reposition current brands to appeal to this large market. Levi’s, reacting to the growing online trend among global teens, launched an online campaign in Asia targeted at “young, tech-savvy trendsetters.” The website played heavily on Western music and style to promote its Levi’s re-cut 501 Re-Born jeans. The theme emphasized that the jeans have been re-cut for today, with one page showing a teen being “reborn” or transformed by the new Levi’s jeans.115 Illustration 2–7 provides another example of an ad using a global youth appeal.

Several recent trends in the global youth market are critical for global marketers to understand. These include the following:116

�r� Technology is mainstream. Wired teens are a global phenomenon not restricted to developed countries. Fifty-six percent of teens globally are “superconnectors,” mean- ing they use two or more electronic devices (e.g., cell phone and the Internet) daily.

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Part Two External Influences62

�r� U.S. teens no longer lead the way. Now it’s more about mind-set and the “creatives” are lead- ing the way. Creatives are most prevalent in Europe (not the United States), are open to new ideas, and like expressing themselves in various ways, including personal web pages and art.

�r� U.S. brands are not currently the leaders. U.S. brands used to be the leaders among global teens. Now the top three are Sony (Japan), Nokia (Finland), and Adidas (Germany).

As the global youth culture moves increasingly away from U.S. influence and brands, marketers in the United States must find ways to understand and connect with the trends and trendsetters across the globe. In addition, it is critical to understand that global youth also have a great many culturally unique behaviors, attitudes, and values. As one expert states, “European teens resent being thought of as Americans with an accent.”117 Also, the similarities described above are most noticeable among middle-class teens living in urban areas. Poorer, rural teens often conform more closely to their society’s traditional culture. For example, Coke distinguishes between major urban centers and smaller cities and towns in China. Consider the following:

In the smaller cities and towns Coke uses a famous Chinese actor traveling the countryside in a hot bus and stresses taste and price. In China’s largest markets its TV spot “features a hip Taiwanese VJ . . . who shows off his dance moves as he pretends his Coke can magnetically draw him to an attractive lady across the street.” According to a Coke executive, “The (urban TV) ad is aimed at young adults who want to do things their own way, as opposed to following a famous actor as in the bus spot.”118

The distinction between rural and urban markets is one aspect of demographics dis- cussed next.

GLOBAL DEMOGRAPHICS Economies such as India and China have seen rapid growth, which has led to increased personal disposable income and strong and growing middle classes that are the envy of marketers worldwide.119 Concerns about the extent to which economic growth in these and other countries will continue at current rates are beginning to appear due to rising fuel and

LO5

This ad campaign

uses a global youth

appeal to target style

leaders around the

world.

ILLUSTRATION 2-7

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Chapter Two Cross-Cultural Variations In Consumer Behavior 63

food costs.120 To the extent that growth continues at a relatively rapid pace, such expansion not only creates opportunities, but can also present challenges.

Examine Illustration  2–8. The rapid increase in owner- ship of automobiles as replace- ments for bicycles in China has provided many with the free- dom to travel greater distances. However, elevated emissions and traffic congestion have also become areas of concern.121

Disposable income is one aspect of demographics. Demographics describe a popula- tion in terms of its size, structure, and distribution. Size refers to the number of individu- als in the society. Structure describes the society in terms of age, income, education, and occupation. Distribution refers to the physical location of individuals in terms of geo- graphic region and rural, suburban, and urban location.

Demographics are both a result and a cause of cultural values. Densely populated soci- eties are likely to have more of a collective orientation than an individualistic one because a collective orientation helps such societies function smoothly. Cultures that value hard work and the acquisition of material wealth are likely to advance economically, which alters their demographics both directly (income) and indirectly (families in economically advanced countries tend to be smaller).

A critical aspect of demographics for marketers is income, particularly the distribution of income. One country with a relatively low average income can have a sizable middle- income segment, while another country with the same average income may have most of the wealth in the hands of a few individuals. As shown below, Brazil’s average per capita income is slightly higher than Romania’s.122 However, the distribution of that income dif- fers sharply. Forty-five percent of the income generated in Brazil goes to just 10 percent of the population. In contrast, the top 10 percent of households in Romania command only 21 percent of that country’s income. How will these and the other differences shown below affect consumption?

Per Capita Income

Percent of Total Income to Top 10 Percent of Population Per Capita PPP

Brazil ��� ��� 45 ��� ��� Canada �� ��� 25 �� ��� Chile � ��� 45 �� ��� China � ��� 35 � ��� Egypt � ��� 30 � ��� France 34,008 25 �� ��� India ��� �� � ��� Japan �� ��� 22 �� ��� ,FOZB ��� �� � ��� Mexico � ��� �� �� ��� Romania � ��� �� � ��� 6OJUFE�,JOHEPN �� ��� �� �� ��� United States �� ��� 30 �� ���

Source: Per Capita Income and Per Capita PPP: 2005 International Comparison Program (International Bank for Reconstruction and Development/The World Bank, 2008); Percent of Total Income to Top 10 Percent of Population: The World Factbook (Washington, DC: Central Intelligence Agency, 2008).

The rapid growth

in personal income

in China has led to

an explosion in car

ownership. This has

resulted in increased

personal freedom but

also concerns about

congestion and

emissions.

ILLUSTRATION 2-8

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Part Two External Influences64

Marketers increasingly use purchasing power parity (PPP) rather than average or median income to evaluate markets. PPP is based on the cost of a standard market basket of products bought in each country. An average household in one country may have a lower income in U.S. dollars. However, that household may be able to buy more than a household in other countries with higher income in U.S. dollars because of a lower local cost structure, government-provided health care, and so forth. The World Bank describes all countries in terms of PPP in its annual World Bank Atlas.123 Notice how Brazil’s purchasing power is substantially higher than its per capita income would suggest. How might an understanding of PPP change marketer decisions about such things as market potential and entry?

The estimated age distributions of the United States, the Philippines, Japan, and Canada are shown below.124 Note that over 40 percent of the populations of the Philippines and of India are under 20, compared with around one-fourth for the United States and Canada, and about one-fifth for Japan. In the Middle East, a massive baby boom is under way, with two-thirds of the population under 25, fueling the youth movement in this region, which we discussed earlier.125 What product opportunities do this and the other age differences among these countries suggest?

Age United States (%) Philippines (%) Japan (%) Canada (%) India (%)

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CROSS-CULTURAL MARKETING STRATEGY As we have seen throughout the chapter, cross-cultural variations in such factors as values and demographics may make it necessary to adapt products and services to local consid- erations. One term for this adaptation is glocalization, which is generally taken to mean global localization.126 There is continuing controversy over the degree to which cross- cultural marketing strategies should be standardized versus customized.127 Standardized strategies can result in substantial cost savings. Maybelline’s Manhattan line of cosmetics designed for the Asian market used one ad campaign in China, Taiwan, Hong Kong, Thai- land, and Singapore. The ads featured an attractive Asian model in a low-cut, short dress against the Manhattan skyline at night. This combination of appeals to youth, beauty, and sophistication could be used in many other countries, though this ad would be inappropri- ate, and probably banned, in most Islamic countries.

Uniformity is sometimes possible, but companies must often adapt to cultural differ- ences. We saw this earlier in the case of KFC in Malaysia. Consider McDonald’s:

McDonald’s used to strive for uniformity around the Globe. Now it adapts its products as appropriate—adding fried eggs to burgers in Japan and offering Samurai Pork Burgers with a sweet barbecue sauce in Thailand. However, its most dramatic changes were made when it entered India for the first time. So, instead of the all-beef Big Macs, the menu featured the mutton [lamb] Maharaja Mac.128

McDonald’s also adapts its store layout. As shown in Illustration 2–9, separate sections for families and singles are provided in Muslim countries.

In addition to values and demographics, attitudes toward international brands can influence the need to customize offerings. For example, higher levels of patriotism and

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Chapter Two Cross-Cultural Variations In Consumer Behavior 65

ethnocentrism appear to drive more negative views of international brands and may require more extreme forms of local customization.129 Miller beer uses such customiza- tion to develop what they call “local intimacy” by creating specific local brands of beer for very specific markets. For example, in Peru:

. . . bottles of its Cusquena brand feature replica stones of an Incan wall that pay tribute to the elite standard of Inca craftsmanship that continues to this day in every bottle.130

Alternatively, higher levels of internationalism and cosmopolitanism appear to drive more positive views of international brands and thus allow for more standardization. In general, most companies will blend standardization and customization and a critical success factor in achieving the right balance.

Considerations in Approaching a Foreign Market There are seven key considerations for each geographic market that a firm is contemplat- ing. An analysis of these seven variables provides the background necessary for deciding whether or not to enter the market and to what extent, if any, an individualized market- ing strategy is required. A small sample of experts, preferably native to the market under consideration, often will be able to furnish sufficient information on each variable.

Is the Geographic Area Homogeneous or Heterogeneous with Respect to Culture? Marketing efforts are generally directed at defined geographic areas, primar- ily political and economic entities. Legal requirements and existing distribution channels often encourage this approach. However, it is also supported by the implicit assumption that geographical or political boundaries coincide with cultural boundaries. As we have

LO6

McDonald’s offers

both family and

singles sections in

Muslim countries to

accommodate the

cultural norms gov-

erning interactions

between men and

women. The singles

section is for single

men only.

ILLUSTRATION 2-9

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Part Two External Influences66

seen, country boundaries represent general tendencies, but differences within a given coun- try are also critical to consider. For example, research suggests that strategies in Latin America need to consider not only cross-country (e.g., Brazil vs. Chile) but also within- country (e.g., regional; urban vs. rural) differences.131

Likewise, China has strong regional cultures, urban and rural cultures, as well as sharp differences associated with income, age, and education.132 Thus, marketing campaigns must be developed for cultural and demographic groups, not just countries.

What Needs Can This Product or a Version of It Fill in This Culture? Most firms examine a new market with an existing product or product technology in mind. The question they must answer is what needs their existing or modified product can fill in the culture involved. For example, bicycles and motorcycles serve primarily recreational needs in the United States, but they provide basic transportation in many other countries.

Can Enough of the People Needing the Product Afford the Product? An ini- tial demographic analysis is required to determine the number of individuals or households that might need the product and who can actually afford it. For example, although China has over 1.3 billion consumers, the effective market for most Western goods is estimated to be considerably smaller than this total.133 Future economic expansion in countries like China and India is expected to enhance their market potential in coming years. In addi- tion, the possibilities of establishing credit, obtaining a government subsidy, or making a less expensive version should be considered. This latter approach is being used by P&G in China, where a tiered pricing system was designed to help reach consumers with relatively low incomes.134 Indeed, many marketers are seeing growth in lower-middle-class markets. For example, Brazil’s “Class C” customer, who earns $600 to $2,600 per month, is now their largest segment, and car sales to this customer increased 50 percent in 2009!135

What Values or Patterns of Values Are Relevant to the Purchase and Use of This Product? The first section of this chapter focused on values and their role in con- sumer behavior. The value system should be investigated for influences on purchasing the product, owning the product, using the product, and disposing of the product. Much of the marketing strategy will be based on this analysis.

What Are the Distribution, Political, and Legal Structures for the Product? The legal structure of a country can have an impact on each aspect of a firm’s marketing mix. China recently banned sex appeals during family view time and is tightening regula- tions on the opening of new Internet cafes. The United Kingdom recently banned junk- food ads targeted at kids under the age of 16 and has tightened regulations on paid tweets. And Brazil has put laws in place that limit the amount of alcohol advertising.136 Such legal restrictions limit the ability of companies to use standardized approaches to their market- ing efforts. What effect would China’s ban on sex appeals have on Maybelline’s advertis- ing in Asia for its Manhattan line?

Distribution challenges also exist. Companies like GM, Nike, and Procter & Gamble are finding this out as they move into so-called second-tier cities in China such as Chanc- hun. Here, distribution practices are different and require adaptation compared to first-tier cities like Bejing.137

In What Ways Can We Communicate about the Product? This question requires an investigation into (1) available media and who attends to each type, (2) the needs the product fills, (3) values associated with the product and its use, and (4) the verbal and nonverbal communications systems in the culture(s). All aspects of the firm’s promo- tional mix—including packaging, nonfunctional product design features, personal selling techniques, and advertising—should be based on these four factors.

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67

CONSUMER INSIGHT 2-1 Unilever Adapts to Sell Laundry Products Globally

Unilever is highly successful in marketing its laundry products outside of the United States. The reason is it continually adapts to existing and emerging factors both within and across the countries where it does business. A stunning statistic is that “[e]very half hour 7 million people in the world wash their cloths with Unilever prod- ucts, and 6 million of them do so by hand.” Below we touch on each of the seven global considerations as they relate to Unilever’s global strategy.138

�t� Cultural Homogeneity. In the global laundry market, heterogeneity, even within a country, can occur. For example, Brazil’s Northeast and South- east regions are very different. One difference is that in the poorer Northeast region, most laundry is done by hand and more bar soap than powder is used. In the more affluent Southeast region, most laundry is done in a washing machine and more powder detergent is used than bar soap in the process.

�t� Needs. Hand washing versus machine washing leads to different laundry product needs. In addi- tion, in developing countries that are an important focus for Unilever, products must be adapted to meet strength of cleaning needs related to removing sweat, odors, and tough stains due to physical labor.

�t� Affordability. Clearly affordability is a component in pricing the laundry detergents themselves to be competitive. However, Unilever also faces the situa- tion that a transition from hand washing to washing machines depends in large part on the economic prosperity of a country or region, as this determines the affordability of washing machines. Adoption of washing machines, in turn, changes the type and amounts of laundry products used, as we saw earlier.

�t� Relevant Values. One source indicates that cleanliness, convenience, and sustainability are key value aspects in laundry products that vary across cultures. In many countries where Unilever oper- ates, there are segments of kids dubbed “Nintendo Kids” who don’t tend to go outside and play and thus don’t get dirty. A core strategy for a number of their brands in these markets is the “dirt is good” campaign that stresses that playing and getting dirty

are part of a healthy child’s development and “let Unilever worry about getting their clothes clean.”

�t� Infrastructure. A broad infrastructure issue in laundry is access to hot water. Many in developing countries don’t have access to hot water or large quantities of water. Unilever responded in India with Surf Excel Quick Wash, an enzyme-based product that uses less water and works under lower water temperatures.

�t� Communication. Europeans have traditionally cleaned their clothes in much hotter water with the logic being that “boiling clothes” is the only real way to get them clean and kill germs. This trend is revers- ing as Unilever pushes more environmental-friendly products and as Europeans have begun to wash in cooler temperatures to save energy. An interesting consequence of the shift is that antibacterial addi- tives are now demanded by European customers to kill the germs.

�t� Ethical Implications. While conversion of the world’s consumers to fully automated washing machines would help standardize Unilever’s approach, it has major implications for water usage. This is because compared to hand washing, machine wash- ing can, depending critically on the number of rinse cycles needed, use more water. Continued innovation in products toward lower water use will be a key ethical and performance issue for Unilever moving forward.

As you can see, Unilever has and must continue to innovate and adjust as its target markets evolve along these critical dimensions.

Critical Thinking Questions 1. How might generational influences affect the adop-

tion of washing machines even after economic condi- tions make them affordable?

2. What other features beyond price and form (bar ver- sus powder) do you think Unilever has had to adjust to meet different needs/wants/preferences across different markets?

3. Which core value is related to sustainability and green marketing? Does this value vary across countries and cultures?

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Part Two External Influences68

The Internet seems like a natural media through which to communicate to consumers. However, Internet access varies widely across countries as does the percentage of con- sumers who will actually buy online. Moreover, tailoring websites to specific countries is critical to online marketing success because of cultural variations in website dimensions driving purchase and loyalty.139

What Are the Ethical Implications of Marketing This Product in This Country? All marketing programs should be evaluated on ethical as well as financial dimensions. As discussed at the beginning of the chapter, international marketing activities raise many ethical issues. The ethical dimension is particularly important and complex in marketing to third world and developing countries. Consider Kellogg’s attempt to introduce cold cereal as a breakfast food in a developing country. An ethical analysis would consider various factors, including the following:

If we succeed, will the average nutrition level be increased or decreased?

If we succeed, will the funds spent on cereal be diverted from other uses with more beneficial long-term impacts for the individuals or society?

If we succeed, what impact will this have on the local producers of currently consumed breakfast products?

Such an ethical analysis not only is the right thing to do but also may head off conflicts with local governments or economic interests. Understanding and acting on ethical consid- erations in international marketing is a difficult task. However, it is also a necessary one.

Consumer Insight 2–1 provides an illustration of how Unilever has dealt with a number of these considerations in marketing its laundry products globally.

LO1: Define the concept of culture Culture is defined as the complex whole that includes knowledge, beliefs, art, law, morals, customs, and any other capabilities acquired by humans as members of society. It includes almost everything that influ- ences an individual’s thought processes and behaviors. Culture operates primarily by setting boundaries for individual behavior and by influencing the function- ing of such institutions as the family and mass media. The boundaries, or norms, are derived from cultural values. Values are widely held beliefs that affirm what is desirable.

LO2: Describe core values that vary across culture and influence behaviors Cultural values are classified into three categories: other, environment, and self. Other-oriented values reflect a society’s view of the appropriate relationships between individuals and groups within that society. Relevant values of this nature include individual/ collective, youth/age, extended/limited family,

masculine/feminine, competitive/cooperative, and diversity/uniformity. Environment-oriented values prescribe a society’s relationships with its economic, technical, and physical environments. Examples of environment values are cleanliness, performance/status, tradition/change, risk taking/security, problem solving/ fatalistic, and nature. Self-oriented values reflect the objectives and approaches to life that individual mem- bers of society find desirable. These include active/ passive, sensual gratification/abstinence, material/ nonmaterial, hard work/leisure, postponed gratification/ immediate gratification, and religious/secular.

LO3: Understand cross-cultural variations in nonverbal communications Nonverbal communication systems are the arbitrary meanings a culture assigns actions, events, and things other than words. Major examples of nonverbal com- munication variables that affect marketers are time, space, symbols, relationships, agreements, things, and etiquette.

SUMMARY

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Chapter Two Cross-Cultural Variations In Consumer Behavior 69

1. What are some of the ethical issues involved in cross-cultural marketing?

2. What is meant by the term culture? 3. What does the statement “Culture sets boundaries

on behaviors” mean? 4. What is a norm? From what are norms derived? 5. What is a cultural value? 6. What is a sanction? 7. Cultural values can be classified as affecting one of

three types of relationships—other, environment, or self. Describe each of these, and differentiate each one from the others.

8. How does the first of the following paired orientations differ from the second?

a. Individual/Collective b. Performance/Status

c. Tradition/Change d. Limited/Extended family e. Active/Passive f. Material/Nonmaterial g. Hard work/Leisure h. Risk taking/Security i. Masculine/Feminine j. Competitive/Cooperative k. Youth/Age l. Problem solving/Fatalistic m. Diversity/Uniformity n. Postponed gratification/Immediate

gratification o. Sensual gratification/Abstinence p. Religious/Secular 9. What is meant by nonverbal communications? Why

is this a difficult area to adjust to?

REVIEW QUESTIONS

LO4: Summarize key aspects of the global youth culture There is evidence that urban youth around the world share at least some aspects of a common culture. This culture is driven by worldwide mass media and com- mon music and sports stars. Emerging aspects include the importance of technology and the fact that U.S. teens and brands are no longer leading the way.

LO5: Understand the role of global demographics Demographics describe a population in terms of its size, structure, and distribution. Demographics differ widely across cultures and influence cultural values (and are influenced by them) as well as consumption patterns.

LO6: List the key dimensions in deciding to enter a foreign market Seven questions are relevant for developing a cross- cultural marketing strategy: (1) Is the geographic area homogeneous or heterogeneous with respect to culture? (2) What needs can this product fill in this culture? (3) Can enough of the people needing the product afford the product? (4) What values or patterns of values are relevant to the purchase and use of this product? (5) What are the distribution, political, and legal structures for the product? (6) In what ways can we communicate about the product? (7) What are the ethical implications of marketing this product in this country?

Cultural values 41 Culture 40 Demographics 63 Environment-oriented values 43 Glocalization 64 Guanxi 58 Instrumental materialism 52

Monochronic time perspective 55 Nonverbal communication

systems 54 Norms 41 Other-oriented values 43 Personal space 56 Polychronic time perspective 55

Power distance 49 Purchasing power parity (PPP) 64 Sanctions 41 Self-oriented values 43 Terminal materialism 52 Verbal communication systems 53

KEY TERMS

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Part Two External Influences70

10. What is meant by each of the following as a form of nonverbal communication?

a. Time b. Space c. Symbols d. Relationships e. Agreements f. Things g. Etiquette 11. What is guanxi? 12. What is the difference between instrumental and

terminal materialism?

13. What are the differences between a monochronic time perspective and a polychronic time perspective?

14. What forces seem to be creating a global youth culture?

15. What are demographics? Why are they important to international marketers?

16. What is purchasing power parity? 17. What is glocalization? What factors affect the need

to adapt to local considerations? 18. What are the seven key considerations in deciding

whether or not to enter a given international market?

19. Why should we study foreign cultures if we do not plan to engage in international or export marketing?

20. Is a country’s culture more likely to be reflected in its art museums or its television commercials? Why?

21. Are the cultures of the world becoming more similar or more distinct?

22. Why do values differ across cultures? 23. The text lists 18 cultural values (in three

categories) of relevance to marketing practice. Describe and place into one of the three categories two additional cultural values that have some relevance to marketing practice.

24. Select two cultural values from each of the three categories. Describe the boundaries (norms) relevant to that value in your society and the sanctions for violating those norms.

25. What are the most relevant cultural values affecting the consumption of each of the following? Describe how and why these values are particularly important.

a. Internet b. MP3 player c. Milk d. Fast food e. Luxury cars f. Cell phones 26. What variations between the United States and

other societies, other than cultural variations, may affect the relative level of usage of the following?

a. Internet b. MP3 player c. Milk

d. Fast food e. Luxury cars f. Cell phones 27. Why is materialism higher in Korea than in the

United States, where given their collectivist culture one might expect materialism to be lower?

28. What values underlie the differences between Fiji Island and U.S. children in terms of the strategies they use to influence their parents’ decisions? What marketing implications emerge?

29. What are the marketing implications of the differences in the masculine/feminine orientation across countries?

30. Respond to the questions in Consumer Insight 2–1. 31. Why do nonverbal communication systems vary

across cultures? 32. Which, if any, nonverbal communication factors

might be relevant in the marketing of the following? a. Watches b. Jewelry c. Facial tissue d. Laundry detergent e. Lip balm f. Women’s clothing 33. What are the implications of guanxi for a Western

firm entering the Chinese market? 34. To what extent do you think youth are truly

becoming a single, global culture? 35. Will today’s youth still be a “global culture” when

they are 40? Why or why not? 36. How do demographics affect a culture’s values?

How do a culture’s values affect its demographics?

DISCUSSION QUESTIONS

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Chapter Two Cross-Cultural Variations In Consumer Behavior 71

37. What causes the differences between purchasing power parity and income, as shown in the text?

38. The text provides a seven-step procedure for analyzing a foreign market. Using this procedure, analyze your country as a market for

a. Laptop computers from Japan. b. Automobiles from Korea. c. Sunglasses from Italy. d. Wine from Chile.

39. What are the major ethical issues in introducing prepared foods such as fast foods to developing countries?

40. Should U.S. tobacco firms be allowed to market cigarettes in developing countries? Why or why not?

41. How can developing countries keep their cultures from being overly Westernized or Americanized?

42. Interview two students from two different cultures. Determine the extent to which the following are used in those cultures and the variations in the values of those cultures that relate to the use of these products:

a. Gift cards b. Energy drinks (like Red Bull) c. Fast-food restaurants d. Exercise equipment e. Music f. Internet 43. Interview two students from two different foreign

cultures. Report any differences in nonverbal communications they are aware of between their culture and your culture.

44. Interview two students from two different foreign cultures. Report their perceptions of the major differences in cultural values between their culture and your culture.

45. Interview a student from India. Report on the advice that the student would give an American firm marketing consumer products in India.

46. Interview two students from Southeast Asia regarding their perceptions of materialism and conspicuous consumption. Report on how their responses reinforce or conflict with the traditional value systems found in their countries.

47. Imagine you are a consultant working with your state’s or province’s tourism agency. You have been asked to advise the agency on the best promotional themes to use to attract foreign tourists. What would you recommend if Germany and Australia were the two target markets?

48. Analyze a foreign culture of your choice, and recommend a marketing program for a brand of one of the following made in your country:

a. Automobile b. Beer c. MP3 player d. Discount retailer e. Movies f. Cosmetics

APPLICATION ACTIVITIES

1. T. Lee, “Target Has a Twin in Australia, but They’re Not Related,” Star Tribune, August 24, 2013, www.startribune.com/ business/220867991.html, accessed August 24, 2014; as well as company websites at (Target U.S.) www.target.com/ and (Target Australia) www.target.com.au/#!.

2. K. Kovalchik, “Easter with . . . the Duracell Bunny?,” Mentalfloss. com, http://mentalfloss.com/article/24372/easter-duracell-bunny, accessed August 24, 2014; and “Duracell Bunny vs. Energizer Bunny,” blog post on September 30, 2013, at www.budgetbatteries. co.uk/blog/?p523, accessed August 24, 2014.

3. I. Paul, “The Beatles and iTunes: A Complicated History,” PC World, September 9, 2009; S. Tibken, “Apple Now Officially

Owns Beatles’ Apple Corps Logo,” cnet news, October 25, 2012, http://news.cnet.com/8301-13579_3-57540017-37/apple-now- officially-owns-beatles-apple-corps-logo/, accessed August 24, 2014; and S. Crawford, “Why Weren’t The Beatles on iTunes?,” electronics.howstuffworks.com, http://electronics.howstuffworks. com/beatles-itunes2.htm, accessed August 24, 2014.

4. See, e.g., M. Fielding, “Special Delivery,” Marketing News, February 1, 2007, pp. 13–14; and T. Sangkhawasi and L. M. Johri, “Impact of Status Brand Strategy on Materialism in Thailand,” Journal of Consumer Marketing, 24, no. 5 (2007), pp. 275–82.

5. Examples from G. Burton, “Brazilian Lessons on Coolness and Imagination,” Brazzil, April 2005, accessed April 27, 2008;

REFERENCES

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Part Two External Influences72

N. Madden, “How the NFL Intends to Push ‘Olive Ball’ in China,” Advertising Age, October 2, 2006, p. 45; I. Rowley, “Lexus,” BusinessWeek, March 31, 2008, p. 72; and P. Cloud, “Tokyo Style—Harajuku Streets,” McClatchy-Tribune Business News, February 1, 2010.

6. N. Madden, “China Cracks Down on TV Talent Competitions,” Advertising Age, April 3, 2006, p. 14.

7. D. Holt, J. A. Quelch, and E. L. Taylor, “How Global Brands Compete,” Harvard Business Review, September 2004, pp. 1–8.

8. See S. Mulley, “Young Women’s Smoking Crisis Declared in Asia,” Medical Post, January 11, 2000, p. 68; J. Mackay and M. Eriksen, The Tobacco Atlas (Brighton, U.K.: World Health Organization, 2002), pp. 31 and 89; M. E. Goldberg and H. Baumgartner, “Cross-Country Attraction as a Motivation for Product Consumption,” Journal of Business Research, 55 (2002), pp. 901–906; and http://tobaccoatlas.org/consumption. html, accessed January 29, 2011.

9. Mulley, “Young Women’s Smoking Crisis Declared in Asia.”

10. See, e.g., J. L. Aaker and J. Sengupta, “Additivity versus Attenuation,” Journal of Consumer Psychology, 2 (2000), pp. 67–82; and D. A. Briley, M. W. Morris, and I. Simonson, “Reasons as Carriers of Culture,” Journal of Consumer Research, September 2000, pp. 157–77.

11. T. Parker-Pope, “Custom-Made,” The Wall Street Journal, September 26, 1996, p. R22; see also M. Fielding, “Walk the Line,” Marketing News, September 1, 2006, pp. 8–10.

12. “At Cricket Event, U.S. Cheerleaders Shake India’s Conservative Values,” SI.com, April 30, 2008, www.si.com, accessed April 30, 2008.

13. For this and other global missteps, see M. D. White, A Short Course in International Marketing Blunders (Petaluma: World Trade Press, 2002).

14. “It’s a Grande-Latte World,” The Wall Street Journal, December 15, 2003, p. B1.

15. G. Hofstede, Culture’s Consequences, 2nd ed. (Thousand Oaks, CA: Sage, 2001).

16. Z. Gurhan-Canli and D. Maheswaran, “Cultural Variations in Country of Origin Effects,” Journal of Marketing Research, August 2000, pp. 309–17.

17. C. Pornpitakpan and J. N. P. Francis, “The Effect of Cultural Differences, Source Expertise, and Argument Strength on Persuasion,” Journal of International Consumer Marketing, 1 (2001), pp. 77–101.

18. H. Ko, M. S. Roberts, and C. Cho, “Cross-Cultural Differences in Motivations and Perceived Interactivity,” Journal of Current Issues and Research in Advertising, Fall 2006, pp. 93–104.

19. K. Schoefer, “Cultural Moderation in the Formation of Recovery Satisfaction Judgments,” Journal of Service Research, 13, no. 1 (2010), pp. 52–64.

20. J. E. M. Steenkamp, F. Ter Hofstede, and M. Wedel, “A Cross- National Investigation into the Individual and National Cultural Antecedents of Consumer Innovativeness,” Journal of Marketing, April 1999, pp. 55–69; and I. S. Yaveroglu and N. Donthu, “Cultural Differences on the Diffusion of New Products,” Journal of International Consumer Marketing, 14, no. 4 (2002), pp. 49–63.

21. S. M. Choi, W. Lee, and H. Kim, “Lessons from the Rich and Famous,” Journal of Advertising, Summer 2005, pp. 85–98.

22. N. Y. Wong and A. C. Ahuvia, “Personal Taste and Family Face,” Psychology & Marketing, August 1998, pp. 423–41.

23. C. Robinson, “Asian Culture,” Journal of the Market Research Society, January 1996, pp. 55–62.

24. T. Erdem, J. Swait, and A. Valenzuala, “Brands as Signals,” Journal of Marketing, January 2006, pp. 34–49.

25. T. Sun, M. Horn, and D. Merritt, “Values and Lifestyles of Individualists and Collectivists,” Journal of Consumer Marketing, 21, no. 5 (2004), pp. 318–31.

26. See, e.g., J. Zhang and S. Shavitt, “Cultural Values in Advertisements to the Chinese X-Generation,” Journal of Advertising, 32, no. 1 (2003), pp. 23–33.

27. “Global Teen Culture,” Brand Strategy, January 2003, pp. 37–38.

28. J. Bowman, “Asian Women Put on a New Face,” Media, April 17, 2008, p. 22.

29. See, e.g., K. C. C. Yang, “The Effects of Allocentrism and Idiocentrism on Consumers’ Product Attribute Evaluation,” Journal of International Consumer Marketing, 16, no. 4 (2004), pp. 63–84.

30. B. Barak et al., “Perceptions of Age-Identity,” Psychology & Marketing, October 2001, pp. 1003–29; C. A. Lin, “Cultural Values Reflected in Chinese and American Television Advertising,” Journal of Advertising, Winter 2001, pp. 83–94; and D. H. Z. Khairullah and Z. Y. Khairullah, “Dominant Cultural Values,” Journal of Global Marketing, 16, no. 1/2 (2002), pp. 47–70.

31. P. L. Andruss, “Groups Make Fruits Apple of Taiwan’s Eye,” Marketing News, December 4, 2000, p. 5.

32. H. Fattah, “The New Arab Consumer,” American Demographics, September 2002, p. 58.

33. M. Kalliny and L. Gentry, “Cultural Values Reflected in Arab and American Television Advertising,” Journal of Current Issues and Research in Advertising, Spring 2007, pp. 15–32.

34. A. Shoham and V. Dalakas, “Family Consumer Decision Making in Israel,” Journal of Consumer Marketing, 20, no. 3 (2003), pp. 238–51; and M. Laroche et al., “How Culture Matters in Children’s Purchase Influence,” Journal of the Academy of Marketing Science, 35 (2007), pp. 113–26.

35. J. S. Wimalasiri, “A Comparison of Children’s Purchase Influence and Parental Response in Fiji and the United States,” Journal of International Consumer Marketing, 4 (2000), pp. 55–73. See also J. S. Wimalasiri, “A Cross-National Study on Children’s Purchasing Behavior and Parental Response,” Journal of Consumer Marketing, 21, no. 4 (2004), pp. 274–84.

36. M. F. Ji and J. U. McNeal, “How Chinese Children’s Commercials Differ from Those of the United States,” Journal of Advertising, Fall 2001, pp. 79–92; K. Chan and J. U. McNeal, “Parent–Child Communications about Consumption and Advertising in China,” Journal of Consumer Marketing, 20, no. 4 (2003), pp. 317–34; and “Little Emperors,” Fortune, October 4, 2004, pp. 138–50.

37. L. Chang, “The New Stresses of Chinese Society Shape a Girl’s Life,” The Wall Street Journal, December 4, 2003, pp. A1, A13.

38. P. Kotler, S. W. Ang, and C. T. Tan, Marketing Management: An Asian Perspective (Singapore: Prentice Hall Pergamon, 1996), p. 524. But see M. Liu, “China’s Empty Nest,” Newsweek, March 10, 2008, p. 41, for evidence of how this is changing among younger generations of Chinese.

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Chapter Two Cross-Cultural Variations In Consumer Behavior 73

39. M. Viswanathan, T. L. Childers, and E. S. Moore, “The Measurement of Intergenerational Communication and Influence on Consumption,” Journal of the Academy of Marketing Science, Summer 2000, pp. 406–24.

40. M. Kripalani, “Here Come the Wal-Mart Wannabes,” BusinessWeek, April 4, 2005, p. 56.

41. See F. S. Al-Olayan and K. Karande, “A Content Analysis of Magazine Advertisements from the United States and the Arab World,” Journal of Advertising, Fall 2000, pp. 69–82.

42. L. Wentz, “U.S. Military Goes Native in Afghanistan Ad Push,” Advertising Age, April 12, 2010, pp. 1 and 20.

43. S. M. Sidin et al., “The Effects of Sex Role Orientation on Family Purchase Decision Making in Malaysia,” Journal of Consumer Marketing, 21, no. 6 (2004), pp. 381–90; and “Rate of Chinese Businesswomen Higher Than World Average,” China Daily, March 20, 2005, www.chinadaily.com.

44. L. M. Milner and J. M. Collins, “Sex-Role Portrayals and the Gender of Nations,” Journal of Advertising, Spring 2000, pp. 67–78; and G. Fowler, “China Cracks Down on Commercials,” The Wall Street Journal, February 19, 2004, p. B7.

45. E. Hall, “U.K. Politicians Court Mommy Bloggers,” Advertising Age, February 18, 2010.

46. K. Simon, “A Rare Mexican Mania over a Female Sporting Icon Ana Guevara May Like to Be Seen as an Inspiration to Girls Back Home,” Financial Times, September 21, 2002, p. 24.

47. L. Y. Sin and O. H. Yau, “Female Role Orientation and Consumption Values,” Journal of International Consumer Marketing, 13, no. 2 (2001), pp. 49–75.

48. L. Y. M. Sin and O. H. M. Yau, “Female Role Orientation of Chinese Women,” Psychology & Marketing, December 2004, pp. 1033–58.

49. For a related discussion, see M. de Mooij, Global Marketing and Advertising (Thousand Oaks, CA: Sage, 1998), pp. 252–53.

50. See K. L. Miller, “You Just Can’t Talk to These Kids,” BusinessWeek, April 19, 1993, pp. 104–106; P. Sellers, “Pepsi Opens a Second Front,” Fortune, August 8, 1994, pp. 70–76; and N. Donthu, “A Cross-Country Investigation of Recall of and Attitude toward Comparative Advertising,” Journal of Advertising, Summer 1998, pp. 111–22.

51. See M. de Mooij, Consumer Behavior and Culture (Thousand Oaks, CA: Sage, 2004), pp. 162–64. For a discussion of how language can influence accessibility of cultural values, see D. A. Briley, M. W. Morris, and I. Simonson, “Cultural Chameleons,” Journal of Consumer Psychology, 15, no. 4 (2005), pp. 351–62.

52. Sun, Horn, and Merritt, “Values and Lifestyles of Individualists and Collectivists.”

53. L. Shannahan, “Bugging Out over Germs,” Brandweek, November 22, 2004, p. 17.

54. See, e.g., V. Kurian, “‘Hand Wash’ Campaign in Kerala Raises a Stink,” Businessline, November 6, 2002, p. 1.

55. J. L. Watson, Golden Arches East (Stanford, CA: Stanford University Press, 1997).

56. R. Mandhachitara, R. M. Shannon, and C. Hadjicharalambous, “Why Private Label Grocery Brands Have Not Succeeded in Asia,” Journal of Global Marketing, 20, no. 2/3 (2007), pp. 71–87.

57. Lin, “Cultural Values Reflected in Chinese and American Television Advertising”; Khairullah and Khairullah, “Dominant Cultural

Values”; S. Okazaki and B. Mueller, “An Analysis of Advertising Appeals Employed in Japanese and American Print Advertising— Revisited,” Working Paper, San Diego State University (San Diego, 2008); and S. Biswas, M. Hussain, and K. O’Donnel, “Celebrity Endorsements in Advertisements and Consumer Perceptions,” Journal of Global Marketing, 22 (2009), pp. 121–37.

58. N. Madden, “In China, Multinationals Forgo Adaptation for New-Brand Creation,” Advertising Age, January 17, 2011.

59. For a related dimension, see S. Shavitt et al., “The Horizontal/ Vertical Distinction in Cross-Cultural Consumer Research, Journal of Consumer Psychology, 16, no. 4 (2006), pp. 325–56.

60. Pornpitakpan and Francis, “The Effect of Cultural Differences, Source Expertise, and Argument Strength on Persuasion”; see also B. R. Barnes et al., “Investigating the Impact of International Cosmetics Advertising in China,” International Journal of Advertising, 23 (2004), pp. 361–87.

61. C. Pornpitakpan, “Factors Associated with Opinion Seeking,” Journal of Global Marketing, 17, no. 2/3 (2004), pp. 91–113.

62. N. R. Buchan, R. T. A. Croson, and E. J. Johnson, “When Do Fair Beliefs Influence Bargaining Behavior?,” Journal of Consumer Research, June 2004, pp. 181–90.

63. D. Kim, Y. Pan, and H. S. Park, “High- versus Low-Context Culture,” Psychology & Marketing, September 1998, pp. 507–21.

64. Z. Caillat and B. Mueller, “The Influence of Culture on American and British Advertising,” Journal of Advertising Research, May–June 1996, pp. 79–88; and Lin, “Cultural Values Reflected in Chinese and American Television Advertising.”

65. Zhang and Shavitt, “Cultural Values in Advertisements to the Chinese X-Generation.”

66. C. Riegner, “Wired China,” Journal of Advertising Research, December 2008, pp. 496–505.

67. G. Parker, “Going Global Can Hit Snags,” The Wall Street Journal, June 16, 2004, p. B1.

68. Steenkamp, Ter Hofstede, and Wedel, “A Cross-National Investigation into the Individual and National Cultural Antecedents of Consumer Innovativeness”; Pornpitakpan and Francis, “The Effect of Cultural Differences, Source Expertise, and Argument Strength on Persuasion”; J. M. Jung and J. J. Kellaris, “Cross- National Differences in Proneness to Scarcity Effects,” Psychology & Marketing, September 2004, pp. 739–53; and Erdem, Swait, and Valenzuala, “Brands as Signals.”

69. See, e.g., P. Raven and D. H. B. Welsh, “An Exploratory Study of Influences on Retail Service Quality,” Journal of Services Marketing, 18, no. 3 (2004), pp. 198–214.

70. W. L. Chang and P. Lii, “Luck of the Draw,” Journal of Advertising Research, December 2008, pp. 523–30; and E. Coggins, “The New Asian Tiger Leadership Style,” suite101. com, accessed February 5, 2011.

71. “Quiet Motorcycle Seeks Added Vroom,” CNN.com, March 17, 2005, www.cnn.com.

72. T. S. Chan, “Concerns for Environmental Issues,” Journal of International Consumer Marketing, 1 (1996), pp. 43–55.

73. R. Y. K. Chan, “Determinants of Chinese Consumers’ Green Purchase Behavior,” Psychology & Marketing, April 2001, pp. 389–413; and K. Lee, “Gender Differences in Hong Kong Adolescent Consumers’ Green Purchase Behavior,” Journal of Consumer Marketing, 26, no. 2 (2009), pp. 87–96.

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Part Two External Influences74

74. “Saudis and Americans,” NOP World (New York: United Business Media), January 6, 2003, www.nopworld.com.

75. S. L. M. So, “A Comparative Content Analysis of Women’s Magazine Advertisements from Hong Kong and Australia on Advertising Expressions,” Journal of Current Issues and Research in Advertising, Spring 2004, pp. 47–58; and Khairullah and Khairullah, “Dominant Cultural Values.”

76. K. Chen and L. Chang, “China Takes Aim at Racy, Violent TV Shows,” The Wall Street Journal, May 24, 2004, p. B1.

77. C. Webster and R. C. Beatty, “Nationality, Materialism, and Possession Importance,” in Advances in Consumer Research, vol. 24, ed. M. Brucks and D. J. MacInnis (Provo, UT: Association for Consumer Research, 1997), pp. 204–10.

78. K. Chan and G. P. Prendergast, “Social Comparison, Imitation of Celebrity Models and Materialism among Chinese Youth,” International Journal of Advertising 27, no. 5 (2008), pp. 799–826; and J. S. Podoshen, L. Li, and J. Zhang, “Materialism and Conspicuous Consumption in China,” International Journal of Consumer Studies, 35 (2011), pp. 17–25.

79. J. E. Workman and S. H. Lee, “Materialism, Fashion Consumers, and Gender,” International Journal of Consumer Studies, 35 (2011), pp. 50–57.

80. P. Paul, “Global Generation Gap,” American Demographics, March 2002, pp. 18–19.

81. “Work Hard? Play Hard? It’s Not the Countries You Might Think,” NOP World (New York: United Business Media), November 8, 2004, www.nopworld.com.

82. G. Hofstede et al., “What Goals Do Business Leaders Pursue?,” Journal of International Business Studies, 33, no. 4 (2002), pp. 785–803.

83. M. de Mooij and G. Hofstede, “Convergence and Divergence in Consumer Behavior: Implications for International Retailing,” Journal of Retailing, 78 (2002), pp. 61–69.

84. See S. S. Al-Makaty, “Attitudes toward Advertising in Islam,” Journal of Advertising Research, May–June 1996, pp. 16–25; and “Saudis and Americans.”

85. See, e.g., D. S. Waller, K. S. Fam, and B. Z. Erdogan, “Advertising of Controversial Products,” The Journal of Consumer Marketing, 22, no. 1 (2005), pp. 6–18.

86. “Dogpile,” Kwintessential, www.kwintessential.co.uk/translation/ articles/cross-cultural-issues.htm, accessed March 20, 2005.

87. See S. Zhang and B. H. Schmitt, “Creating Local Brands in Multilingual International Markets,” Journal of Marketing Research, August 2001, pp. 313–25.

88. D. L. Vence, “Proper Message, Design in Global Markets Require Tests,” Marketing News, September 1, 2006, pp. 18, 24.

89. See M. F. Toncar, “The Use of Humor in Television Advertising,” International Journal of Advertising, 20 (2001), pp. 521–39.

90. See N. Spears, X. Lin, and J. C. Mowen, “Time Orientation in the United States, China, and Mexico,” Journal of International Consumer Marketing, 1 (2001), pp. 57–75.

91. L. A. Manrai and A. K. Manrai, “Effect of Cultural-Context, Gender, and Acculturation on Perceptions of Work versus Social/Leisure Time Usage,” Journal of Business Research, February 1995, pp. 115–28; J. D. Lindquist and C. F. Kaufman- Scarborough, “Polychronic Tendency Analysis,” Journal of

Consumer Marketing 21, no. 5 (2004), pp. 332–42; and G. H. Brodowsky et al., “If Time is Money Is It a Common Currency?,” Journal of Global Marketing, 21, no. 4 (2008), pp. 245–57.

92. M. Lee and F. M. Ulgado, “Consumer Evaluations of Fast-Food Services,” Journal of Services Marketing, 1 (1997), pp. 39–52; and G. H. Brodowsky and B. B. Anderson, “A Cross-Cultural Study of Consumer Attitudes toward Time,” Journal of Global Marketing, 3 (2000), pp. 93–109.

93. de Mooij, Global Marketing and Advertising.

94. Ibid., p. 71.

95. See M. Chapman and A. Jamal, “Acculturation,” in Advances in Consumer Research, vol. 24, ed. M. Brucks and D. J. MacInnis (Provo, UT Association for Consumer Research, 1997), pp. 138–44.

96. From White, A Short Course in International Marketing Blunders, p. 39.

97. R. Bjerke and R. Polegato, “How Well Do Advertising Images of Health and Beauty Travel across Cultures?,” Psychology & Marketing, October 2006, pp. 865–84.

98. See also de Mooij, Global Marketing and Advertising; and T. J. Madden, K. Hewett, and M. S. Roth, “Managing Images in Different Cultures,” Journal of International Marketing, 8, no. 4 (2000), pp. 90–107.

99. P. A. Herbig and H. E. Kramer, “Do’s and Don’ts of Cross- Cultural Negotiations,” Industrial Marketing Management, 4 (1992), p. 293; see also P. Fan and Z. Zigang, “Cross-Cultural Challenges When Doing Business in China,” Singapore Management Review, 26, no. 1 (2004), pp. 81–90.

100. M. Ewing, A. Caruana, and H. Wong, “Some Consequences of Guanxi,” Journal of International Consumer Marketing, 4 (2000), p. 77. See also F. Balfour, “You Say Guanxi, I Say Schmoozing,” BusinessWeek, November 19, 2007, pp. 84–85.

101. M. Willis, “Tradition versus Change,” Journal of Global Marketing, 22 (2009), pp. 67–89. See also F. F. Gu, K. Hung, and D. K. Tse, “When Does Guanxi Matter?,” Journal of Marketing, July 2008, pp. 12–28.

102. Fan and Zigang, “Cross-Cultural Challenges When Doing Business in China,” p. 85; and N. J. White and J. Lee, “Dispute Resolution in the Korean and U.S. Markets,” Mid-American Journal of Business, 19, no. 2 (2004), pp. 23–30.

103. G. Brewer, “An American in Shanghai,” Sales and Marketing Management, November 1997, p. 42.

104. See H. McDonald, P. Darbyshire, and C. Jevons, “Shop Often, Buy Little,” Journal of Global Marketing, 4 (2000), pp. 53–72; and A. G. Abdul-Muhmin, “The Effect of Perceived Seller Reservation Prices on Buyers’ Bargaining Behavior in a Flexible-Price Market,” Journal of International Consumer Marketing, 3 (2001), pp. 29–45.

105. C. Miller, “Not Quite Global,” Marketing News, July 3, 1995, p. 9.

106. S. Y. Park, “A Comparison of Korean and American Gift- Giving Behaviors,” Psychology & Marketing, September 1998, pp. 577–93.

107. A. Joy, “Gift Giving in Hong Kong and the Continuum of Social Ties,” Journal of Consumer Research, September 2001, pp. 239–54. See also J. Wang, F. Piron, and M. V. Xuan, “Faring One Thousand Miles to Give Goose Feathers,” in Advances in

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Chapter Two Cross-Cultural Variations In Consumer Behavior 75

Consumer Research, vol. 28, ed. M. C. Gilly and J. Meyers-Levy (Provo, UT: Association for Consumer Research, 2001), pp. 58–63.

108. M. K. Hui and K. Au, “Justice Perceptions of Complaint Handling,” Journal of Business Research 52 (2001), pp. 161–73; and C. A. Voss et al., “A Tale of Two Countries’ Conservatism, Service Quality, and Feedback on Customer Satisfaction,” Journal of Service Research, February 2004, pp. 212–30.

109. M. Fong, “Chinese Charm School,” The Wall Street Journal, January 13, 2004, pp. B1, B6.

110. B. D. Keillor, M. D’Amico, and V. Horton, “Global Consumer Tendencies,” Psychology & Marketing, January 2000, pp. 1–19; and F. Ter Hofstede, M. Wedel, and J. E. M. Steenkamp, “Identifying Spacial Segments in International Markets,” Marketing Science, Spring 2002, pp. 160–77.

111. C. Edy, “The Olympics of Marketing,” American Demographics, June 1999, pp. 47–48.

112. “Little Emperors,” p. 143.

113. S. Hamm, “Children of the Web,” BusinessWeek, July 2, 2007, pp. 50–58.

114. “Global Youth Panel,” NGT, www.nextgreatthing.com, accessed May 5, 2008.

115. N. Madden, “Levi’s Enjoys ‘Rebirth’ on the Web in Asia,” Advertising Age, April 19, 2004, p. N-10.

116. C. Walker, “Six Seismic Shifts in Global Teen Culture,” Chief Marketer, www.chiefmarketer.com, accessed February 6, 2011.

117. L. Bertagnoli, “Continental Spendthrifts,” Marketing News, October 22, 2001, p. 15.

118. N. Madden, “Coke Targets Second Cities,” Advertising Age, August 16, 2004, p. 22.

119. See, e.g., L. Tong, “Consumerism Sweeps the Mainland,” Marketing Management, Winter 1998, pp. 32–35; J. Slater, “In India, a Market Unleashed,” The Wall Street Journal, March 12, 2004, p. A13; and N. Madden, “China Passes Japan as Second- Largest Economy,” Advertising Age, August 25, 2010.

120. “Picturing a World of Want,” Newsweek, May 5, 2008, p. 7.

121. J. L. Lee, “China Senses Need for Cleaner Fuel,” The Wall Street Journal, December 11, 2003, p. A16.

122. The World Factbook (Washington, DC: Central Intelligence Agency, 2008).

123. 2005 International Comparison Program (International Bank for Reconstruction and Development/The World Bank, 2008), www.worldbank.org/data/quickreferences (per capita income in U.S. dollars; per capita PPP in international dollars).

124. Statistical Abstract of the United States (2010), www.census. gov; 2010 Philippine Statistical Yearbook (Makati City: National Statistical Information Center, 2010), p. 1.18; Statistics Canada (2004), www.statcan.ca; Japan Statistical Yearbook (2009), www.stat.go.jp; Census of India 2001.

125. H. Fattah, “The Middle East Baby Boom,” American Demographics, September 2002, pp. 55–60.

126. A. Esser, “The Transnationalization of European Television,” Journal of European Area Studies, 10, no. 1 (2002), pp. 13–29.

127. See, e.g., de Mooij and Hofstede, “Convergence and Divergence in Consumer Behavior”; and A. Kanso and R. A. Nelson,

“Advertising Localization Overshadows Standardization,” Journal of Advertising Research, January–February 2002, pp. 79–89.

128. “When in Rome . . . ,” Businessline, April 15, 2004, p. 1.

129. I. Vida and J. Reardon, “Domestic Consumption,” Journal of Consumer Marketing, 25, no. 1 (2008), pp. 34–44; L. Dong and K. Tian, “The Use of Western Brands in Asserting Chinese National Identity,” Journal of Consumer Research, October 2009, pp. 504–23; M. O. Lwin, A. Stanaland, and J. D. Williams, “Exporting America,” International Journal of Advertising, 29, no. 2 (2010), pp. 245–77; and A. A. Maher, P. Clark, and A. Maher, “International Consumer Admiration and the Persistence of Animosity,” Journal of Consumer Marketing, 27, no. 5 (2010), pp. 415–24.

130. E. J. Schultz, “MillerCoors Thinks Globally, but Gets ‘Intimate’ Locally,” Advertising Age, October 4, 2010, pp. 1 and 19.

131. C. Rubel, “Survey,” Marketing News, July 15, 1996, p. 5; and D. Barros, “Create Unique Strategy for Each Brazilian Culture,” Marketing News, September 1, 2004, pp. 17–18.

132. G. Cui, “Segmenting China’s Consumer Market,” Journal of International Consumer Marketing, 1 (1999), pp. 55–76; and T. Sun and G. Wu, “Consumption Patterns of Chinese Urban and Rural Consumers,” Journal of Consumer Marketing, 21, no. 4 (2004), pp. 245–53.

133. P. L. Andruss, “Slow Boat to China,” Marketing News, September 10, 2001, p. 11.

134. N. Madden and J. Neff, “P&G Adapts Attitude toward Local Markets,” Advertising Age, February 23, 2004, p. 28.

135. C. Penteado, “Emerging Lower Middle Class Fires Up Marketers in Brazil,” Advertising Age, June 14, 2010, p. 12.

136. Examples come from Chen and Chang, “China Takes Aim at Racy, Violent TV Shows”; G. A. Fowler, “China Cracks Down on Commercials,” The Wall Street Journal, February 19, 2004, p. B7; “Molson Airs Ad under New Rules,” Advertising Age, February 23, 2004, p. 12; “China Bans Opening New Internet Cafes,” CNN. com, March 2006, www.cnn.com; E. Hall, “In Europe, the Clash over Junk-Food Ads Heats Up,” Advertising Age, March 5, 2007, p. 32; and E. Hall, “U.K. to Tighten Regulations for Paid Tweets, Sponsored Posts,” Advertising Age, January 13, 2011.

137. N. Madden, “Lower-Tier Cities Offer Most Growth,” Advertising Age, June 23, 2010.

138. Sources include “Unilever in Brazil (1997–2007): Marketing Strategies for Low-Income Consumers,” Insead, (2007); E. Wong, “Unilever’s True Grit,” Adweek, 50, no. 21 (May 24, 2009), p. AM8; C. Challener, “Developing and Industrialized Nations Present Diverse Opportunities for Innovation and Growth in Laundry Products,” ICIS Chemical Business, June 18, 2008; K. Capell, “Unilever’s Laundry Biz Is Greener and Growing,” BusinessWeek Online, December 29, 2008; J. Neff, “The Dirt on Laundry Trends around the World,” Advertising Age, June 14, 2010, p. 8; and Unilever’s corporate website, www.unilever.com.

139. P. D. Lynch, R. J. Kent, and S. S. Srinivasan, “The Global Internet Shopper,” Journal of Advertising Research, May–June 2001, pp. 15–23.

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76

3 The Changing American Society: Values chapter

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77

Understand core American cultural values.

Summarize changes in self, environment, and other-oriented values.

Discuss values as they relate to green marketing.

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Discuss values as they relate to cause-related marketing.

Discuss values as they relate to marketing to gay and lesbian consumers.

Discuss values as they relate to gender-based marketing.

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

Gender roles continue to evolve in the United States with more women taking on traditionally male-oriented tasks and more men taking on traditionally female-oriented tasks.1 One area that has recently gotten the attention of mar- keters is grocery shopping. A recent Yahoo! study finds that 51 percent of adult men in the United States report being the primary grocery shopper for their home. And, while men may be inflating their participation, other research supports the fact that men, indeed, are involved in the grocery shopping task more than ever before. You might wonder what has caused this shift. Many factors are likely to be involved, a few of which are discussed next. First, generational shifts are occurring, where younger women are now more educated than their male counterparts. This is changing career and family dynamics and causing cou- ples to revisit how household duties should be divided up. Second is economic. Nearly three out of every four jobs lost in the most recent recession were those of men, another dynamic that has led couples to revisit house- hold duties. A third aspect is the masculine/ feminine value itself. This value appears to be shifting in the United States away from the tra- ditional masculine- dominated value to a more balanced masculine/feminine value. As this

shift has occurred, role differentiation between men and women has reduced. Consider the following excerpt:

In masculine cultures, household work is less

shared between husband and wife than in

feminine cultures. Men also do more household

shopping in the feminine cultures. Data from

Eurostat . . . show that low masculinity explains

52% of variance of the proportion of men who

spend time on shopping activities.

Given the increased participation by men in the grocery shopping task, several marketing factors become critical. First is to understand differences in how men and women shop. A recent RIVET survey indicates the following differences:

MEN are (a) more likely to stick to brand names they recognize, (b) less likely to shop with a list, and (c) less likely to look for in-store bargains. WOMEN are (a) more likely to change brands for the sake of variety, (b) more likely to make unplanned purchases, and (c) more likely to shop every aisle.

Such differences have implications for retailers ranging from the role of coupons (probably less pronounced for men) to the appeal of store brands (probably more

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Part Two External Influences78

pronounced for women). Understanding such dif- ferences for grocery retailers is critical. A second critical marketing factor is adjusting numerous aspects of grocery retailing toward men. This may include a range of issues including store layout, in-store promotions, and advertising for grocery products. For example, “themed events” catering to men’s interests such as beer-tasting nights may

help make the grocery shopping task more engag- ing. Providing free samples may also be effective because it is a major factor cited by men in terms of influencing them to switch brands. Finally, appropri- ate inclusion of male-oriented themes in advertising is critical. Only a quarter of men currently feel that ads in the grocery category are designed to speak to them.

Chapter 2 discussed how variations in values influence consumption patterns across cultures. Here, we describe how changes in values within culture over time influence consumption patterns, with a specific focus on the United States. The changing role of men and women in American society, highlighted in the chapter opener, reflects changes in the “masculine/feminine” value described in Chapter 2. As this example makes clear, cultural values are not constant. Rather, they evolve over time.2 We begin by examining the evolution of American values in general. Next, we examine four marketing trends that have evolved in response to changing values: green marketing, cause-related marketing, marketing to gay and lesbian consumers, and gender-based marketing.

CHANGES IN AMERICAN CULTURAL VALUES Observable shifts in behavior, including consumption behavior, often reflect shifts in cultural values, widely held beliefs that affirm what is desirable. Therefore, it is neces- sary to understand the underlying value shifts to understand current and future consumer behavior. Although we discuss American values as though every American has the same values, in fact there is substantial variance in values across individuals and groups. In addi- tion, changes in values tend to occur slowly and unevenly across individuals and groups. While traumatic events such as the 9/11 attacks and the recent major recession can produce value shifts, a slow evolution is more common. Caution should be used in assuming that short-term behavioral or attitudinal changes in response to such events represent long- lasting value shifts.

Figure 3–1 presents our estimate of how American values are changing. These are the same values used to describe different cultures in Chapter 2. It must be emphasized that Figure 3–1 is based on the authors’ subjective interpretation of the American society. You should feel free, indeed compelled, to challenge these judgments.

Self-Oriented Values Traditionally, Americans have been active, materialistic, hardworking, religious people inclined toward abstinence and postponed gratification. Beginning after the end of World War II and accelerating rapidly during the 1970s and early 1980s, Americans placed increased emphasis on leisure, immediate gratification, and sensual gratification. While these changes have remained relatively intact, we discuss what role, if any, the most recent recession (dubbed by some as the Great Recession) has had on specific values such as materialism and immediate gratification.

LO1

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Chapter Three The Changing American Society: Values 79

Religious/Secular America is basically a secular society. A religious group does not control the educational system, government, or political process, and most people’s daily behaviors are not guided by strict religious guidelines. Nonetheless, roughly 82 percent of American adults claim a religious affiliation, 30 percent claim to attend a religious service at least once a week, and 54 percent state that religion is very important in their lives.3

While Americans often profess to be more religious than their behaviors would sug- gest, religious-based beliefs do influence decisions.4 Many Americans for whom religion is especially important are conservative in their beliefs. They are quite active politically and as consumers. Their political activism involves attempts to regulate various market- ing activities, including products (particularly “sin” products such as liquor, gambling, and pornography) and advertising.5 Their consumption patterns include both positive con- sumption (purchasing religious objects and books) and negative consumption (avoiding or boycotting products and companies).

Although conservative religious groups generate substantial publicity and have consid- erable political power, the culture remains relatively secular. Indeed, increasing secularism is cited as one reason for the increase in interfaith marriages.6 However, it is estimated that the devoutly religious make up 25 percent of the U.S. population.7 And advertising to this group requires a nuanced approach—advertisers can’t simply put a religious symbol on all products and think that it will have a positive effect. Only when there is a product- religion match (e.g., a counseling center) does the inclusion of a religious symbol such as a

Sensual gratification Postponed gratification Material Hard work Active

Abstinence Immediate gratification Nonmaterial Leisure Passive

Minimum cleanliness Change Security Fatalistic Overcome nature Status

Collective Uniformity Extended family Age Cooperation Feminine

Maximum cleanliness Tradition Risk taking Problem solving Admire nature Performance

Individual Diversity Limited family Youth Competition Masculine

Self-Oriented

Environment-Oriented

Other-Oriented

*T = Traditional, E = Emerging, and C = Current.

E T T

EC T

CET E CT

E CT

T

TEC T

EC T C

E

E ECT*

TC

CE

E C T

C T C E

T C E

T C E T C E

E C

Religious SecularECT

3-1Traditional, Current and Emerging American Values FIGURE

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Part Two External Influences80

cross have a positive influence on purchas- ing. When there is a perceived lack of fit (e.g., alcohol), the inclusion of a religious symbol has a negative effect. In addition, the more religious a person is, the more pronounced these effects are.8 We treat religion and its impact on our society in considerable depth in Chapter 5 when we discuss subcultures.

Sensual Gratification/Abstinence Closely tied to America’s traditional reli- gious orientation was a belief in the virtue of abstinence. As American society became more secular, sensual gratification became more acceptable. This trend appears to remain strong, even as consumer and gov- ernment agencies have tried to push back and curb violence, indecency, and nudity in such venues as ads, movies, and video games.9 For example, Axe body spray is the number one brand in its category and

relies heavily on sex appeals targeting young men. And while the United States is not the highest in its use of nudity in ads, it outranked Brazil, China, South Korea, and Thailand in a recent study. However, the effectiveness of sexual appeals in ads depends on viewer gender. Men tend to react more positively than women to sex appeals involving female nudity. However, women with more liberal attitudes toward sex view sexually explicit ads just as positively as men.10

Other evidence of the greater value placed on sensual gratification comes from a recent study showing that one of the biggest value shifts in the United States is in the greater impor- tance placed on fun and excitement. That is, people today, more than ever, want to lead a “pleasurable, happy life; to experience stimulation and thrills.”11 The food industry certainly relies on consumer desires for sensual gratification by selling the pleasure, happiness, and thrills that various foods can deliver. According to one Pepperidge Farm executive, their premium cookies offer a “small indulgence anytime, anywhere.”12

Illustration 3–1 shows an ad for TBP4Men, that appeals to sensual gratification. How do you feel this ad would be received by men? By women?

Postponed/Immediate Gratification In line with the value they generally place on sensual gratification, Americans seem unwilling to delay pleasures, even in the face of discomfort over spending levels and debt. For a time, there was hope that the Great Recession would usher in a new frugality among consumers and a willingness to postpone gratification by delaying or eliminating purchases. And, to some degree, it has. Americans are now saving more and paying down debt. However, recently these trends have begun to recede as once again U.S. consumers get back to “spending as usual.” Consider the following quote:

The truth is that spending may be hard to contain. Entire generations of consumers have grown up with the idea of instant gratification and the credit culture that comes with it.13

American culture

values sensual grati-

fication. Products

and ads based on

this appeal such as

TBD4Men are gener-

ally well received but

can cause problems

when they go too far.

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Chapter Three The Changing American Society: Values 81

It is really quite difficult, therefore, to say whether U.S. consumer values relating to instant gratification have truly been affected (it does appear that they have somewhat, as represented in Figure 3–1), or whether the behavioral changes related to spending and saving had more to do with the economic constraints imposed by the recession. As a con- sequence, we show an emerging trend back toward instant gratification more in line with pre-recession levels moving forward.

Material/Nonmaterial Americans have maintained a strong material orientation. An outcome of America’s focus on materialism is a consumption-driven society. As we will see, Americans are working longer hours, in part, to afford material posses- sions. That is, Americans are trading time and energy for things and services such as cars and travel. One factor found to influence materialism is television. As one group of researchers note:

Television is a powerful medium .  .  . consumers often use information from television to con- struct perceptions of social reality including the prevalence of affluence. Heavier viewers tend to believe luxury products and services to be more commonplace than they actually are.14

As we have seen, the recent recession has curtailed spending to some degree. However, at least some of that frugality appears to have been more economically than value-related. Indeed, one expert notes that consumers are going through “frugality fatigue,” which sug- gests that consumers are acting due to an external constraint more than an internal value change. And, consider the following quote from a young woman who simply got fed up with trying to save and began spending again, which led to her eviction and caused her to have to move back in with her parents:

After awhile, I just decided, “Screw it. I need some new clothes. I’m going to get them.” My mamma’s not happy, but I don’t care. You stop spending and you stop living.15

While materialism appears to be the norm, a movement away from materialism in the United States is occurring among a select group of consumers. Role overload, burnout, and emotional exhaustion are causing some to rethink priorities and simplify their lives. Consider the following:

I had all the stuff that was supposed to make me successful—my car and my clothes, the house in the right neighborhood and belonging to the right health club. All the external framework was excellent and inside I kind of had this pit eating away at me.16

Consumers’ efforts to reduce their reliance on consumption and material possessions have been termed voluntary simplicity. Voluntary simplicity can span a continuum from minor life adjustments and reduced spending to drastic lifestyle adjustments, including downsized jobs, incomes, houses, and spending. The key is that it is a conscious and vol- untary decision, not one brought on by economic necessity. Major factors in the deci- sion to simplify appear to be reduced stress and increased life satisfaction, although other motivations, including environmentalism, can be involved. While the voluntary simplicity movement appears to represent a relatively small proportion of the U.S. population, its growth certainly holds economic and marketing consequences, including the market for secondhand products and green products.17

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Part Two External Influences82

Hard Work/Leisure Americans continue their strong tradition of hard work, leading much of the industrialized world in hours worked. Average weekly hours worked is around 40 for full-time workers, with 24 percent of workers clocking more than 40 hours per week. The percentage of married women who work outside the home for wages has increased almost 50 percent since 1970, from 41 to 61 percent of all married women.18 Americans work long hours for many reasons. One is clearly their material orientation. Americans work to have such things as a large home, two cars, and a nice vacation. Others work long hours because they lack the skills or job opportunities to provide even a moderate lifestyle without doing so. However, Americans also work long and hard because work is meaningful and valuable to them, in part because of the self-esteem and respect they gain from the work they do.19

Partly in response to the increase in work hours, the value placed on work relative to leisure has dropped over the past several decades. Clearly work is still important, and higher unemployment during the recent recession has put this into even greater perspec- tive. However, a recent study finds that for working women with children, the percentage who indicated that full-time work was ideal for them has decreased by 11  percent since 1997, while the percentage who indicated part-time work was ideal for them has increased by 12 percent.20 And yet, over two-thirds of married women with children work outside the home for wages. Together, these statistics suggest such factors as time pressures and role conflict associated with the fact that work competes with other important aspects of one’s life. This opens up opportunities for marketers who can deliver convenience. Still, we can’t seem to get away from work. One study finds that between 51 and 65 percent of U.S. workers with work e-mail check it during off hours including nights, weekends, and while on vacation.21 Thus, we have a situation in which hard work and leisure are both valued (often by the same people) and commingled in people’s lives.

Active/Passive Americans continue to value an active approach to life. Although less than half of all American adults exercise regularly, most Americans take an active approach to both leisure and problem-solving activities. Television viewing as a primary form of entertainment has dropped sharply from its peak in the mid-1980s (young men [18 to 24 years of age] seem to be moving away from TV faster than any other group).22 Alternative activities, including surfing the net, sports, cooking, and gardening, are popu- lar. And the amount of time children spend in scheduled activities continues to increase.23 The following quote illustrates that Americans differ on this value, but most would agree more with the second speaker than the first.

My idea of a vacation is a nice oceanfront resort, a beach chair, and a piña colada.

Mine too. For a day or two. Then I’d go bug spit. I’d feel like I was in prison. I’d do something.24

Illustration 3–2 describes how Club Med has 71 worldwide resorts designed for active leisure.

Environment-Oriented Values Environment-oriented values prescribe a society’s relationship with its economic, techni- cal, and physical environments. Americans have traditionally admired cleanliness, change, performance, risk taking, problem solving, and the conquest of nature. While this cluster of values remains basically intact, there are some important shifts occurring.

Cleanliness Americans have long valued cleanliness. This strong focus seems to be declining somewhat, particularly in terms of our homes. Likely due to increased time

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Chapter Three The Changing American Society: Values 83

demands caused by work, messier homes are more acceptable.25 However, such shifts don’t appear to suggest major changes. The popularity of TV shows like Mission: Orga- nization on HGTV suggests that while Americans may accept messier homes, they are not happy about them. This obviously presents marketing opportunities.26 For example, the development of robotic vacuum cleaners such as iRobot’s Roomba taps the desire for cleanliness while offering much-needed convenience and time savings.

Personal hygiene, another aspect of cleanliness, remains very important to most Ameri- cans. One study shows that antibacterial hand sanitizers such as Purell are an important part of the arsenal of products carried around by mothers.27 Illustration 3–3 demonstrates how Clorox emphasizes cleanliness which is in line with the importance that Americans place on personal hygiene.

Tradition/Change Americans have always been very receptive to change. New has traditionally been taken to mean improved. While still very appreciative of change, Ameri- cans are now less receptive to change for its own sake. New-product recalls, the expense and the failure of various government programs, and the energy required to keep pace with rapid technological changes are some of the reasons for this shift. Another reason is the aging of the American population. As we will see in the next chapter, the average age of the population is increasing, and people generally become somewhat less accepting of change as they age. Still, much of America continues to embrace change, as evidenced by a grow- ing segment of workers that one expert calls the creative class. The creative class includes those who work in such professions as architecture, science, engineering, and health care as well as business and who generate new ideas and technologies for a living or engage in

This Club Med ad

is consistent with

American values for

leisure, activeness,

sensual gratification,

and risk taking.

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Part Two External Influences84

complex problem solving. This group now constitutes about 33 percent of the workforce, compared with just 10 percent in 1900. Fiat, in re-launching its brand in the United States, indicated that they were targeting the creative class with a campaign heavy on digital, viral, and event-marketing approaches they felt would work best with this segment.28

Risk Taking/Security Americans’ risk-taking orientation seems to have changed somewhat over time. There was an increased emphasis on security during the period from 1930 through the mid-1980s. This attitude was a response to the tremendous upheavals and uncertainties caused by the Depression, World War II, and the cold war. However, risk tak- ing remains highly valued and is gaining appreciation as Americans look to entrepreneurs for economic growth and to smaller firms and self-employment to obtain desired lifestyles. Figure 3–1 indicates that there seems to currently be a greater emphasis on security, driven at least in part by the recent economic recession. However, a long-term study of the impor- tance that Americans place on security shows that the desire for security has seen one of the largest declines over the last several decades. This suggests that the short-term focus on security may give way once again to risk taking as the economy recovers.29

Problem Solving/Fatalistic Americans take great pride in being problem solvers, and as we saw earlier, as a percentage of the workforce, problem solvers and creative types are on the increase. By and large, Americans believe that virtually anything can be fixed given sufficient time and effort. For example, even in the midst of the recent recession, nearly two-thirds of Americans agreed that “[a]s Americans, we can always find ways to solve problems.”30 Marketers introduce thousands of new products each year with the theme that they will solve a problem better than existing products will. We will examine the results of this value later in this chapter in the sections on green marketing and cause marketing.

Admire/Overcome Nature Traditionally, nature was viewed as an obstacle. Ameri- cans attempted to bend nature to fit their desires without realizing the negative conse- quences this could have for both nature and humanity. However, this attitude has shifted dramatically over the past 30 years.

Americans continue

to place a high

value on cleanliness,

as this Clorox ad

demonstrates.

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Chapter Three The Changing American Society: Values 85

Experts have been concerned that environmentalism is dead. Some cite the fact that the percentage of Americans who call themselves environmentalists dropped from 73 to 47 percent between 1990 and 2000. Part of the decline may be real, but part of the decline may simply be in how people define environmentalism. For example, a recent Gallop Poll shows that 80 percent of Americans are active or sympathetic to environmentalism (21 percent “active”; 49 percent “sympathetic” but not active). This puts active participa- tion up by five percentage points since 2000. Here are other indications that concern for the environment among Americans remains strong and may be on the rise:

�r� Eighty-three percent report changing their lifestyle to protect the environment. �r� Recycling (89 percent), energy reduction (85 percent), and environmentally friendly

purchases (70 percent) remain strong. �r� Sixty-seven percent say that “even in rough economic times, it is important to purchase

products with social and environmental benefits.” �r� Fifty-one percent report being willing to pay more for products with environmental

benefits.31

Table 3–1 shows eight segments, identified by IRI/TNS, based on consumer attitudes and behaviors toward the environment.32

Firms that convince environmentally concerned consumers that their products are environmentally sound can reap huge rewards. Such an approach has been termed enviropreneurial marketing. Enviropreneurial marketing is environmentally friendly marketing practices, strategies, and tactics initiated by a firm to achieve a competitive differentiation. Research shows that such a marketing approach can lead to increased new- product success and increased market share.33

We describe the marketing response to this value in the section of this chapter on green marketing.

Performance/Status Americans are shifting back to a focus on performance rather than status. Although consumers are still willing to purchase “status” brands, these

Eco-Centrists (16 percent): Highly committed to and concerned about environment. Beliefs reflected in their consumption behaviors across a wide range of products will pay more for eco-friendly products. Cynical about corporate green efforts—viewed as merely marketing tactics. High education and income; Urban South and West.

Respectful Stewards (7 percent): Most highly concerned about environment. Beliefs reflected in their consumption behaviors. Will pay more for eco-friendly products. Not cynical about corporate green marketing efforts. Focused on community and culture. Lower education and income; Hispanic; Urban.

Proud Traditionalists (14 percent): Environmental efforts focused on keeping home running efficiently and effectively (insulation and water- efficient products). Focused on family and hard work. Rural Midwest.

Frugal Earth Mothers (18 percent): Environmental efforts focused on running a more efficient home to save money (buy used, wash in cold water, air-dry clothes). Focused on practicality and lowering day-to-day costs. Lower income; Rural; Female.

Skeptical Individuals (13 percent): Believe in environmental issues like global warming and carbon emission concerns. Skeptical of corporate green efforts. Very high income and education; Urban coasts; Male.

Eco-Chic (14 percent): Environmentally concerned, but actions don’t match beliefs. More interested in appearing to be green to “ride the wave of environmental consciousness.” May try eco-friendly products but tend to return to their favorite nongreen brands. Young adults.

Green Naives (11 percent): Environmental issues have not registered with this group in terms of beliefs or actions. Sedentary; Lower income.

Eco-Villians (7 percent): Highly dismissive of environmental concerns. Don’t believe global warming exists. Highly negative of corporate green efforts—seen as marketing ploys. Middle income; Male, Smaller metro areas.

3-1Shades of Green Segmentation™ Scheme by IRI/TNS TABLE

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Part Two External Influences86

brands must provide style and functionality in addition to the prestige of the name. This has led to substantial increases in sales at stores that combine price, service, and quality, such as Walmart and Target stores, and for quality retailer private-label brands such as those offered by Albertson’s, Target, and Walmart. In contrast, outlets with inappropri- ate cost structures or images, such as The Gap, Kmart, and Montgomery Ward, have struggled or failed.34

Other-Oriented Values Other-oriented values reflect a society’s view of the appropriate relationships between individuals and groups within that society. Historically, American society has been ori- ented toward individualism, competitiveness, masculinity, youth, limited families, and uniformity. However, several aspects of this orientation are undergoing change.

Individual/Collective A strong emphasis on individualism is one of the defining char- acteristics of American society. Watch any American hit movie. The leading character will virtually always behave as an individual, often despite pressures to conform to the group. Americans believe in “doing your own thing.” Even the “uniforms” that each generation of teenagers invents for itself allow ample room for individual expression. This value affects incentive systems for salespeople, advertising themes, product design, and customer com- plaining behavior.35 For example, consumers higher in individualism are more likely to complain, switch, or engage in negative word-of-mouth when faced with poor service per- formance.36 Individualism is also evident in the customization craze for cars, trucks, and motorcycles, a market worth over $2 billion a year. Discovery Channel and CMT have tapped into this trend with shows such as American Chopper and Trick My Truck, which attract the highly elusive younger male audience.37

Diversity/Uniformity While American culture has always valued individualism, it has also valued a degree of uniformity, particularly with respect to groups. America was founded in part by people seeking religious freedom or fleeing from various forms of persecution. The Constitution and many laws seek to protect diverse religions, political beliefs, and so forth. Nonetheless, Americans historically insisted that immigrants quickly adopt the language, dress, values, and many other aspects of the majority. Those who did not were often subject to various forms of discrimination. This was particularly true for racial and some religious minorities.

Since World War II, Americans have increasingly valued diversity. Consider the following:

Hallmark markets a collection of greeting cards called “Common Threads,” whose mes- sages reflect a variety of world cultures, emphasizing global community and diverse cultural expression.38

Researchers speculate that the market for products such as “Common Threads” is “cul- tural creatives,” the “26% of adult Americans who are concerned with self-actualization, spirituality, and self-expression and who like things that are foreign and exotic.”39 Cultural creatives, regardless of ethnicity, are more likely to cross traditional ethnic boundaries in seeking out products.

Although far from being free of racial, religious, ethnic, or class prejudice, American cul- ture is evolving toward valuing diversity more than uniformity, as reflected in Illustration 3–4. And a recent study shows that 61 percent of Americans think that the increased racial and

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Chapter Three The Changing American Society: Values 87

ethnic diversity “has been a change for the better.” This percentage is higher for younger generations.40 We examine one aspect of America’s increasing acceptance of diversity— marketing to gay and lesbian consumers—later in this chapter.

Limited/Extended Family America was settled by immigrants, people who left their extended families behind. As the nation grew, the western movement produced a similar phenomenon. Even today, frequent geographic moves as well as differential rates of social mobility mean that few children grow up in close interaction with aunts, uncles, cousins, nieces, or nephews.41 It is also common for children to leave their hometowns and parents once they begin their own careers. The physical separation of traditional family members often reduces the sense of family among those members. This, in turn, reduces the impact that the family has on the individual.

This is not to say that Americans do not love their family members or that how an American is raised does not influence the person for life. Rather, it means that a 35-year- old American is unlikely to have a cousin who would feel obligated to respond positively to a loan request (this is not the case in many other cultures). Likewise, this 35-year-old would be unlikely to have one or more cousins, aunts, or nephews live with him or her for an extended time period. The role of families in the American culture is covered in depth in Chapter 6.

Youth/Age Traditionally, older people were considered wiser than young people and were, therefore, looked to as models and leaders in almost all cultures. This has never been as true in American culture, probably because transforming a wilderness into a new type of producing nation required characteristics such as physical strength, stamina, youthful vigor, and imagination. The value on youth continued as America became an industrial nation.

Americans increas-

ingly value diversity.

As a result, a diversity

approach is used in

many ads.

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Part Two External Influences88

Since World War II, it has increased to such an extent that products such as cars, clothing, cosmetics, and hairstyles seem designed for and sold only to the young. For example, youth appeals in American advertising still appear to outstrip appeals to age and tradition.42

But a slow reversal of this value on youth seems to be occurring. Because of their increasing numbers and disposable income, older citizens have developed political and economic clout and are beginning to use it. Cosmetics, medicines, and hair care products are being marketed specifically to older consumers, and ads for these products increas- ingly feature older models, such as Julianne Moore, who are closer in age to the target audience. However, most of these products still have either a direct or indirect appeal of creating a younger appearance.

Age portrayal in advertising is a difficult issue. Since people often feel younger than their actual age, ads using younger models might generate a more positive reaction. In addition, for youth-oriented or conspicuously consumed products, using older models in ads may alienate younger consumers. These two factors help explain the overrepresenta- tion of younger models in ads.43 There is the worry, however, that at some point older consumers may feel ignored by ads that portray overly young users. Clearly, marketers have a lot to learn in this area.

Competition/Cooperation America has long been a competitive society, and this value remains firmly entrenched. It is reflected in our social, political, and economic sys- tems. We reward particularly successful competitors in business, entertainment, and sports with staggering levels of financial compensation. Although the focus on cooperation and teamwork in schools and businesses has increased, teamwork is generally instituted so that the team or group can outperform some other team or group. It is no wonder that America was one of the first countries to allow comparative advertising.

Masculine/Feminine American society, like most others, has reflected a masculine orientation for a long time. But as indicated by this chapter’s opening vignette, this orien- tation is changing, as are gender roles. Although American society is becoming less mas- culine oriented, it still leans clearly in that direction. For example, 37 percent of parents indicate that they would prefer a boy if they could have only one child, compared with 28 percent who would opt for a girl.44 And textbooks aimed at children still depict physical activity more often for boys (65 percent) than for girls (35 percent).45 Still, there is a shift taking place in this value. For example, preference for male bosses continues to decline while preference for female bosses continues to increase.46 The marketing implications resulting from evolving gender roles are discussed later in this chapter.

MARKETING STRATEGY AND VALUES We have examined a number of marketing implications of American values and changes in these values. It is critical that all aspects of the firm’s marketing mix be consistent with the value system of its target market. We will now examine marketing responses to four evolving American values: green marketing, cause-related marketing, marketing to gay and lesbian consumers, and gender-based marketing.

Green Marketing Marketers have responded to Americans’ increasing concern for the environment with an approach called green marketing.47 Green marketing generally involves (1) developing products whose production, use, or disposal is less harmful to the environment than the tra- ditional versions of the product; (2) developing products that have a positive impact on the

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Chapter Three The Changing American Society: Values 89

environment; or (3) tying the purchase of a product to an environmental organization or event. For example:48

�r� Levi’s launched its Levi’s Eco line of 100 percent organic cotton jeans.

�r� CBS created the “EcoAd” program whereby 10 percent of a company’s ad buy goes to local environmental causes. Participation is signaled with a “green- leaf” eco-ad logo.

�r� Office Depot offers Recycled Enviro- Copy printer and copier paper, which contains 35 percent postconsumer, recy- cled fibers, with green-colored packag- ing and the name “Office Depot Green” to emphasize the environment.

Environmental concerns don’t guarantee purchase of green products. Even among those who are environmentally concerned, negative perceptions are on the rise includ- ing beliefs that green products are too expensive, of lower quality, and not better for the environment, and that green claims can’t be trusted.49 Overcoming these obstacles is critical to the success of green marketing (see the Audi TDI Clean Diesel ad in Illustration 3–5). For example, Honda discontinued its Accord hybrid in 2007. Poor sales were likely due to the fact that highway mileage for the hybrid was only 1 mpg higher than the gas-only Accord, but it cost nearly $15,000 more!50

The FTC shares consumer skepticism about green claims. Amid substantial increases in green marketing and green claims by companies, the FTC has made the first modifica- tions in over a decade to its voluntary guidelines called the “Green Guides.” The Green Guides provide guidance on acceptable and unacceptable practices relating to environ- mental claims. Several issues motivated the FTC to make the modifications:51

�r� First, terms such as eco-friendly appear to be misleading to consumers who believe that such products have “far-reaching benefits in almost all environmental areas without having any substantial drawbacks.” According to the FTC, few products can live up to the perceptions that consumers have of them.

�r� Second is a practice termed greenwashing whereby a firm promotes environmental benefits that are unsubstantiated and on which they don’t deliver.

Prominent among the modifications to the Green Guides are (a) a focus on qualifying claims so that it is clear in what way the product is environmentally friendly and (b) a crack- down on third-party certifications and seals. This crackdown reflects the fact that some com- panies have created their own seals or utilize third-party vendors that don’t do anything to substantiate the claims being made (to learn more about Green Guides, visit www.ftc.gov).52

Cause-Related Marketing The term cause marketing is sometimes used interchangeably with social marketing. How- ever, the two are different. As noted in Chapter 1, social marketing is marketing done to enhance the welfare of individuals or society without direct benefit to a firm. In contrast,

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Environmentally

friendly products

such as the Audi

TDI diesel must also

provide consumer

benefits to be

successful.

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Part Two External Influences90

cause marketing, or cause-related marketing (CRM), is marketing that ties a company and its products to an issue or cause with the goal of improving sales or corporate image while providing benefits to the cause.53 Companies associate with causes to create long-term rela- tionships with their customers, building corporate and brand equity that should eventually lead to increased sales. A good example of CRM is Secret’s “Mean Stinks” anti-bullying campaign.

Examine the two ads in Illustration 3–6. The ad on the left in Illustration 3–6 is an example of social marketing; it promotes a benefit to the world community without advancing the profits or image of a commercial firm. The ad on the right in Illustration 3–6 is an example of cause-related marketing; it attempts to benefit a cause and to enhance the image and sales of a commercial firm.

The foundation of CRM is marketing to consumers’ values, and it can be very effec- tive. Cause-related marketing is often effective because it is consistent with strongly held American values.54 For example, a common theme in most CRM programs taps America’s problem-solving orientation by presenting a problem, such as breast cancer, AIDS, or pol- lution, and an action that individuals can take to help solve the problem. Thus, consumer expectations, acceptance of CRM, and response to CRM have increased dramatically over the past decade.

Research shows that many consumers will travel out of their way to find stores and brands that support the causes they care about and also pay more for those products. In addition:

�r� Seventy-one percent have purchased a cause-related brand. �r� Eighty-eight percent think companies should try to accomplish their business goals

while simultaneously working to improve society.

The Take the Walk ad

on the left promotes

a benefit to the world

community without

advancing the profits

or image of a com-

mercial firm. That

ad is an example of

social marketing. The

Secret Mean Stinks

ad on the right repre-

sents cause-related

marketing. It not only

benefits a cause but

also enhances the

image and sales of a

commercial firm.

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Chapter Three The Changing American Society: Values 91

�r� Seventy-four percent claim that a company’s commitment to a social issue is important when deciding which products and services to recommend to other people.

�r� Eighty-six percent are likely to switch brands based on CRM when price and quality are equal.55

Given consumer receptivity to CRM, it is not surprising that corporate spending on it is on the rise. One area of spending, cause-related sponsorship, has grown from $120 million in 1990 to $1.5 billion, which represents the third-largest area of corpo- rate sponsorship!56 Consumer skepticism and apathy remain a challenge. When consum- ers feel that the company is engaged in CRM due to positive values (they feel morally obligated), corporate trust is enhanced, which increases word-of-mouth and purchases. Alternatively, when consumers feel the company is engaged in CRM simply to enhance their own image or because stockholders expect it, corporate trust is reduced, which decreases positive word-of-mouth and purchases.57 CRM skepticism and apathy are demonstrated in the following descriptions and quotes of four consumer types based on their responses to CRM:58

Skeptic (doubts sincerity or effectiveness of CRM): “I think those are fake, most of them. Because what they give is so little it doesn’t amount to anything.”

Balancer (believes in CRM but generally doesn’t act accordingly): “I hate to say this, but, as far as grocery stores, I go to the one that is closest to me. It makes me feel bet- ter . . . about Food Lion that they were willing to do this (participate in CRM) . . . but, sometimes I don’t put out that extra effort, but I guess I really should.”

Attribution-oriented (concerned about motives behind CRM): “I always approach them with a skeptical eye, but I try and use good judgment and common sense based on who they are, what they’re doing and try to see the end result.”

Socially concerned (driven by desire to help): “I mean, as long as they’re doing it, the motives can be questionable as far as I’m concerned. . . . Even if there’s questionable motives, it’s that much more important to support companies who do those things. Just to reinforce that good behavior.”

An emerging consensus is that a “fit” between the company and the cause can improve results.59 For example, ConAgra (a food marketing company) launched Feeding Children Better to combat child hunger while Crest and the Boys and Girls Club of America part- nered to form Healthy Smiles 2010 to teach kids about oral hygiene. In both cases there is a business–cause fit.60

Beyond fit, a unique approach to cause-related marketing is being used with success by Toms Shoes, as discussed in Consumer Insight 3–1. Do you think their approach over- comes some of the challenges faced by cause-related marketing?

Marketing to Gay and Lesbian Consumers As Americans in general are shifting to valuing diversity, they are increasingly embrac- ing ethnic, religious, and racial diversity. Another group gaining increased public accep- tance is the gay and lesbian community (we follow business press convention and refer to gay and lesbian consumers as the gay market). Overall, 52 percent of Americans feel that gay and lesbian relations are morally acceptable, up from 40 percent in 2001. The strongest support comes from younger men (62 percent) and women (59 percent), support- ing our earlier observation that shifts on the diversity value appear to be strongest among

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92

younger generations.66 Interestingly, the value that Americans place on individual rights and protection appears to transcend personal opinions about lifestyle. For example, over 70 percent support hate-crime protection laws and same-sex couple rights such as hospital visitation, and 60 percent favor allowing gays and lesbians to serve openly in the military. These numbers are even stronger among younger consumers.67 The emergence and popu- larity of TV shows with openly gay or lesbian characters, such as Modern Family and The L Word, are additional evidence of increased public acceptance.

CONSUMER INSIGHT 3-1 Cause Marketing “Baked into the Brand” at Toms Shoes

A Target store popped up on Times Square in New York City, one of the most expensive pieces of real estate in the country. The store interior was blanketed in a sea of pink products—pink bicycles, sweaters, flip-flops, tee shirts. Outside a coffee cart served pink donuts. All proceeds during the store’s short one-month existence went to the Breast Cancer Research Foundation.61 For every home Habitat for Humanity builds for the home- less in North America, Whirlpool donates a range and a refrigerator.62 Hand in hand with the Red Cross, P&G Tide’s “Loads of Hope” provides mobile laundromats to victims of natural disasters (e.g., New Orleans after Hurricane Katrina).63

These cause-marketing campaigns establish a part- nership between a corporation and a nonprofit and often result in “doing well by doing good.” Marketers increase their bottom line amid a halo of goodwill, while nonprofits receive needed contributions and public attention, and consumers purchase goods for themselves and thus contribute to a worthy cause. Despite the benefits of a win-win-win, critics have pointed out the downside of cause marketing. Corporations may come to lose con- sumer trust if consumers perceive the corporate–cause relationship as exploitation of the charity. Rather than contribute directly to nonprofits, cause marketing may be teaching consumers to contribute only when they receive something in return and at no cost to themselves. Unlike the unfettered contributions received directly from the pub- lic, the contributions charities receive in partnership with corporations may come with strings and obligations.64

However, the success of Toms Shoes puts a new twist to cause marketing. Toms Shoes does not partner with a nonprofit or charity. Rather, Toms Shoes is a “for profit” company with the cause “one for one” baked into the brand. For each pair of Toms shoes consum- ers buy, the company donates a pair of Toms shoes to children who need shoes but cannot afford them. In spring 2013 Toms Shoes donated 13 million pairs of shoes in 59 countries. It is now expanding its efforts to eyeglasses in 15 countries. The “baked in brand” strategy of Toms Shoes has been described as a metastory—story telling through action. The consumer act of buying Toms shoes tells the story about the brand and the consumer. The story came first. The “for profit” status of the firm makes doing the right thing sustainable.65

Critical Thinking Questions 1. Should marketers, whose primary motivation is to

increase the bottom line, deserve the goodwill and burnished reputation that arise through partnerships with nonprofit organizations?

2. Cause marketing teaches consumers that they can improve the world by their consumption, to con- tribute only when they receive something in return and at no additional cost. Do you agree with that statement?

3. Do the concerns that surround cause marketing apply to the new form of cause marketing such as Toms Shoes?

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Chapter Three The Changing American Society: Values 93

State and federal actions have also increased in the direction of protecting and expand- ing the rights of gays and lesbians on a number of fronts including open service in the military and rights as couples, including legalizing gay marriage. In addition, nearly nine out of ten Fortune 500 companies protect workers based on sexual orientation.68

Before we begin, it is important to emphasize that gay consumers, like heterosexuals, vary in terms of ethnicity, geographic region, occupation, and age. These and other factors influence their behavior and, in most instances, play a much larger role in their consump- tion process than does their sexual orientation.

The gay market is substantial in both size and purchase power. The size of the gay market is estimated to be about 7 percent of the adult U.S. population, or roughly 16 million people over the age of 18. Purchasing power is estimated at between $750 and $900 billion.69 Not surprisingly, many companies have concluded that the gay market is a highly attractive seg- ment to pursue. Examples include:70

�r� American Airlines created a page on its website specifically for gay, lesbian, bisexual, and transgender (GLBT) consumers. Wyndham Hotels partnered with the airline by giving a 20 percent discount on all reservations made through the page.

�r� IBM has a “sales team dedicated to bringing GLBT decision-makers in contact with IBM.”

�r� Ikea generated considerable public outcry in 1994 for its gay-themed ad. It reentered the gay market in 2006 with a spot that “shows a black and Asian male couple with their daughter and Golden Retriever and ends with the voiceover: ‘Why shouldn’t sofas come in flavors, just like families?’ ” Unlike the reaction in 1994, no public debate was created by this ad.

Any firm that desires to capture the loyalty of the gay community must have inter- nal policies that do not discriminate against gay employees. A recent survey found that 82 percent of gay consumers are more likely to buy from companies they know are gay friendly.71 The Human Rights Campaign Foundation (www.hrc.org) helps provide such information through its corporate equality index (CEI), which measures how equitably a company treats its GLBT employees, customers, and investors.

Product Issues In many cases the lifestyles of gay consumers do not differ sufficiently from those of other consumers to require product modifications. For example, three of the top four reasons for choosing a hotel were the same for GLBT customers as for heterosex- uals. In order of importance, they were convenience, customer service, and recommenda- tions from friends or family.72 However, product modification opportunities are sometimes possible and beneficial. For example, in the realm of television, content that targets news, concerns, programs, and movies of specific interest to GLBT audiences is increasingly popular. The Logo and here! networks have been launched recently in response to this growing demand. In addition, with the increased focus on same-sex marriage, companies such as Pottery Barn and Tiffany’s are modifying their bridal registries to be gender neu- tral, and websites such as Gayweddings (www.gayweddings.com) are emerging to serve this market.

Another area in which product modifications are often necessary is financial services. As the director of segment marketing for American Express explains:

Often, gay couples are very concerned about issues like Social Security benefits and estate plan- ning, since same-sex marriages often are not recognized under the law.73

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Part Two External Influences94

Ameriprise has a GLBT web page devoted to this market and scores 100 percent on the CEI index. As their website states:

Ameriprise Financial was one of the first financial services firms to offer dual client analysis for domestic partners and single people in relationships. Dual client analysis allows financial advi- sors to help domestic partners create a shared plan for the future. Our financial advisors use a comprehensive approach to financial planning that includes tax, protection, estate, retirement and investment planning strategies.

Communication Issues There are a large number of gay-oriented print media in the United States and Canada. Given the size and spending power of the gay market, it is not surprising that spending in gay-oriented print media has more than tripled since 1997 to its current level of over $350 million. And a large and increasing number of Fortune 500 companies now advertise in gay media.74

Compared with the general population, gay consumers tend to be more tech savvy and more likely to search online for information.75 Marketers are taking this into account in developing their websites.76 For example, iTunes offers GLBT podcasts, Orbitz has a gay and lesbian page on its travel site, and, as we have seen, Ameriprise has a dedicated web page for the GLBT community. In addition, marketers such as Virgin Mobile are using targeted banner ad campaigns to promote their products through websites that target the GLBT community such as OutTraveler.com, SheWired.com, and gay.com.

Since most products don’t require alteration for the gay market, firms may decide to approach the market by placing one of their standard ads in gay-oriented media. Anheuser- Busch, Miller Brewing, Baileys Original Irish Cream, and American Express are among the firms that first approached this market with standard ads. However, a majority of ads (62 percent) in gay print media are now created specifically for gay consumers.77 The ads may portray a gay couple instead of a heterosexual couple in a standard ad. Or the entire ad may contain a gay theme, such as the Tylenol ad shown in Illustration 3–7.

It has been estimated that roughly half of the gay community rarely or never read gay- oriented publications and spend considerable time using standard media.78 As one gay man stated, “We are not only reading Out and The Advocate all the time. If you go into any gay man’s apartment you’re very likely to see Vanity Fair and People as well.”79 This is also true online, where eight of the ten top websites visited by gay consumers are general sites, such as Yahoo!, Google, Amazon, CNN, and eBay, which are not specifically devoted to gay issues.80

Using ads with gay themes in standard mass media can generate concerns regarding backlash from the portion of the market that does not accept the gay community, as well as the desire to have ads that directly appeal to the largest number of viewers.81 A recent study compared mainstream ads (heterosexual couples in the ad) with explicitly gay and lesbian ads (male or female couples) or implicit gay and lesbian ads (ads that had gay symbolic icons, such as the rainbow flag, pink triangle, and freedom rings). The study found that gays and heterosexuals equally liked the mainstream ads. In addition, although heterosexu- als disliked explicit gay and lesbian ads, their attitudes were not negatively influenced by the implicit gay and lesbian ads. Finally, both explicit and implicit gay and lesbian ads were liked more than mainstream ads by those who identified themselves as gay or lesbian.82 For marketers wanting to move into the mainstream market with appeals that are as broad as possible and still target gay consumers, this research suggests that using symbolic gay icons (which the mainstream market tends to be relatively unknowledgeable of) appears to be an effective tactic. This is important because research shows that gay consumers reward companies that advertise in gay media outlets and/or use gay themes in their advertising.

Finally, in addition to advertising in gay media, support of gay community events such as Gay Pride week is another important avenue firms use in approaching this market.

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Chapter Three The Changing American Society: Values 95

Gender-Based Marketing As we saw in the chapter’s opening vignette, gender roles in the United States are shift- ing. The shift is going both ways, with more women taking on traditionally male-oriented tasks and more men taking on traditionally female-oriented tasks. It’s hard to imagine that just a few generations ago, the prevailing stereotype of an automobile purchase involved a male making the purchase alone. Today, women influence 80 percent of all vehicles sold, make over half of all new vehicle purchases (up from 20 percent in 1984), and purchase 40 percent of all SUVs.83

Changes in gender roles for women have been dramatic, with increased participation in the workforce, increased wealth and purchase power, and increased participation in active lifestyles, to name just a few. Marketers of products and services ranging from automo- biles, to sportswear, to financial services clearly understand the importance of women as a market segment. Consider the following examples:

�r� Cadillac targets professional women with campaigns for models such as their CTS featuring Kate Walsh and the tagline “The real question is, when you turn your car on, does it return the favor.”

�r� Harley Davidson has a page on their website called Women Riders and spon- sors Garage Party events for women, who are an increasing proportion of Harley’s customer base.84

�r� Nike has an entire golf and apparel line targeted to women, along with an entire section on its website featuring these products as well as the Nike Training Club app available through iTunes.

LO6

Ads targeting the gay

community can range

from standard ads

run in gay-oriented

media to ads such

as as this Tylenol

ad with clear gay

themes.

ILLUSTRATION 3-7

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Part Two External Influences96

The terms sex and gender are used interchangeably to refer to whether a person is biologically a male or a female. Gender identity refers to the traits of femininity (expres- sive traits such as tenderness and compassion) and masculinity (instrumental traits such as aggressiveness and dominance). These traits represent the ends of a continuum, and indi- viduals have varying levels of each trait, with biological males tending to be toward the masculine end of the continuum and biological females toward the feminine end.85

Gender roles are the behaviors considered appropriate for males and females in a given society. As the previous discussion of automobile purchasing indicates, gender roles in America have undergone massive changes over the past 30 years. Much of this shift has been for behaviors previously considered appropriate primarily for men to be acceptable for women too. But also, as we saw in the opener, there is a shift for behaviors previously considered appropriate primarily for women to be acceptable for men too.

Gender roles are ascribed roles. An ascribed role is based on an attribute over which the individual has little or no control. This can be contrasted with an achievement role, which is based on performance criteria over which the individual has some degree of con- trol. Individuals can, within limits, select their occupational role (achievement role), but they cannot generally determine their gender (ascribed role).

It can be useful to distinguish traditional or modern gender orientations on the basis of preference for one or the other of two contrasting married lifestyles:

�r� Traditional. A marriage in which the husband assumes the responsibility for providing for the family and the wife runs the house and takes care of the children.

�r� Modern. A marriage in which husband and wife share responsibilities. Both work, and they share homemaking and child care responsibilities.

Americans have certainly moved toward a preference for a modern lifestyle, from only 35 percent in 1977 to 71 percent in the most recent polls.86 In addition, only 25 percent agree that women should return to their traditional roles and 87 percent agree that fathers are just as capable as mothers of caring for their children.87 However, while males and females both express strong preferences for the modern lifestyle as a general concept, most recognize that it comes with a cost. For example, 80 percent of mothers with children age five or under would prefer to stay home with their children if it were totally up to them,88 and nearly half of both men and women believe that it was easier when “women stayed at home and men went to work.”89

As the opener indicated, men’s participation in household duties is on the rise. It is important to realize, however, that the focus there was on all men, whether married or single. However, for married men, while participation in household tasks has increased, the general pattern still follows more traditional gender roles. The following Gallup Poll results show the breakout of household chores in terms of who is most likely to do them. The figures for each activity represent the percent response to the question, “Who is most likely to do each of the following in your household?”

Activity Husband (%) Wife (%)

Keep the car in good condition 69 13 Do yard work 57 12 Handle investments 35 18 Do grocery shopping 16 53 Do laundry 10 68 Clean house 9 54

Source: F. Newport, “Wives Still Do Laundry, Men Do Yard Work,” Gallup, 2008 www.gallup.com, accessed May 26, 2008.

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Chapter Three The Changing American Society: Values 97

These numbers have not changed much since the mid-1990s. And the fact that only 2 of the 11 activities are ones for which the male took majority responsibility means wives are left to do most of the work at home even though they also work outside the home. Given that 62 percent believe that “sharing household chores” is very important to a successful marriage,90 this can lead to strong resentments, as the following quote demonstrates:

“It’s a blowout fight every month,” Hope (32 and a book editor) confesses. “It’s the only thing we fight about.” Hope says getting Cohen (34 and a medical resident) to do his agreed-upon tasks requires constant reminders. “He’ll tell me he’ll wash the dishes before we go to bed, and maybe he will,” she says. “But by around 9:30, with dirty dishes still in the sink, I’m broiling.”91

With high levels of role overload and stress associated with dual-income families, many Americans are realizing that they can’t have it all, and where there is a choice, some are opting for change. Sometimes the change is toward the nontraditional, as in the increasing numbers of “stay-at-home” dads.92 Sometimes the change is toward the traditional, as in the recent increase in “stay-at-home” moms.93

As we have seen, women have a variety of role options and a range of attitudes con- cerning their gender roles. The ads in Illustration 3–8 reflect two sharply contrasting views of the female role. Next, we examine some of the marketing implications of the changing roles of women in American society.

Market Segmentation Neither the women’s nor the men’s market is as homogeneous as it once was. At least four significant female market segments exist:94

1. Traditional housewife. Generally married. Prefers to stay at home. Very home and family centered. Desires to please husband and children. Seeks satisfaction and mean- ing from household and family maintenance as well as volunteer activities. Experi- ences strong pressure to work outside the home and is well aware of forgone income opportunity. Feels supported by family and is generally content with role.

Women fulfill a mul-

titude of roles today

and have a wide

range of attitudes

about their roles in

society. These two

ads take radically

different approaches

to the portrayal of

women and women’s

attitudes.

ILLUSTRATION 3-8

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Part Two External Influences98

2. Trapped housewife. Generally married. Would prefer to work but stays at home because of young children, lack of outside opportunities, or family pressure. Seeks satisfaction and meaning outside the home. Does not enjoy most household chores. Has mixed feelings about current status and is concerned about lost opportunities.

3. Trapped working woman. Married or single. Would prefer to stay at home but works because of economic necessity or social or family pressure. Does not derive satis- faction or meaning from employment. Enjoys most household activities but is frus- trated by lack of time. Feels conflict about her role, particularly if younger children are home. Resents missed opportunities for family, volunteer, and social activities. Is proud of financial contribution to family.

4. Career working woman. Married or single. Prefers to work. Derives satisfaction and meaning from employment rather than, or in addition to, home and family. Experi- ences some conflict over her role if younger children are at home but is generally content. Views home maintenance as a necessary evil. Feels pressed for time.

Although the above descriptions are oversimplified, they indicate the diverse nature of the adult female population. Notice that women may move in and out of these categories over their lifetimes. For example, an otherwise career working woman may feel more like a trapped working woman if she finds it necessary to work while her children are young. And while the career working woman category has grown significantly over the past three decades, the other segments are still sizable, unique, and important.

The male market is likewise diverse in both its attitudes and behaviors toward gender roles, work, and household chores. One classification distinguishes between modern and traditional men, whereby modern men are more focused on such factors as (a) fashion, (b) shopping, and (c) cooking.95

Product Strategy Many products are losing their traditional gender typing. Guns, cars, motorcycles, computer games and equipment, golf equipment, financial services, and many other once masculine products are now designed specifically with women in mind. The expanding wealth, independence, and purchasing power of women, and the time pres- sure on them make them an important target market. Consider the following:

�r� Women-headed households represent roughly 28 percent of all households. The Barbara K tool line (now Barbara’s Way) targeted at women was launched in 2003 and has been highly successful. According to CEO Barbara Kavovit, “Women have made so many strides but can’t fix things in their homes.” The tools are designed to be stylish and functional, and have special features targeting women, such as cushioned handles.96

�r� Assaults against women are a major social problem. Smith & Wesson launched Lady- Smith, a line of guns designed specifically for women. They found that “if a woman is going to pull out a gun for personal protection, she doesn’t want a cute gun.” So rather than “feminize” men’s guns with colored handles, Smith & Wesson targeted a key suc- cess criterion by redesigning its guns to fit women’s hands.

�r� The high percentage of women working outside the home, particularly when coupled with children, can lead to high levels of time pressure and a resulting need for conve- nience products and services.97 A wealth of such products and services have emerged to meet this need, as shown in Illustration 3–9.

As women’s roles have expanded, the consumption of potentially harmful products has become socially acceptable for women. This, of course, raises the ethical issue of targeting groups that have not historically been heavy users of products such as alcohol or tobacco.

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Chapter Three The Changing American Society: Values 99

Marketing Communications A con- siderable amount of research suggests that males and females process and respond differently to various communications ele- ments, including sexual appeals, music, verbal style, and so forth.98 As just one example, females respond more favorably to a “help-others” type of appeal for a charity, whereas males respond best to a “self-help” appeal.99 This is caused by differing world- views that affect a range of communications responses as well as consumption behaviors.

Men and women also consume different media and use the same media differently. For example in social media, information is a more prominent goal for men (36 percent) than women (28 percent), while finding coupons and promotions is a more promi- nent goal for women (47 percent) than men (33 percent).100 Also, types of social network sites women frequent are different from those frequented by men. The top five sites for women and men based on Google Ad Plan- ner data are as follows:

Women Men

Bebo Slashdot MySpace Reddit Classmates.com Digg Xanga Last.fm Ning Delicious

Source: Statistics from “Study: Males vs. Females in Social Network Sites,” at http://royal.pingdom.com, accessed March 1, 2011.

Since women are quite diverse as a group, marketers must also consider such factors as ethnicity, age, life stage, and employment status differences when designing market- ing communications. Ads portraying women must be careful about offending any of the various segments.101 For example, an ad that implied that housework was unimportant or that women who work outside the home are somehow superior to those who do not could insult traditional housewives. Ads that show women primarily as decoration or as clearly inferior to males tend to produce negative responses across all female segments.102 Despite such negative reactions, many ads still use these tactics.103 However, some companies are hitting this issue straight on. Dove launched its “Real Beauty” campaign, which features realistic depictions of women, in response to idealized and unrealistic portrayals of women in advertising that have been shown to reduce self-esteem.

Finally, in terms of gender role portrayal, there are still relatively few ads showing men using products traditionally designed for women or performing tasks traditionally per- formed by women. And according to one study, only one in four men feels that consumer product ads are designed to speak to them.104 However, this is changing. JIF has moved away from the “Choosy mothers choose JIF,” to “Choosy moms and dads choose JIF,” along with positive depictions of father and child interactions in their ads. The Dixie Ultra ad in Illustration 3–10 also demonstrates these changing roles. Increases in such portrayals are likely over time.

Firms have

responded to

increased time pres-

sure with new prod-

ucts and positioning

strategies.

ILLUSTRATION 3-9

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Part Two External Influences100

Retail Strategy As we saw in the chapter opener, men and women shop differently even for the same products. Differences in loyalty, brand switching, coupon usage, and shopping styles within the store all need to be accounted for by retailers as more men take on the grocery shopping task.

In addition, men and women react differently to various aspects of retail and service environments. For example, when there is a service failure, men appear to focus mostly on problem resolution, whereas women also focus on the process by which the problem is resolved. Being able to have a voice in the resolution process is much more important for women than men. Such differences need to be built into employee training programs.105

The Dixie Ultra ad

is still somewhat

unusual in that it por-

trays a male involved

in a traditional female

task. Although gen-

der roles are chang-

ing, it is much more

common to portray

women performing

traditional male tasks

than the reverse.

ILLUSTRATION 3-10

LO1: Understand core American cultural values Cultural values are widely held beliefs that affirm what is desirable. Three categories of values that affect behaviors are those related to the self, others, and the environment. Sometimes numerous values are at work in affecting a given trend, as is the case with organic

consumption, which is affected by values relating to family and nature.

LO2: Summarize changes in self, environment, and other-oriented values In terms of self-oriented values, we place some- what less emphasis on hard work as an end in itself,

SUMMARY

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Chapter Three The Changing American Society: Values 101

although we continue to work some of the longest hours among industrialized nations. We are trending toward greater emphasis on sensual gratification. And, while the recent recession may have tempered spend- ing, there appears to be a move back toward greater emphasis on immediate gratification. Finally, while religion is important, America remains a relatively secular culture.

Values that affect our relationship to our environ- ment have become somewhat more performance ori- ented and slightly less oriented toward change. There is a strong and growing value placed on protecting the natural environment, and we increasingly value risk taking.

In terms of those values that influence an indi- vidual’s relationship with others, Americans remain individualistic. We have substantially less of a mascu- line orientation now than in the past. We also place a greater value on older persons and diversity.

LO3: Discuss values as they relate to green marketing Americans have shifted their view from one of over- coming nature to more of admiring nature. This trans- lates into greater concerns regarding the protection of our environment and the emergence of green market- ing. Green marketing involves (1) developing products whose production, use, or disposition is less harmful to the environment than the traditional versions of the product; (2) developing products that have a positive impact on the environment; or (3) tying the purchase of a product to an environmental organization or event.

LO4: Discuss values as they relate to cause- related marketing Americans are high on the value of problem solving. This makes us prone to want to put efforts toward

causes that are important to us in an attempt to fix or improve the situation. Cause-related marketing is marketing that ties a company and its products to an issue or cause with the goal of improving sales and corporate image while providing benefits to the cause. Companies associate with causes to create long-term relationships with their customers, building corpo- rate and brand equity that should eventually lead to increased sales.

LO5: Discuss values as they relate to market- ing to gay and lesbian consumers The value placed on diversity continues to increase, including openness to alternative lifestyles and family structures including same-sex couples. The gay mar- ket is estimated at roughly 16 million people over the age of 18 with purchasing power between $750 and $900 billion. Many companies view the gay market as highly attractive and have committed consider- able resources to targeting this market with specific products and promotional efforts. Supportive internal policies toward gay employees as well as support for important gay causes are among the critical factors in approaching this market.

LO6: Discuss values as they relate to gender- based marketing The ongoing shift from a traditionally masculine view toward a balanced masculine-feminine view has resulted in changing gender roles. Gender roles have undergone radical changes in the past 30 years. A fundamental shift has been for the female role to become more like the traditional male role. Male roles are also evolving, with men beginning to take on what have traditionally been considered female tasks. Virtually all aspects of our society, including marketing activities, have been affected by these shifts.

Achievement role 96 Ascribed role 96 Cause-related marketing (CRM) 90 Cultural values 78 Enviropreneurial marketing 85

Gender 96 Gender identity 96 Gender role 96 Green marketing 88 Greenwashing 89

Modern gender orientation 96 Traditional gender orientation 96 Voluntary simplicity 81

KEY TERMS

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Part Two External Influences102

18. Describe additional values you feel could, or should, be added to Figure 3–1. Describe the marketing implications of each.

19. Pick the three values you feel the authors of this book were most inaccurate about in the chapter in describing the current American values. Justify your answers.

20. Pick the three values you feel the authors were most inaccurate about in describing the emerging American values. Justify your answers.

21. Respond to the questions in Consumer Insight 3–1. 22. Which values are most relevant to the purchase or

use of the following? Are they currently favorable or unfavorable for ownership/use? Are they shifting at all? If so, is the shift in a favorable or unfavorable direction?

a. Dietary supplements b. The Salvation Army c. Financial investments (stocks, mutual

funds, etc.) d. Home theater systems e. Tanning salon f. Expensive Jewelry

23. Do you believe Americans’ concern for the environment is a stronger value than their materialism?

24. What ethical issues do you see relating to green marketing?

25. Explain greenwashing and its possible role in the FTC’s revision of the Green Guides.

26. Cause-related marketing is done to enhance a firm’s sales or image. Some critics consider such marketing to be unethical. What is your position?

27. In which of the four categories of responders to cause-related marketing are you? Why?

28. Suppose AT&T showed a gay couple using its long-distance service or P&G showed a gay couple using one of its laundry products in ads on network television. Is a backlash by those who do not accept the gay community a likely response? How are such consumers likely to respond? Why?

29. Do you think housewives may be defensive or sensitive about not having employment outside of

DISCUSSION QUESTIONS

1. What is a cultural value? Do all members of a culture share cultural values?

2. Describe the current American culture in terms of each of the 18 values discussed in this chapter.

3. How is voluntary simplicity related to the materialism value? What are the marketing implications of voluntary simplicity? Do these implications vary by product class?

4. What is green marketing? 5. What values underlie green marketing? 6. How is enviropreneurial marketing related to new

product success and market share? Link this to the value of green marketing in creating a competitive advantage.

7. Describe the basic conflict between the environmental movement and many businesses.

8. What is cause-related marketing? Why is it often successful?

9. What are the major decisions a firm faces with respect to the gay market?

10. What is meant by gender? 11. What is gender identity? 12. What is a gender role? 13. How does an ascribed role differ from an

achievement role? 14. What is happening to male and female gender

roles in America? 15. What are the differences between a traditional and

a modern gender role orientation? 16. Describe a segmentation system for the female

market based on employment status and gender role orientation.

17. What are some of the major marketing implications of the changing role of women?

REVIEW QUESTIONS

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Chapter Three The Changing American Society: Values 103

the home? If so, what implications will this have for marketing practice?

30. Develop an advertisement for the following for each of the four female market segments described in the chapter.

a. Bicycles b. iPad

c. Exercise equipment d. Breakfast cereal e. Vacation cruises f. Cosmetics

31. Find and copy or describe an advertisement for an item that reflects Americans’ position on the following values:

a. Active/Passive b. Material/Nonmaterial c. Hard work/Leisure d. Postponed/Immediate gratification e. Sensual gratification/Abstinence f. Religious/Secular g. Cleanliness h. Performance/Status i. Tradition/Change j. Risk taking/Security k. Problem solving/Fatalistic l. Admire/Overcome nature m. Individual/Collective n. Limited/Extended family o. Diversity/Uniformity p. Competition/Cooperation q. Youth/Age r. Masculine/Feminine 32. Interview a person who consumes one or more

organic food items. What values influence this consumption pattern?

33. Interview a salesperson who has been selling the following for at least 10 years. See if this individual has noticed a change in the purchasing roles of women over time.

a. Electric guitars b. Cell phones c. Computers d. Homes e. Financial services 34. Interview a career-oriented working wife and a

traditional housewife of a similar age. Report on differences in attitudes toward shopping, products, and so forth.

35. Form a team of five. Have each team member interview five married adult males. Based on these interviews, develop a typology that classifies them by their attitude toward and participation in household or child-rearing activities.

36. Pick two different environmental segments from Table 3–1. Find one advertisement you think is particularly appropriate or effective for each. Copy or describe each ad and justify its selection.

37. Interview a salesperson for each of the following. Ascertain the interest shown in the item by males and females. Determine if males and females are concerned with different characteristics of the item and if they have different purchase motivations.

a. Art b. Automobiles c. Golf clubs d. Personal care items e. Clothing f. Gardening tools 38. Interview 10 male and 10 female students. Ask

each to describe the typical owner or consumer of the following. If they do not specify, ask for the gender of the typical owner. Then probe to find out why they think the typical owner is of the gender they indicated. Also determine the perceived marital and occupational status of the typical owner and the reasons for these beliefs.

a. Pet snake b. Pasta maker c. Large life insurance policy d. Power tools e. Habitat for Humanity contributor f. Personal fitness trainer

APPLICATION ACTIVITIES

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Part Two External Influences104

1. Opener based on M. De Mooij and G. Hofstede, “The Hofstede Model,” International Journal of Advertising, 29 (2010), pp. 85–110; B. Fuller, “Understanding the Male Grocery Shopper,” Promo, September 15, 2010; and J. Neff, “Time to Rethink Your Message,” Advertising Age, January 17, 2011.

2. E. Gurel-Atay et al., “Changes in Social Values in the United States,” Journal of Advertising Research, March 2010, pp. 57–67.

3. Numbers are for 2010 based on a Gallup poll reported at www. gallup.com/poll/1690/religion.aspx, accessed February 20, 2011.

4. W. H. Henley et al., “The Effects of Symbol Product Relevance and Religiosity on Consumer Perceptions of Religious Symbols in Advertising,” Journal of Current Issues and Research in Advertising, Spring 2009, pp. 89–103.

5. Public Agenda, “New Survey Shows Religious Americans Less Likely to Support Compromise,” press release, January 23, 2005, www.publicagenda.org.

6. R. Gardyn, “Breaking the Rules of Engagement,” American Demographics, July–August 2002, p. 35.

7. B. A. Robinson, “How Many People Go Regularly to Weekly Religious Services?,” Ontario Consultants on Religious Tolerance, November 26, 2001, www.religioustolerance.org.

8. Henley et al., “The Effects of Symbol Product Relevance and Religiosity on Consumer Perceptions of Religious Symbols in Advertising.”

9. J. Flint, “Angry NFL Slams ABC’s ‘Desperate Housewives’ Promo,” The Wall Street Journal Online, November 17, 2004, www.wsj.com.

10. L. Petrecca, “Axe Ads Turn up the Promise of Sex Appeal,” USAToday, April 18, 2007, at www.usatoday.com, accessed February 20, 2011; H-J. Paek et al., “A Cross-Cultural and Cross-Media Comparison of Female Nudity in Advertising,” Journal of Promotion Management, 13, no. 1/2 (2007), pp. 145–67; and J. Sengupta and D. W. Dahl, “Gender-Related Reactions to Gratuitous Sex Appeals in Advertising,” Journal of Consumer Psychology, 18 (2008), pp. 62–78.

11. Gurel-Atay et al., “Changes in Social Values in the United States.”

12. S. Thompson, “Minor Indulgence Keeps Cookies from Tanking,” Advertising Age, June 28, 2004, p. S-18.

13. S. Theil, “The Urge to Splurge Is Creeping Back,” Newsweek, November 29, 2010, www.newsweek.com/urge-splurge-creeping- back-70101.

14. L. J. Shrum, J. E. Burroughs, and A. Rindfleisch, “Television’s Cultivation of Material Values,” Journal of Consumer Research, December 2005, pp. 473–79.

15. Theil, “The Urge to Splurge Is Creeping Back.”

16. S. Zavestoski, “The Social-Psychological Bases of Anticonsumption Attitudes,” Psychology & Marketing, February 2002, p. 155.

17. A. Etzioni, “Voluntary Simplicity,” Journal of Economic Psychology 19 (1998), pp. 619–43; Zavestoski, “The Social- Psychological Bases of Anticonsumption Attitudes”; M. Craig-Lees and C. Hill, “Understanding Voluntary Simplifiers,” Psychology &

Marketing, February 2002, pp. 197–210; and S. McDonald et al., “Toward Sustainable Consumption,” Psychology & Marketing, June 2006, pp. 515–34.

18. These statistics drawn from Statistical Abstract of the United States (Washington, DC: U.S. Census Bureau, 2011), Labor Force, Employment, and Earnings, tables 644, 602, and 597 respectively.

19. A. C. Brooks, “I Love My Work,” The American, September/ October 2007, accessed February 21, 2011.

20. “Fewer Mothers Prefer Full-Time Work,” PewResearchCenter Publications, July 12, 2007.

21. “New Survey from Xobni on Email Overload Shows There Is No Such Thing as a Day Off for Americans and Brits,” PR Newswire, September 2, 2010.

22. See P. Paul, “Targeting Boomers,” American Demographics, March 2003, pp. 24–26; and J. Consoli, “Where Have All the Young Men Gone?,” Mediaweek, October 20, 2003, pp. 4–5.

23. M. Slatalla, “Overscheduled?,” Time, July 24, 2000, p. 79.

24. T. Cahill, “Exotic Places Made Me Do It,” Outside, March 2002, p. 60.

25. See J. P. Robinson and M. Milke, “Dances with Dust Bunnies,” American Demographics, January 1997, pp. 37–40; and A. Miller, “The Millennial Mind-Set,” American Demographics, January 1999, pp. 62–63.

26. P. Tyre, “Clean Freaks,” Newsweek, June 7, 2004, p. 42.

27. “Cash and Carry,” American Demographics, May 2000, p. 45.

28. “Creativity at Work,” American Demographics, December 2002–January 2003, pp. 22–23; D. Kiley, “It’s Back .  .  . Fiat Launches 500, Slights Mass for Creative Class,” Advertising Age, January 31, 2011, pp. 1 and 8.

29. Gurel-Atay et al., “Changes in Social Values in the United States.”

30. “Public Worried but Not Panicked about Economy,” PewResearchCenter Publications, October 15, 2008.

31. R. E. Dunlap, “The State of Environmentalism in the U.S.,” Gallup, 2007, www.gallup.com, accessed May 25, 2008; J. M. Jones, “In the U.S., 28% Report Major Changes to Live ‘Green,’” Gallup, 2008, www.gallup.com, accessed May 25, 2008; Public Agenda Online, www.publicagenda.org, accessed May 25, 2008; and J. Loechner, “Consumers Want Proof It’s Green,” MediaPost, April 9, 2009, www.mediapost.com, accessed February 19, 2011.

32. TNS News Center, “TNS Global Study ‘The Green Life’ Reveals Spectrum of Environmental Attitudes across United States and the World,” press release, April 30, 2008, accessed at www.tnsglobal.com on February 20, 2011; J. Gartner, “Consumer Shades of Green Identified,” MatterNetwork. com, June 9, 2008, accessed February 21, 2011; “Do ‘Green’ Conscious Consumers Practice What They Preach?,” BusinessWire, September 29, 2008; and “IRI/TNS Shades of Green Segmentation™,” Data Sheet, accessed from www. infores.com on February 21, 2011.

REFERENCES

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Chapter Three The Changing American Society: Values 105

33. W. E. Baker and J. M. Sinkula, “Environmental Marketing Strategy and Firm Performance,” Journal of the Academy of Marketing Science, 33, no. 4 (2005), pp. 461–75; and F. Ross, T. Martinez, and M. Molina, “How Green Should You Be?,” Journal of Advertising Research, December 2008, pp. 547–63.

34. A. C. Cuneo, “What’s in Store,” Advertising Age, February 25, 2002, p. 1.

35. M. J. Dutta-Bergman and W. D. Wells, “The Values and Lifestyles of Idiocentrics and Allocentrics in an Individualistic Culture,” Journal of Consumer Psychology, 12, no. 3 (2002), pp. 231–42.

36. B. S. C. Liu, O. Furrer, and D. Sudharshan, “The Relationship between Culture and Behavioral Intentions toward Services,” Journal of Service Research, November 2001, pp. 118–29.

37. J. Halliday, “Tuners Fit In with Customizer Fare,” Advertising Age, May 31, 2004, p. S-8.

38. S. A. Grier, A. M. Brumbaugh, and C. G. Thornton, “Crossover Dreams,” Journal of Marketing, April 2006, pp. 35–51.

39. Ibid.

40. “Millennials’ Judgments about Recent Trends Not So Different,” PewResearchCenter Publications, January 7, 2010.

41. R. Suro, “Movement at Warp Speed,” American Demographics, August 2000, pp. 61–64.

42. See, e.g., C. A. Lin, “Cultural Values Reflected in Chinese and American Television Advertising,” Journal of Advertising, Winter 2001, pp. 83–94.

43. C. R. Wiles, J. A. Wiles, and A. Tjernlund, “The Ideology of Advertising,” Journal of Advertising Research, May–June 1996, pp. 57–66. See also P. Simcock and L. Sudbury, “The Invisible Majority?,” International Journal of Advertising, 25, no. 1 (2006), pp. 87–106.

44. F. Newport, “Americans Continue to Express Slight Preference for Boys,” Gallup, July 5, 2007, www.gallup.com, accessed May 26, 2008.

45. Women’s Sports and Physical Activity Facts and Statistics (EastMeadow: Women’s Sports Foundation, May 17, 2008).

46. D. W. Moore, “Americans More Accepting of Female Bosses Than Ever,” Gallup, May 10, 2002, www.gallup.com, accessed May 26, 2008.

47. J. Ottman, “Innovative Marketers Give New Products the Green Light,” Marketing News, March 1998, p. 10; and “Investors, Big Businesses See Green in Being Green,” CNN.com, August 20, 2007, www.cnn.com, accessed December 1, 2008.

48. M. Gunther, “The Green Machine,” Fortune, August 7, 2006, pp. 42–57; B. Steinberg, “Buy a Spot, Save the Planet,” Advertising Age, January 11, 2011, pp. 1 and 18; and information available through corporate websites.

49. J. Neff, “Has Green Stopped Giving?,” Advertising Age, November 8, 2010, pp. 1 and 19; and J. Loechner, “Consumers Want Proof It’s Green,” MediaPost, April 9, 2009.

50. M. Glover, “Why Honda Accord Hybrid Ran Out of Gas,” Knight Ridder Tribune Business News, June 13, 2007, p. 1.

51. J. Neff, “FTC Goes After Broad Environmental Clams in Long- Awaited Guideline Revision,” Advertising Age, October 6, 2010; and “Green Means Go on the Enforcement Highway,” Consumer

Advertising Law Blog, at www.consumeradvertisinglawblog. com, accessed February 19, 2011.

52. “Green Guides: Summary of Proposal,” at www.ftc.gov, accessed February 18, 2011.

53. See, e.g., P. S. Bronn and A. B. Vrioni, “Corporate Social Responsibility and Cause-Related Marketing,” International Journal of Advertising, 2 (2001), pp. 207–21.

54. M. J. Barone, A. D. Miyazaki, and K. A. Taylor, “The Influence of Cause-Related Marketing on Consumer Choice,” Journal of the Academy of Marketing Science, Spring 2000, pp. 248–62; and S. Sen and C. B. Bhattacharya, “Does Doing Good Always Lead to Doing Better?,” Journal of Marketing Research, May 2001, pp. 225–43.

55. Cone Incorporated, “Multi-Year Study Finds 21% Increase in Americans Who Say Corporate Support for Social Issues is Important in Building Trust,” press release, December 8, 2004, www.coneinc.com; and “The Do Well Do Good Public Opinion Survey on Cause-Marketing,” Summary Report accessed at www.dowelldogood.net on February 24, 2011.

56. “The Growth of Cause Marketing,” Cause Marketing Forum, www.causemarketingforum.com, accessed May 26, 2008.

57. P. A. Vlachos et al., “Corporate Social Responsibility,” Journal of the Academy of Marketing Science, 37 (2009), pp. 170–80.

58. D. J. Webb and L. A. Mohr, “A Typology of Consumer Responses to Cause-Related Marketing,” Journal of Public Policy & Marketing, Fall 1998, pp. 226–38.

59. J. W. Pracejus and G. D. Olsen, “The Role of Brand/Cause Fit in the Effectiveness of Cause-Related Marketing Campaigns,” Journal of Business Research, 57 (2004), pp. 635–40; N. J. Rifon et al., “Congruence Effects in Sponsorship,” Journal of Advertising, Spring 2004, pp. 29–42; and X. Nan and K. Heo, “Consumer Responses to Corporate Social Responsibility (CSR) Initiatives,” Journal of Advertising, Summer 2007, pp. 63–74.

60. Additional information about these programs can be found on each company’s website. See also the Cause Marketing Forum at www.causemarketingforum.com.

61. C. Hays, “Stores That Pop UP and Go Away, on Purpose,” The New York Times, December 7, 2004, www.nytimes. com/2004/12/07/business/businessspecial/07HAYS.html?_r=0, accessed August 25, 2014. See also S. Hallock, “Taking Aim at Breast Cancer,” Time Magazine, October 4, 2004, http:// content.time.com/time/magazine/article/0,9171,995259,00. html#ixzz2nffbml4b, accessed August 25, 2014.

62. Habitat for Humanity, “Whirlpool Brand and Habitat for Humanity Announce House Build Locations for 2013,” press release, February 27, 2013, www.habitat.org/newsroom/2013archive/02_27_2013_ Whirlpool_Habitat.aspx, accessed August 25, 2014.

63. P&G, “Bringing Loads of Hope to Colorado,” press release, September 20, 2013, http://news.pg.com/blog/sustainability/ bringing-loads-hope-colorado, accessed August 25, 2014.

64. S. Rozensher, “The Growth of Cause Marketing: Past, Current, and Future Trends,” Journal of Business & Economics Research (online), 11, no. 4 (2013), p. 181. For the possible downside effects, see A. Eikenberry, “The Hidden Costs of Cause Marketing,” Stanford Social Innovation Review, 7, no. 3 (2009), pp. 51–56.

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Part Two External Influences106

84. C. Krauss, “Harley Woos Female Bikers,” The New York Times, July 25, 2007.

85. E. Fischer and S. J. Arnold, “Sex, Gender Identity, Gender Role Attitudes, and Consumer Behavior,” Psychology & Marketing, March 1994, pp. 163–82; see also K. M. Palan, C. S. Areni, and P. Kiecker, “Gender Role Incongruity and Memorable Gift Exchange Experiences,” in Advances in Consumer Research, ed. M. Gilly and J. Meyers-Levy (Provo, UT: Association for Consumer Research, 2001), pp. 51–57.

86. J. S. Grigsby, “Women Change Places,” American Demographics, November 1992, p. 48; and “Gender Equality Universally Embraced, but Inequalities Acknowledged,” Pew Global Attitudes Project, July 1, 2010, at www.pewglobal.org, accessed March 1, 2011.

87. “Child Care: Most People Say Fathers Can Be Just as Caring as Mothers and That Women Should Not Return to Their Traditional Roles,” Public Agenda Online, www.publicagenda. org, accessed April 24, 2005.

88. “Child Care: Most Women Say That Mothers Who Work Outside the Home Are under More Stress Than Mothers Who Stay Home and Most Mothers Say They Would Prefer to Stay at Home,” Public Agenda Online, www.publicagenda.org, accessed April 24, 2005.

89. “The Reality of the Working Woman,” Ad Age Insights White Paper, June 7, 2010, p. 6.

90. “As Marriage and Parenthood Drift Apart Public Is Concerned About Social Impact, PewResearchCenter Publications, July 1, 2007.

91. P. Paul, “Whose Job Is This Anyway?,” Time, October 4, 2004, p. 83.

92. A. Taylor, “Many Fathers Begin to Stay at Home with Children,” Knight Ridder Tribune Business News, June 20, 2004, p. 1.

93. A. Rock, “From Two Incomes to One,” Money, January 2005, p. 34.

94. These segments are similar to the four categories popularized by Bartos. See C. M. Schaninger, M. C. Nelson, and W. D. Danko, “An Empirical Evaluation of the Bartos Model,” Journal of Advertising Research, May 1993, pp. 49–63; and R. Bartos, “Bartos Responds to ‘The Bartos Model,’” Journal of Advertising Research, January 1994, pp. 54–56.

95. “The U.S. Men’s Market,” Packaged Facts, November 2007.

96. A. Tsao, “Retooling Home Improvement,” BusinessWeek Online, February 15, 2005, www.businessweek.com.

97. See, e.g., M. Posig and J. Kickul, “Work-Role Expectations and Work Family Conflict,” Women in Management Review 19, no. 7/8 (2004), pp. 373–86; J. Warner, “Mommy Madness,” Newsweek, February 21, 2005, p. 42; and “The Female Midlife Crisis,” The Wall Street Journal, April 7, 2005, p. D1.

98. See, e.g., L. D. Wolin, “Gender Issues in Advertising,” Journal of Advertising Research, March 2003, pp. 111–29; and S. Putrevu, “Communicating with the Sexes,” Journal of Advertising, Fall 2004, pp. 51–62.

99. F. F. Brunel and M. R. Nelson, “Explaining Gender Responses to ‘Help-Self’ and ‘Help-Others’ Charity Ad Appeals,” Journal of Advertising, Fall 2000, pp. 15–28.

65. J. Chu, “Toms Sets Out to Sell a Lifestyle, Not Just Shoes,” FastCompany.com, June 17, 2013, www.fastcompany .com/3012568/blake-mycoskie-toms, accessed August 25, 2014; and T. Montague, “The Rise of Storydoing,” FastCompany.com, August 5, 2013, www.fastcompany.com/3015209/leadership- now/the-rise-of-storydoing-inside-the-staggering-success-of- toms-shoes, accessed August 25, 2014.

66. L. Saad, “Americans’ Acceptance of Gay Relations Crosses 50% Threshold,” Gallup Annual Values and Beliefs Survey, at www.gallup.com, accessed February 24, 2011.

67. “Gay Rights: Seven in 10 Americans Say They Would Favor Hate Crime Laws to Protect Gays and Lesbians,” Public Agenda Online, www.publicagenda.org, accessed April 18, 2005; and “Most Continue to Favor Gays Serving Openly in Military,” PewResearchCenter Publications, November 29, 2010, at www. pewresearch.org, accessed February 20, 2011.

68. “The Gay and Lesbian Market in the U.S.,” Packaged Facts, July 2010.

69. Ibid.

70. Ibid., pp. 181–82; and M. Gunther, “Wal-Mart Becomes Gay-Friendly,” CNNMoney.com, November 30, 2006, www. cnnmoney.com, accessed May 27, 2008.

71. D. L. Vence, “Pride Power,” Marketing News, September 1, 2004, pp. 1, 13.

72. “The Gay and Lesbian Market in the U.S.,” Packaged Facts, February 2007.

73. L. Koss-Feder, “Out and About,” Marketing News, May 25, 1998, pp. 1, 20.

74. 2009 Gay Press Report (Mountainside, NJ: 11th Annual Report by Prime Access Inc. and Rivendell Media Company Inc., 2004), available at www.gaymarket.com/agency_reports.html. See also M. Gunther, “Courting the Gay Consumer,” CNNMoney.com, December 7, 2006.

75. “The Gay and Lesbian Market in the U.S.” (2010).

76. R. Greenspan, “Advertisers May Find Gay Dollars Online,” July 30, 2003, www.clickz.com.

77. 2009 Gay Press Report.

78. “The Gay and Lesbian Market in the U.S.” (2007).

79. R. Gardyn, “A Market Kept in the Closet,” American Demographics, November 2001, pp. 37–42; see also J. J. Burnett, “Gays,” Journal of Advertising Research, January 2000, pp. 75–83.

80. R. Greenspan, “Gays Access News, Influenced by Ads,” May 17, 2004, www.clickz.com.

81. J. L. Aaker, A. M. Brumbaugh, and S. A. Grier, “Nontarget Market and Viewer Distinctiveness,” Journal of Consumer Psychology, 3 (2000), pp. 127–40; and G. Oakenfull and T. Greenlee, “The Three Rules of Crossing Over from Gay Media to Mainstream Media Advertising,” Journal of Business Research, 57 (2004), pp. 1276–85.

82. G. K. Oakenfull and T. B. Greenlee, “Queer Eye for a Gay Guy,” Psychology & Marketing, May 2005, pp. 421–39. See also G. K. Oakenfull, M. S. McCarthy, and T. G. Greenlee, “Targeting a Minority without Alienating the Majority,” Journal of Advertising Research, June 2008, pp. 191–98.

83. For these and other statistics, go to the About 4-Wheel Drive/ Offroading website at http://4wheeldrive.about.com.

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Chapter Three The Changing American Society: Values 107

100. R. H. Levey, “Survey Shows Gender Differences in Retail Social Media Use,” Chief Marketer, January 4, 2011.

101. See R. Widgery, M. G. Angur, and R. Nataraajan, “The Impact of Employment Status on Married Women’s Perceptions of Advertising Message Appeals,” Journal of Advertising Research, January 1997, pp. 54–62; and S. Feiereisen, A. J. Broderick, and S. P. Douglas, “The Effect and Moderation of Gender Identity Congruity,” Psychology and Marketing 26, no. 9 (2009), pp. 813–43.

102. M. S. LaTour, T. L. Henthorne, and A. J. Williams, “Is Industrial Advertising Still Sexist?,” Industrial Marketing Management, 1998, pp. 247–55; and M. Y. Jones, A. J. S. Stanaland, and

B. D. Gelb, “Beefcake and Cheesecake,” Journal of Advertising, Summer 1998, pp. 33–51.

103. For a cross-cultural meta-analysis of this topic, see M. Eisend, “A Meta-Analysis of Gender Roles in Advertising,” Journal of the Academy of Marketing Science 38 (2010), pp. 418–40.

104. Neff, “Time to Rethink Your Message.”

105. J. R. McColl-Kennedy, C. S. Daus, and B. A. Sparks, “The Role of Gender in Reactions to Service Failure and Recovery,” Journal of Service Research, August 2003, pp. 66–82; see also A. S. Mattila, A. A. Grandey, and G. M. Fisk, “The Interplay of Gender and Affective Tone in Service Encounter Satisfaction,” Journal of Service Research, November 2003, pp. 136–43.

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108

4 The Changing American Society: Demographics and Social Stratification chapter

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109

Understand the critical role that demograph- ics play in influencing consumer behavior.

Define the concept of generations and discuss the generations that exist in America.

Explain the concept of social stratification and the role that socioeconomic factors play.

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Identify and discuss the major social classes in America.

Understand how social class is measured.

Discuss the role of social class in developing marketing strategies.

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

Technology is hot. And marketers want to know who the heavy users are and what traits characterize them so they can better understand this market and meet their needs. Scarborough Research recently conducted a national survey of adults 18 and older to find what they call the Digital Savvy consumer.1 Digital Savvy consumers are leading-edge digital users who are early adopters and dif- fusers of information related to technology in terms of (1) technology ownership, (2) Inter- net usage, and (3) cell phone feature usage. Scarborough identified 18 different behaviors relating to these three dimensions that dif- ferentiated the Digital Savvy from the general population. Digital Savvy consumers are those who meet 8 or more of the 18 total technology behaviors. They represent 6 percent of the U.S. population, or roughly 14 million adults! Having identified this group, Scarborough went about characterizing it in terms of tech behaviors, demographics, lifestyle, and media usage. Some of the key results include

�r� Technology Behaviors: The Digital Savvy outstrip the general population in every category of technology, including MP3 and DVR ownership, online banking, online streaming video, text messaging, and e-mail use via cell phone.

�r� Demographics: The Digital Savvy have a very distinct demographic profile. They trended younger, white collar, male, higher educa- tion, higher income. And while it is com- monly believed that technology is mostly a youth market, Digital Savvy consumers are found across all age categories, and the youngest age category is not even the most Digital Savvy. The table below shows the age distribution of Digital Savvy consumers compared with the general population.

Age General Population

(%) Digital Savvy

(%)

18–24 13 22 25–34 18 31 35–44 19 24 45–54 19 16 55–64 14 7 651 17 1

Source: Adapted from “Understanding the Digital Savvy Consumer,” Scarborough Research, 2008, www.scarborough.com.

�r� Lifestyle: The Digital Savvy’s lifestyles are characterized by luxury purchases (upscale restaurants and luxury cars) and travel to exotic destinations, such as East Asia, the Middle East, and Hawaii. They are heavy online spenders who are also active and athletic (yoga, golf, bowling, adult education) and are sports fans.

�r� Media: The Digital Savvy are heavy users of digital media. In terms of traditional

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Part Two External Influences110

media, they tend to be slightly higher in radio, about average in newspapers, and somewhat lower in TV except for high-end TV such as pay- per-view and premium channels. They watch

news, sports, and family programs (many are married with kids). They also tend to watch ethnically oriented programming because this group trends higher Asian and Hispanic.

Marketers must segment and understand their markets. Demographics are an important aspect in this process, as the opening example suggests. In this chapter, we will discuss the closely related concepts of demographics and social status. As we will see, several demographic variables—income, education, and occupation—serve as dimensions of social status, and they combine with others to determine social class. We will first take a broad look at the demo- graphics of the American society, with particular attention to age and its related concept, gener- ations. Then we will consider social status and the role that demographics play in social status.

DEMOGRAPHICS Demographics describe a population in terms of its size, distribution, and structure (see also Chapter 2). Demographics influence consumption behaviors both directly and by affecting other attributes of individuals, such as their personal values and decision styles.2 Consider the demographics of the devoted high-end coffee shop crowd:

Today’s most devoted coffee shop patrons are 18- to 34-year-olds and those with annual incomes over $75,000. Forty-two percent of the 18- to 34-year-olds and 46 percent of those who earn more than $75,000 say that when they drink coffee away from home, they head straight for Starbucks- like shops, compared with just 32 percent of all away-from-home coffee drinkers. The younger folks are attracted to the coffee-bar atmosphere, music selections, and what tends to be a younger customer base, while the wealthy simply want the best.3

Not surprisingly, marketers frequently segment and describe their markets on the basis of demographics and use that information to select appropriate media and develop effec- tive promotional themes. As the opening example suggests, demographics are often related to values, lifestyles, and media patterns in important ways.

Population Size and Distribution The population of the United States is approximately 320 million and is expected to sur- pass 340 million by 2020. The population has grown steadily since 1960 despite birthrates that were on a strong decline through the mid-1970s and birthrates that have held relatively steady since. This steady overall growth can be attributed to longer life expectancies, the large baby boom generation moving through the child-bearing years, and significant immi- gration. Population growth is expected to remain relatively steady over the next several decades, but the increasing number of deaths due to the aging of the population is expected to result in reduced population growth of about 20 percent over the next five decades. That is, the overall U.S. population will continue to grow, just at a slower rate over time.4

Population growth has not been even throughout the United States, nor is it expected to be so in the future. For example, from 2010 to 2020, states like Arizona, Nevada, Texas, and Florida are predicted to grow by at least 15 percent. Growth in these states is being fueled in part by the retirement and migration of older consumers and in part by immigra- tion. In contrast, states like New York, Ohio, Iowa, and North Dakota are expected to grow by less than 2 percent.5 As we discuss in the next chapter, regions of the country serve as important subcultures whose members have unique tastes and preferences. Several exam- ples of these differences are shown in Figure 4–1.

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Chapter Four The Changing American Society: Demographics and Social Stratification 111

Source: Data from “The Lifestyle Analyst, 2008 Edition,” published by SRDS with data supplied by Equifax Marketing Services. Used by permission.

0 50 100 150 200 250 Index*

*An Index of 100 represents the average for the entire United States

Boston San FranciscoDallas/F. Worth

Wine consumption

Subscribe to broadband cable

Own a wireless e-mail device

Own a dog

Hunting/shooting

Horseback riding

Foreign travel

Boating/sailing

Bible/devotional reading

Attend cultural events 148

60

90

181

83

44

71

129

95

139

102

126

81

106

113

91

115

129

97

98

119

46

124

129

65

50

70

112

114

121

4-1A Tale of Three Cities FIGURE

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Part Two External Influences112

Occupation Occupation is probably the most widely applied single cue we use to initially evaluate and define individuals we meet. This should be obvious when you stop to think of the most common bit of information we seek from a new acquaintance: “What do you do?” Almost invariably we want to know someone’s occupation to make inferences about his or her probable lifestyle. Occupation is strongly associated with education (which to some extent determines occupation) and income (which to some extent is determined by occupation).

One’s occupation provides status and income. In addition, the type of work one does and the types of individuals one works with over time also directly influence one’s values, lifestyle, and all aspects of the consumption process. Differences in consumption between occupational classes have been found for products such as beer, detergents, dog food, shampoo, and paper towels. Media preferences, hobbies, and shopping patterns are also influenced by occupational class (see Table 4–1).

Education Approximately 87 percent of Americans have a high school degree, and 30 percent have completed college. Education is increasingly critical for a “family wage” job. Traditional high-paying manufacturing jobs that required relatively little education are rapidly disap- pearing. High-paying jobs in the manufacturing and service sectors today require technical

Wholesale and Retail Trade

Professional, Scientific, and Technical

Mining and Construction

Products Domestic beer 115 122 142 Cigarettes 113 69 140 Diet colas 96 127 66 Satellite radio system 87 143 139

Activities Sailing 116 132 195 Hunting 97 60 265 Football 112 115 172 Movies (last 6 months) 109 121 93

Shopping Target 101 123 85 Walmart 99 82 102 Costco 98 159 78 Academy Sports 92 89 156 Lowe’s 97 118 147

Media Comedy Central 132 184 86 CNN 83 101 93 The Wall Street Journal 77 187 148 Food & Wine 86 139 70

Note: 100 5 Average level of use, purchase, or consumption. Source: Simmons National Consumer Study 2010, Experian Information Solutions (Costa Mesa, CA 2014).

Occupational Influences on Consumption4-1TABLE

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Chapter Four The Changing American Society: Demographics and Social Stratification 113

skills, abstract reasoning, and the ability to read and learn new skills rapidly. Individuals without these skills are generally forced into minimum-wage and often part-time jobs, which will rarely keep a family above the poverty level.6 As the following data show, edu- cation clearly drives income in today’s economy.

Since individuals tend to have spouses with similar education levels, these differences are magnified when spousal income is considered.

Income: Workers 18 and Older7

Education Level Males Females

No high school degree $24,831 $14,521

High school degree 36,753 24,329

Associate’s degree 48,237 32,253

Bachelor’s degree 72,868 44,078

Master’s degree 88,450 54,517

Professional degree 147,518 87,723

Education influences what one can purchase by partially determining one’s income and occupation. It also influences how one thinks, makes decisions, and relates to others.8 Those with a limited education are generally at a disadvantage.

Not surprisingly, education has a strong influence on one’s tastes and preferences, as shown in Table 4–2. However, education seldom provides a complete explanation for con- sumption patterns. For example, a lawyer earning $30,000 per year as a public defender

Graduated College

Attended College

Graduated High School

Did Not Graduate High School

Products Cocktails 103 92 96 113 Beer 70 90 106 168 Motorcycles 87 113 122 70 iPod (Apple) 164 115 65 38

Activities Waterskiing 103 114 105 80 Visiting museums 175 103 64 40 Foreign travel (last 3 years) 135 100 84 73 Registered to vote 116 106 96 69

Shopping Kmart 75 97 119 107 Neiman Marcus 139 86 88 86 Kentucky Fried Chicken 68 112 110 126 California Pizza Kitchen 198 113 46 42

Media Forbes 154 124 69 45 People 129 113 85 52 Nick at Nite 51 90 118 163 Fox News channel 97 101 109 85

Note: 100 5 Average level of use, purchase, or consumption. Source: Simmons National Consumer Study 2010, Experian Information Solutions (Costa Mesa, CA 2014).

4-2Education Level Influences on Consumption TABLE

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Part Two External Influences114

will have a different lifestyle from a lawyer earning $250,000 per year in private practice, despite similar educational backgrounds.

Income A household’s income level combined with its accumulated wealth determines its purchas- ing power. While many purchases are made on credit, one’s ability to buy on credit is ultimately determined by one’s current and past income (wealth).

Most of American history has been characterized by consistently increasing real per capita income. For most middle- and lower-income Americans, this increasing trend stopped in the 1980s, and household incomes were stagnant or declining until they increased again in the mid-1990s.9 Several notable economic expansions have taken place from the mid-1990s through 2006. The first was from 1993 through 2000 and the second from 2002 through 2006. Economic expansion results in higher incomes and spending power. A major concern, however, is the growing income divide. One study shows that during the 1993–2000 expansion, real incomes of the top 1 percent grew by 10.1 percent while the remaining 99 percent grew by only 2.4 percent. Even more striking, during the 2002–2006 expansion, the top 1 percent of incomes grew by 11 percent compared with just 0.9 percent for the remaining 99 percent. Such increases in wealth concentration mean that not all Americans are benefiting equally from economic expansion in the United States.10

Just as Americans have not shared equally in prosperous times, neither have they shared equally in the most recent recession. For example, while the United States lost 1.2 million people previously earning over $100,000, roughly twice that (2.1 million) dropped below $35,000. And while the economy has shown positive signs, consumers are still being affected by the housing market, the high price of gas, and continued economic and global uncertainty. In response, many consumers are buying smaller cars and homes, building fewer new homes, and remodeling less.11 Target has actually gained business in this envi- ronment by repositioning itself more toward value, in part by creating their 5% Rewards program.12

How long these trends hold remains to be seen. Consumers with modest incomes often want to “trade up” to luxury brands. Companies, in a strategy termed class to mass, have responded by expanding opportunities for less affluent consumers to afford luxury. How- ever, today more than ever, this may require trade-offs. As one retail expert notes:

Consumers are still willing to trade up. But if someone wants the designer jeans, they’ll cut back on something else.13

Income enables purchases but does not generally cause or explain them. For example, a college professor or lawyer may have the same income as a truck driver or plumber. Nonetheless, it is likely that their consumption processes for a variety of products will differ. Occupation and education directly influence preferences for products, media, and activities; income provides the means to acquire them.14 Thus, income is generally more effective as a segmentation variable when used in conjunction with other demographic variables.

How wealthy one feels may be as important as actual income for some purchases.15 Subjective discretionary income (SDI) is an estimate by the consumer of how much money he or she has available to spend on nonessentials. Several studies show that SDI adds considerable predictive power to actual total family income (TFI) measures.16

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Chapter Four The Changing American Society: Demographics and Social Stratification 115

Age Proper age positioning is critical for many products. Age carries with it culturally defined behavioral and attitudinal norms.17 It affects our self-concept and lifestyles.18 Not surpris- ingly, age influences the consumption of products ranging from beer to toilet paper to vacations. Our age shapes which media we use, where we shop, how we use products, and how we think and feel about marketing activities.19 Table 4–3 illustrates some consump- tion behaviors that vary with age. Illustration  4–1 shows an ad with the type of humor appreciated by many young adults.

The estimated age distributions (millions in each age category) of the U.S. population for 2010 and 2020 are shown in the following table.20

Age Category 2010 2020 Percentage Change

Under 10 42,132 45,496 18.0%

10–19 41,103 43,392 15.6

20–29 43,051 43,112 10.1

30–39 40,408 44,847 111.0

40–49 43,638 40,892 26.3

50–59 41,680 42,578 12.2

60–69 28,851 38,474 133.4

Over 69 28,071 37,013 131.9

18–24 25–34 35–44 45–54 55–64 651

Products Tequila 102 140 111 114 90 45 Scotch whiskey 62 105 85 84 127 128 Botox 33 145 199 52 65 83 Blu-ray 138 113 114 110 86 51

Activities Skateboarding 297 145 108 49 62 15 Backpacking/hiking 125 129 146 99 80 30 Participating in civil protest 105 116 97 93 106 88 Visiting museums 92 118 107 99 100 82

Shopping Belk 88 71 89 95 114 137 Victoria’s Secret 200 145 115 81 57 40 Chuck E. Cheese’s 128 214 130 75 46 23 The Cheesecake Factory 140 138 97 106 75 58

Media Reader’s Digest 39 50 75 88 123 203 GQ 237 125 126 83 39 38 AARP, The Magazine 14 9 17 73 192 269 Businessweek 60 74 70 126 112 140

Note: 100 5 Average level of use, purchase, or consumption. Source: Simmons National Consumer Study 2010, Experian Information Solutions (Costa Mesa, CA 2014).

4-3Age Influences on Consumption TABLE

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Part Two External Influences116

Even a quick look at these age distributions indicates important changes. Some of the marketing implications include:

�r� Demand for children’s products, such as toys, diapers, and clothes, will grow moder- ately, as the population under 10 years of age will grow 8 percent over this period.

�r� The teen market is growing again at a modest rate after a decade in which growth had been minimal or negative. This signals a growth in demand for fashion, music, and technology targeting the teen market.

�r� Given that marriage and childbirth often occur in the twenties but are increasingly delayed until the thirties, growth in the 30–39 market should provide growth in homes, child care products and services, family cars, and insurance to offset the lack of growth in the 20–29 age group.

�r� Products consumed by those aged 40 to 49 will decline as this population group grows smaller. This will have significant implications for such industries as financial ser- vices, for which this is a key age group.

�r� The largest growth area is in the 60 and over groups, which will grow at greater than 30 percent. The 60–69 age group will be primarily one- or two-person households, with many retired or near retirement. Vacations, restaurants, second homes, and financial services aimed at this market should flourish. Growth in the 69 and over group will cre- ate many opportunities for marketers ranging from beauty aids and travel and leisure to retirement homes and health care.

Age groups, as defined by the census and as presented above, can be useful as a means of understanding and segmenting a market. For example, P&G launched the Oil of Olay ProVital line, targeting women over 50 years old. One of the first spokeswomen for the

Age affects how

individuals think,

feel, and behave.

The humor in this ad

would be appreciated

more by younger

consumers than by

older consumers.

ILLUSTRATION 4-1

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Chapter Four The Changing American Society: Demographics and Social Stratification 117

product was 51-year-old actress Anne Roberts. However, the product line has not been positioned as just an antiwrinkle solution:

Age is just a number. Many women 50 and over have told us that as they age, they feel more con- fident, wiser, and freer than ever before. These women are redefining beauty. Our research shows that when it comes to skin, dryness and vitality are their key concerns, not just a few wrinkles.21

These comments suggest an important distinction between chronological age (how old you are) and cognitive age (how old you feel). Cognitive age is defined as one’s perceived age, a part of one’s self-concept.22 It is measured by asking people what age they would associate with how they look, feel, and behave. For older consumers, cognitive age is often 10 to 15 years less than chronological age. Similar results have been found for cognitive age in Japan.23 Better health and higher education, income, and social support lead to reductions in cognitive age. And for many behaviors, cognitive age is more important than chronological age, making age perception a critical marketing consideration. Generational influences, which provide additional richness and insight beyond standard age categories, are discussed next.

UNDERSTANDING AMERICAN GENERATIONS A generation, or age cohort, is a group of persons who have experienced a common social, political, historical, and economic environment. Age cohorts, because their shared histories produce unique shared values and behaviors, often function as unique market segments.24

Cohort analysis is the process of describing and explaining the attitudes, values, and behaviors of an age group as well as predicting its future attitudes, values, and behaviors.25 A critical fact uncovered by cohort analysis is that each generation behaves differently from other generations as it passes through various age categories. For example, in 2011 the leading edge of the baby boom generation was eligible to retire at the traditional age of 65. Some opted for earlier retirement, some retired when eligible, and some continue to work, though eligible to retire. However, it would be a mistake to assume that retir- ing baby boomers will behave like the pre-Depression generation does today. The forces that shaped the lives of these generations were different, and their behaviors will differ throughout their life cycles. As just one example, the computer and Internet skills that baby boomers have acquired will make them much heavier Internet users in their retire- ment years than is currently true of their parents, who in many cases were bypassed by the most recent technology revolution.

In the following sections, we will examine the six generations that compose the primary American market.26 The generations, along with their birth years, age range, and approxi- mate size as of 2015, are shown in the table below and described in detail in the sections that follow.

Generation Birth Years Age Range Approximate Size

Pre-Depression Prior to 1930 861 6 M Depression 1930 to 1945 70–85 25 M Baby Boom 1946 to 1964 51–69 80 M Generation X 1965 to 1976 39–50 45 M Generation Y 1977 to 1994 21–38 79 M Generation Z 1995 to 2009 5–20 69 M

LO2

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Part Two External Influences118

It is important to emphasize that generation is only one factor influencing behavior and the differences within generations are often larger than the differences across generations. In addition, generations do not have sharp boundaries. Those near the age breaks between generations often do not belong clearly to either generation.

Pre-Depression Generation Born before 1930, this generation represents roughly 6 million Americans as of 2015. High mortality accounts for the rapid reduction in the size of this group (from 12 million in 2010). These individuals grew up in traumatic times. Most were children during the Depression and entered young adulthood during World War II. They have witnessed radi- cal social, economic, and technological change. As a group, they are conservative and concerned with financial and personal security.

As with all generations, the pre-Depression generation is composed of distinct seg- ments, and marketing to it requires a strategy that incorporates such factors as gender, ethnicity, and social class.27 This generation is part of the broader mature market, gener- ally defined as consumers 55 years of age and over. Gerontographics is one segmentation approach to the mature market that incorporates aging processes and life events related to the physical health and mental outlook of older consumers. Four segments have been iden- tified. Healthy Indulgers are physically and mentally healthy and are thus active, indepen- dent, and out to enjoy life. Ailing Outgoers have health problems that limit their physical abilities, but their positive outlook means they remain active within financial constraints. Healthy Hermits are physically healthy, but life events, often the death of a spouse, have reduced their self-concept and they have become withdrawn. Frail Recluses have accepted their old-age status and have adjusted their lifestyles to reflect reduced physical capabili- ties and social roles. Can you see the marketing implications of these market segments for targeting the mature market?

The pre-Depression generation faces numerous consumption-related decisions. One is the disposition of valued belongings that they no longer use or that are not appropriate in nursing or retirement homes. These can be emotional decisions for both the elderly person and his or her family members.

The pin means a great deal to me. I would love for my granddaughter to have it. It will be strange not seeing it in my jewelry box anymore.28

Communications strategies need to consider media selection, message content, and message structure. For example, some aspects of information processing, memory, and cognitive performance decline with age. The rapid, brief presentation of information that younger consumers respond to is generally not appropriate for older consumers.29

Products related to the unique needs of this segment range from health services to single-serving sizes of prepared foods. As this generation continues to age, assisted-living services are growing rapidly. As more members of this generation experience reduced mobility, shopping will become an increasing problem. Although Internet shopping would seem a good solution, relatively few members of this generation use the Internet.

Depression Generation Born between 1930 and 1945, this generation represents roughly 25 million Americans as of 2015. These people were small children during the Depression or World War II. They matured during the prosperous years of the 1950s and early 60s. They discovered both

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Chapter Four The Changing American Society: Demographics and Social Stratification 119

Sinatra and Presley. They “invented” rock and roll and grew up with music and televi- sion as important parts of their lives.

Most in this generation have retired or will soon do so. Many have accumulated substantial wealth in the form of home equity and savings, although the most recent economic downturn has eroded the wealth of many in terms of decreased home equity and retirement portfolio values. Those who still work often dominate the top positions in both business and government. Members of this generation are also grandparents with sufficient incomes to indulge their grand- children, making them a major market for upscale children’s furniture, toys, strollers, car seats, and clothing.

Many, particularly those in the younger part of this generation, are still in good health and are quite active. Active lifestyles translate into demand for recreational vehicles, second homes, new cars, travel services, and recreational adult education.30 Perhaps a bit surprising to younger generations, over half of this generation are online and over half of those online have used the Internet to make travel reservations, and a full three-quarters have used the Internet to look up health information.31 So-called active adult communities such as Sun City in Phoenix, Arizona, are a major growth arena and will continue to be so as the baby boomers enter their retirement years. These age-restricted communities offer an amazing array of activ- ities and attract relatively wealthy households, many of whom can pay cash for their homes.32

Marketers targeting this segment are increasingly using themes that stress an active lifestyle and breaking with stereotypical portrayals of older consumers. A good example of this is Campbell’s Healthy Request ads (as shown in Illustration 4–2). Campbell’s is appealing to the “healthy indulger” segment described earlier.

Nonetheless, this generation is dealing with the physical effects of aging. In terms of clothing, comfort is important, as attested to by the success of Levi’s Action Slacks and Easy Spirit shoes in targeting this segment. However, style simply cannot be overlooked as it plays an important role in maintaining a positive self-concept. Consider the thoughts of Susan, a 71-year-old who shops in department stores:

Lately, I have found a hard time finding the right clothes. Clothes that I used to wear, that younger people wear, don’t look like they used to on me. My body is naturally changing so things don’t look good. Please listen to this one. The stuff they have for people over sixty is really horrible . . . and I refuse to wear it. It’s old lady looking, very old, and dated. I like stylish slacks and pretty sweaters and nice blouses.33

Clearly, nursing home stays and in-home care are more likely for those with serious health issues and those in the older part of this generation34 and health care is a major concern and a major expenditure. In addition, as this group ages, declines in information processing, memory, and cognitive performance must be considered in creating communi- cations strategies, much like for the pre-Depression generation.35

Asset management is important to this group, and firms such as MetLife have devel- oped products and services to meet these needs.36 Lawyers, accountants, and financial

The mature market is

composed of many

distinct segments.

The Campbell’s

Healthy Request ad

would appeal to the

“healthy indulger”

segment, which is

healthy, content, and

out to enjoy life.

ILLUSTRATION 4-2

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Part Two External Influences120

planners also have been attracted to the “wealth transfer” that is expected to occur as the baby boomers inherit the wealth accumulated by their parents. Numbers vary dramatically due to stock market fluctuations and rising health care costs. However, current estimates put the number between $6 and $8 trillion in the coming decades.37

In addition, this group of consumers is downsizing homes and possessions just like the pre-Depression generation. And increasing numbers are becoming more tech savvy, even to the point of using eBay to help them downsize! As one such eBay user jokes:

The end of the bidding cycle is quite exciting, especially for older people whose lives like mine are not that exciting anymore.

SeniorNet is a nonprofit group that helps older consumers learn about computers by offering classes in nursing homes and recreation centers, and eBay has been a strong sup- porter of their efforts.38

Baby Boom Generation Born during the dramatic increase of births between the end of World War II and 1964, this generation represents nearly 80 million Americans as of 2015. The large size of this generation makes them very important to marketers. Most of this group grew up during the prosperous 1950s and 1960s. They were heavily influenced by the Kennedy assassination, the Vietnam War, recreational drugs, the sexual revolution, the energy crisis, the rapid growth of divorce, and the cold war, as well as rock and roll and the Beatles. Although there are significant differences between the boomers born early in this generation and those born later, boomers are considered to be more self-centered, individualistic, eco- nomically optimistic, skeptical, suspicious of authority, and focused on the present than are other generations.39

Baby boomers are characterized by high education levels, high incomes, and dual- career households. They are also often characterized by time poverty (particularly young boomers) as they try to manage two careers and family responsibilities. TV is still a major route through which to target this generation. However, baby boomers are more tech savvy than previous generations. The Internet offers the convenience and custom- ization that this generation demands, with roughly two-thirds of boomers using the Inter- net to make product purchases. Internet usage among boomers is roughly 80 percent, and their use of social networking sites is substantially higher than that of previous generations.40

The “empty nest” is increasingly common for this generation, a circumstance that is providing them with both increased discretionary income and time. In fact, baby boomers are 48 percent more likely than the average adult to earn $100,000 or more.41 As a result, sales of adventure vacations, expensive restaurant meals, second homes, recreational vehi- cles, maintenance-free homes, personal chefs, and personal trainers should continue to grow.42 However, boomers are also facing the major challenge of being the caretaker of their parents. One result of this is the rapid growth of assisted-living centers as boom- ers often don’t want their parents living with them and their parents don’t want to be a burden.43

Retirement is no longer something in the distant future, and many have already made that step. However, surveys indicate that boomers plan to continue and expand the concept of “active retirement” begun by the Depression generation. In one study, two-thirds of 50- to 75-year-olds selected as a definition of retirement: To begin a new, active, and involved

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Chapter Four The Changing American Society: Demographics and Social Stratification 121

chapter in life, starting new activities and setting new goals.44 Sony has targeted the active boomer as follows:

Sony spent $25 million to target what it calls the “zoomers,” a name that reflects the active lifestyle of this generation. One of their ads featured a “grey-haired astronaut filming Earth with his own camcorder.” The tagline: “When your kids ask where the money went, show them the tape.” Sony credits a surge in camcorder sales to its renewed focus on this increasingly important segment.45

Being a grandparent has or will become a major part of this active retirement period for many boomers. The substantial wealth and spending power of this generation make them prime targets for a whole host of categories including toys, vacations, gift cards, and school supplies.46

Clearly, however, as boomers age, their physical needs are changing. Particularly among older boomers, major health problems are increasingly likely and will hamper their active life- styles. Even for healthy boomers, however, issues of appearance are critical and demand for plastic surgery, baldness treatments, health clubs, cosmetics for both men and women, hair col- oring, health foods, and related products continue to expand as this group ages. How well do you feel the baby boom generation is targeted in the Oil of Olay Regenerist ad in Illustration 4–3?

As with the Depression generation, it is important for advertisers to avoid overreliance on themes and models that are too young and not representative of boomers and their life stage. As one boomer indicates:

I’ve quit buying clothes from stores who only use young gals in their catalogs. To me it says that they aren’t interested in my money.47

While it is convenient to provide a general summary of boomer characteristics, it is also important to avoid stereotypes and move toward an understanding of how to segment this large market. Consumer Insight 4–1 discusses some of the stereotypes and also approaches to segmenting the boomer market.

Generation X Born between 1965 and 1976, this genera- tion represents roughly 45 million Ameri- cans as of 2015. It is a smaller generation than the generations before and after it. Gen- eration X reached adulthood during difficult economic times. It is the first generation to be raised mainly in dual-career households, and 40 percent spent at least some time in a single-parent household before the age of 16. The divorce of their parents is often a cause of stress and other problems for the children involved. However, these changes have also caused many members of Genera- tion X to have a very broad view of family, which may include parents, siblings, step- parents, half-siblings, close friends, live-in lovers, and others.

The baby boom gen-

eration is entering

its 50s and 60s.

As it matures, it is

creating demand

for weight-control

products, hair dyes,

lotions, and other

“anti-aging” devices

such as the Oil of

Olay Regenerist

microsculpting

serum.

ILLUSTRATION 4-3

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122

CONSUMER INSIGHT 4-1 Beyond Stereotypes: Segmenting the Boomer Market

The baby boom market is the largest generational segment in America but also one of the most diverse. Such diversity requires that marketers move beyond stereotypes and understand segmentation opportunities that exist. Below we deal with common stereotypes of the boomer market and provide insight as to segmentation opportunities.48

�t� Boomers all have the same values and outlook— This is far from true. Boomers are quite different in values and outlook in part due to differences in life experiences relating to health and finances. One study by Focalyst finds three boomer segments based on outlook: Yesterday (25 percent)—This group believes that life was better in the ’50s and is not optimistic about the future. Health and financial issues are major factors for this group. Marketing messages that reassure, comfort, and acknowledge the efforts of this group may be particularly effective.

Today (30 percent)—This group believes that they live in exciting times and is happy with their lives today. Strong physical and financial health contribute to this positive outlook. Marketing mes- sages that focus on the now, indulgence, and the good life may be particularly effective.

Tomorrow (45 percent)—This group believes that the future will be better than today and remains positive about the future despite negative financial or health events. This group is highly con- nected with friends and community, which may explain their positive outlook. Marketing messages that emphasize stability, optimism, and spirituality may be particularly effective.

�t� Boomers are self-centered—The phrase “Me Generation” was created for baby boomers. How- ever, many boomers are much more socially and environmentally conscious than that label sug- gests. One study estimates that roughly half of all boomers are “Green Boomers,” meaning they buy environmentally friendly products.

�t� Boomers are not tech savvy—The Internet and mobile technology are an important part of many boomers’ lives. Roughly 80 percent of boomers are online, and roughly half of all boomers engage in wireless Internet use, which includes wireless Internet connection via laptop, checking e-mail via cell phone, using the Internet on a cell phone, and using IM on a cell phone.

�t� Boomers are married empty nesters who are downsizing—Only 25 percent of boomers are mar- ried empty nesters. Nearly 40 percent of boomers have children under the age of 18 living at home and many also have boomerang children, and live-in parents. Others are singles who are actively dating. In terms of housing, less than 10 percent of boomers plan to downsize in the next five years.

�t� Boomers are all retiring early and wealthy—Over half of all boomers plan to work and/or volunteer beyond their retirement age. One in six is on their “second career” and about the same percent- age are engaged in furthering their education. Although many will continue to work out of enjoy- ment, many also work due to financial need, increases in retirement age, and so on. Only 10 percent of boomers make $150,000 or more a year, and the net worth of the bottom 20 percent of boomers is a mere $2,480.

Clearly the baby boom generation is large and diverse and marketers must understand the boomer market and its segments in designing appropriate mar- keting strategies.

Critical Thinking Questions 1. Explain the key factors driving the outlook differences

among boomers?

2. What factors explain why only 10 percent of boomers plan to downsize in the next five years?

3. What ethical and social responsibilities do marketers have when marketing to older consumers?

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Chapter Four The Changing American Society: Demographics and Social Stratification 123

This is the first American generation to seriously confront the issue of reduced expectations. These reduced expectations are based on reality for many in this gen- eration as wages and job opportunities for young workers were limited until the eco- nomic boom that started in the mid-1990s. This relative lack of opportunity was in part responsible for this generation’s ten- dency to leave home later and also to return home to live with their parents as younger adults. Not only has the path to success been less certain for this generation, but many Generation Xers do not believe in sacrificing time, energy, and relations to the extent the boomers did for the sake of career or economic advancement.49

This generation faces a world racked by regional conflicts and terrorism, an environment that continues to deterio- rate, and an AIDS epidemic that threatens their lives. Members of this group tend to blame the Me Generation and the mate- rialism associated with the baby boom generation for the difficult future they see for themselves. Given their early economic challenges, it is perhaps not surprising that this generation appears to be more entrepre- neurial in its approach to jobs and less prone to devote their lives to large public corpora- tions. For example, half of all Xers aspire to own their own business, which is 13 percent higher than the average adult.50

Generation X is highly educated, with more college attendance and graduates than previous generations. And Xer women are more highly educated than men, giving them increased leverage in the workforce. This is having interesting repercussions in terms of family dynamics. More than 20 percent of Xer women now earn more than their husbands. Given the underlying masculine value predominant for much of America’s history, this can be uncomfortable for some couples, although most are finding ways to navigate this change. As one analyst observes:

At one point, the stereotype was a man might feel inferior to a woman who is at a higher point in her career than he is. I think that’s dissipated a bit, where there aren’t these built-in expectations of who should be above.51

The empowerment of Xer women extends beyond their careers. One study shows that across all generations, Xer women are the highest viewers of home improvement media and the most likely to engage in home improvement projects, including adding a room onto the house.52

This generation is moving into its 40s, and although they tended to delay marriage and children, nearly half of Xer households are now married with children under 18.53 This helped keep the housing market strong during the economic downturn in the early 2000s. It is also the reason that this generation increasingly feels the time crunch typical of child- rearing years. This generation is a major force in the market for cars, appliances, children’s products, and travel. The ad in Illustration 4–4 targets Xer parents.

Many Generation X

consumers are now

parents and com-

panies are targeting

their needs in this

area.

ILLUSTRATION 4-4

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Part Two External Influences124

While an important market, Generation X is not always easy to reach. It is both cynical and sophisticated about products, ads, and shopping. It is materialistic and impatient. In many aspects, its tastes are “not baby boom.” Thus, it created the grunge look and snow- boarding. Magazines such as Spin, Details, and Maxim were created for this generation, as were the X Games. It responds to irreverence in advertising but not always as well to traditional approaches. Generation Xers want products and messages designed uniquely for their tastes and lifestyles.

Xers are more diverse and open to diversity than previous generations. For example, Xers are 45 percent more likely to be Hispanic. Xers are also more likely to accept alter- native lifestyle choices such as gay couples raising children, mothers working outside the home, living together without getting married, and people of different races getting mar- ried than are those of previous generations.54 This generation is also more tech savvy than prior generations, with 86 percent using the Internet and between a half and two-thirds watching videos online, using social networking sites, and sending IMs.

Examples of companies that have targeted the Generation X segment include:

�r� Volvo redesigned its marketing mix for the S40 sedan to go after the Generation X market and some older Generation Yers. The automaker did tie-ins with Microsoft’s Xbox and Virgin Group and created commercials with a hip-hop feel.55

�r� Learn & Master Guitar has a target demographic that is predominantly Generation X men who are increasingly users of Facebook. Learn & Master utilized an ad on Face- book with a visual of a 40-something male and it has done well.56

These ads show that successful marketers are adapting to this audience in ways that play not only to their heritage but also to their current life stage and technology use.

Generation Y Born between 1977 and 1994, this generation represents roughly 79 million Americans as of 2015, thus rivaling the baby boom generation. This segment has grown over the past decade in part due to immigration, as evidenced by the fact that at 22 percent, the His- panic segment of this market is larger than in any previous generation.57 These children of the original baby boomers are sometimes referred to as the “echo boom.” Overall, it is the first generation to grow up with virtually full-employment opportunities for women, with dual-income households as the standard, with a wide array of family types seen as normal, with significant respect for ethnic and cultural diversity, with computers in the home and schools, and with the Internet. It has also grown up with divorce as the norm,58 AIDS, visible homelessness (including many teenagers), drug abuse, gang violence, and economic uncertainty. The Columbine shootings, the Oklahoma City bombing, the Clinton–Lewinsky scandal, the collapse of the Soviet Union, and Kosovo were key events for this generation.59

Generation Y is characterized by a strong sense of independence and autonomy. They are assertive, self-reliant, emotionally and intellectually expressive, innovative, and curi- ous. They understand that advertisements exist to sell products and are unlikely to respond to marketing hype. They prefer ads that use humor or irony and have an element of truth about them. They like the ability to customize products to their unique needs. Brand names are important to them.60 Factors they believe make their generation unique include (a)  technology use, (b) music and pop culture, (c) tolerance, (d) intelligence, and (e) clothes. Gen Yers are diverse and embrace that diversity with the highest tolerance of any previous generation for alternative lifestyles.61

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Chapter Four The Changing American Society: Demographics and Social Stratification 125

Younger Gen Yers are finishing college and starting careers. Older Gen Yers are starting to get married and have children, with a third falling into that category. Still this gener- ation has the lowest marriage rates of any prior generation as it passed through this age range, while alternative arrangements such as living together increase.62 Younger Gen Yers have been hit harder by the most recent economic downturn, requiring some to get assis- tance from family or move back in with parents. This could create longer-term differences between older and younger Gen Yers because coming of age in a down economy can lead to suppressed earnings for a decade or more and also to reduced expectations.63

Despite the economic downturn, the size and market potential of Generation Y continue to attract the attention of marketers. Apparel is a major focus since young adults (younger Gen Yers) spend more on apparel than does any other age group.64 The key is adapting to the tastes of young adults as they move out of their teen years. As one expert puts it, “Where are all these folks going to go when they get tired of shopping in teenage land?”65 Retailers such as Metropark are blending music and fashion in interesting ways to attract this segment.

All their stores have “a DJ booth in front and a lounge area in back with sofas, a magazine rack and an array of energy drinks. The boutique sells more than 100 brands, including $219 Paige Premium Denim jeans and $149 hooded sweatshirts from Obey Clothing label.”66

Other fashion merchandisers are attempting to ease this generation into the workplace with affordable, work-appropriate, yet stylish clothes.

While complete statistics are not yet available, this generation is expected to be at least as highly educated as Generation X, if not more so. In addition, data for older Gen Yers show that the trend of women being more educated than men continues, reflecting ongoing changes in values and gender roles.67

Gen Y is more technologically immersed than any previous generation, with 95 percent being online, 66 percent sending IMs, and 83 percent using social network sites.68 This group is also accustomed to media and TV programs designed for them, such as MTV, Facebook, Maxim, American Idol, and CSI. Ads targeting this generation must be placed in appropriate magazines and on appropriate Internet sites, television and radio programs, and video games—a strategy called “advergaming.”69

The portrayal of multiple racial and ethnic groups in ads aimed at this generation is com- mon and important given their multiethnic nature. Similarly, the portrayal of modern female gender roles and alternative lifestyles is more common and important to this group given their diversity and acceptance of that diversity. Traditional mass-marketing approaches that were so successful with older generations often don’t work well with Generation Y. Companies must continually push the creative envelope with respect to media and promo- tional themes to capture this audience. Tapping into consumer-generated buzz is particu- larly appropriate for this group given their high levels of participation in social media. As seen earlier, music and fashion are often key touch points as well. Illustration 4–5 shows a Van Heusen ad that is designed to tap into the unique aspects of Generation Y, with its creative “institute of style” campaign and use of social media elements.

Generation Z Born between 1995 and 2009, this generation represents roughly 69 million Americans as of 2015. This generation has also been labeled the Digital Natives, Generation @, and the Net Generation due to the fact that none of the members of this cohort can recall

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Part Two External Influences126

a time before computers, the Internet, and cell phones. This generation is dealing with global unrest, economic uncertainty, terrorism, the Virginia Tech massacre, cyber- bullying, and global warming.70 Eth- nic diversity is high among this group and comparable to that of Generations X and Y, except that this group currently trends higher in African Americans than do the previous two generations.71 In addition, due to declining divorce rates, this generation, although certainly accustomed to divorce, often lives in two-parent households.

Many in this group are moving into their tweens (8 to 14) and teens. According to one study, Generation Z values personal responsibility, civic engagement, and diver- sity. The older members of this generation tend to be driven by their own conscience and by civic responsibility. Compared to Generations X and Y when they were teens and tweens, this group as a whole tends to

avoid risky behaviors, acts in a responsible manner, and accepts diversity, including hav- ing a gay friend.72

Expectations placed on this generation are high and that has produced anxiety to excel at a younger and younger age. One expert indicates of this generation:

We are seeing an erosion of childhood. Kids aren’t allowed to be kids for very long and they’re made into little consumers at a very young age. They’ve grown up in a world which is focused on achievement and outcomes, and some are suffering anxiety about what they do when they finish school already.73

Personal ramifications aside, these pressures are expected to result in even higher levels of education for this group compared to previous generations and the gender divide shows no sign of weakening, although it is much too early to make firm predictions. What is known is that teens and tweens, which make up much of this generation, account for an estimated $200 billion in purchasing power.74 Some of their purchasing power is direct and based on their own earnings, gift money, and allowances. Some of their purchasing power is indirect and based on spending by their parents on items for them. And while the economic downturn has hurt, a recent survey finds that for the teen market:75

�r� While 40 percent have not been affected, the remainder have been negatively affected. �r� Teens are shopping smarter (sales and comparison shopping) to weather the economic

storm. �r� Teens who work do so to buy clothes, save for college, and buy a car.

Beyond spending power, the teenage market is attractive to marketers because prefer- ences and tastes formed during the teenage years can influence purchases throughout life. As the Ford Focus brand manager states, “Although very few of [teenagers] are car buyers now, it is vital to create a relationship with them so they’ll think of Ford when it is time to buy a car.”76

This Van Heusen

ad is designed to

attract Generation Y

through its unique

and creative market-

ing approach.

ILLUSTRATION 4-5

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Chapter Four The Changing American Society: Demographics and Social Stratification 127

Marketers targeting teens need to use appropriate language, music, and images. Retail- ers are realizing that they need to constantly adjust and update their offerings to drive traffic among this active shopper segment that is also easily bored. Consider the following statement by a retail consultant:

This is the challenge for any store catering to mall rats—the kids come back so often that you’re forced to constantly change the displays. Otherwise they get bored and stop coming at all. It’s one reason stores need to know how often the regulars return—to see whether the windows and front tables should be changed every week or every seventeen days.77

Honesty, humor, diversity, and information appear to be important to teens. And alter- native media approaches involving social media are critical. Teens have been found to be high or even the highest in terms of the use of social network sites, sending IMs, reading or posting to blogs, and visiting a virtual world. Illustration 4–6 shows the Be Tween Talk site, which is an example of a social networking site targeting to the teen part of Generation Z. This site provides a forum where teens can focus on their concerns and issues.

Examples of companies that are taking advantage of the tech-savvy nature of Genera- tion Z include:

�r� Tumblr is a micro-blogging site that allows easy access to blogging from any device, anywhere. It allows posting of photos, video, self-recording audio statements, and IMs and allows posts from Tumblr to be fed to Facebook and Twitter.78

�r� Gatorade knew the teen market was key to its current and future success. So they rede- signed their marketing approach toward teens and teen athletes to include a Mobile Locker Room tour, Facebook, and Twitter.79

Tweens are late adolescents and early teens. Opportunities exist in music, fashion, cos- metics, video games, and so on. Parents still play an important role in terms of choices for

The Be Tween Talk

social networking

site targets the

highly attractive

Generation Z market.

ILLUSTRATION 4-6

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Part Two External Influences128

tweens. Aeropostle is one store that is focused on “target the mom.” They and others are trying to appeal to both the child and the parent. Some are widening aisles to make them stroller accessible and designing their lines to be, as one mother described, “less snooty, less provocative.”80 We discuss marketing to children in more detail in Chapter 6 in our discussion of families.

SOCIAL STRATIFICATION We are all familiar with the concept of social class, but most of us would have difficulty explaining our class system to a foreigner. The following quote illustrates the vague nature of social class:

Like it or not, all of us are largely defined, at least in the eyes of others, according to a complex set of criteria—how much we earn, what we do for a living, who our parents are, where and how long we attended school, how we speak, what we wear, where we live, and how we react to the issues of the day. It all adds up to our socioeconomic status, our ranking in U.S. society.81

The words social class and social standing are used interchangeably to mean societal rank—one’s position relative to others on one or more dimensions valued by society. How do we obtain a social standing? Your social standing is a result of characteristics you possess that others in society desire and hold in high esteem. Your education, occupation, ownership of property, income level, and heritage (racial or ethnic background, parents’ status) influence your social standing, as shown in Figure  4–2. Social standing ranges from the lower class, those with few or none of the socioeconomic factors desired by soci- ety, to the upper class, who possess many of the socioeconomic characteristics considered by society as desirable. Individuals with different social standings tend to have different needs and consumption patterns. Thus, a social class system can be defined as a hierarchi- cal division of a society into relatively distinct and homogeneous groups with respect to attitudes, values, and lifestyles.

“Pure” social classes do not exist in the United States or most other industrialized soci- eties. However, it is apparent that these same societies do have hierarchical groups of individuals and that individuals in those groups do exhibit unique behavior patterns that are different from behaviors in other groups.

What exists is not a set of social classes but a series of status continua.82 These sta- tus continua reflect various dimensions or factors that the overall society values. In an achievement-oriented society such as the United States, achievement-related factors constitute the primary status dimensions. Thus, education, occupation, income, and, to a

LO3

Socioeconomic factors

Occupation Education Ownership Income Heritage

Social standing

Upper class Middle class Working class Lower class

Unique behaviors

Preferences Purchases Consumption Communication

4-2 Social Standing Is Derived and Influences BehaviorFIGURE

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Chapter Four The Changing American Society: Demographics and Social Stratification 129

lesser extent, quality of residence and place of residence are important status dimensions in the United States. Race and gender are ascribed dimensions of social status that are not related to achievement but still influence status in the United States. Likewise, the status of a person’s parents is an ascribed status dimension that also exists in the United States. However, heritage is a more important factor in a more traditional society such as England.83

The various status dimensions are clearly related to each other. In a functional sense, the status of one’s parents influences one’s education, which in turn influences occupation that generates income, which sets limits on one’s lifestyle, including one’s residence. Does this mean that an individual with high status based on one dimension will have high status based on the other dimensions? This is a question of status crystallization. The more con- sistent an individual is on all status dimensions, the greater the degree of status crystalliza- tion for the individual. Status crystallization is moderate in the United States. For example, many blue-collar workers (such as plumbers and electricians) earn higher incomes than many professionals (such as public school teachers).

SOCIAL STRUCTURE IN THE UNITED STATES The moderate level of status crystallization in the United States supports the contention that a social class system is not a perfect categorization of social position. However, this does not mean that the population cannot be subdivided into status groups whose mem- bers share similar lifestyles, at least with respect to particular product categories or activi- ties. Furthermore, there are many people with high levels of status crystallization who exhibit many of the behaviors associated with a class system. It is useful for the marketing manager to know the characteristics of these relatively pure class types, even though the descriptions represent a simplified abstraction from reality.

A number of different sets of social classes have been proposed to describe the United States. We will use the one developed by Coleman and Rainwater.84 In their system, shown in Table 4–4, the upper class (14 percent) is divided into three groups primar- ily by differences in occupation and social affiliations. The middle class (70 percent) is divided into a middle class (32 percent) of average-income white- and blue-collar work- ers living in better neighborhoods and a working class (38 percent) of average-income blue-collar workers who lead a “working-class lifestyle.” The lower class (16 percent) is divided into two groups, one living just above the poverty level and the other visibly poverty-stricken.

The percentage of the American population assigned to each class in the Coleman– Rainwater system closely parallels the way Americans classify themselves.85 The Coleman–Rainwater groups are described in more detail in the following sections.

Upper Americans The Upper-Upper Class Members of the upper-upper social class are aristocratic families who make up the social elite. Members with this level of social status generally are the nucleus of the best country clubs and sponsors of major charitable events. They provide leadership and funds for community and civic activities and often serve as trustees for hospitals, colleges, and civic organizations.

The Kennedy family is a national example of the upper-upper class. Most communities in America have one or more families with significant “old money.” These individuals

LO4

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Part Two External Influences130

live in excellent homes, drive luxury automobiles, own original art, and travel extensively. They generally stay out of the public spotlight unless it is to enter politics or support a charity or community event.

The Lower-Upper Class The lower-upper class is often referred to as “new rich—the current generation’s new successful elite.” These families are relatively new in terms of upper-class social status and have not yet been accepted by the upper crust of the com- munity. In some cases, their incomes are greater than those of families in the upper-upper social strata. Bill Gates, founder of Microsoft, and Ted Turner, founder of CNN, are national examples of the lower-upper class. Most communities have one or more families who have acquired great wealth during one generation, many from the high-tech and dot- com boom of the 1990s.

Many members of this group continue to live lifestyles similar to those of the upper- middle class. Other members of the lower-upper class strive to emulate the established

Upper Americans

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careers, private clubs, causes, and the arts.

Middle Americans

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Lower Americans

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Typical Profile

Social Class Percent Income* Education Occupation

Upper Americans

Upper-upper 0.3% $1,300,000 Master’s degree Board chairman

Lower-upper 1.2 990,000 Master’s degree Corporate president

Upper-middle 12.5 330,000 Medical degree Physician

Middle Americans

Middle class 32.0 61,000 College degree High school teacher

Working class 38.0 33,000 High school Assembly worker

Lower Americans

Upper-lower 9.0 19,700 Some high school Janitor

Lower-lower 7.0 10,900 Grade school Unemployed

* Income is 2010 inflation-adjusted dollars using U.S. Consumer Price Index (CPI) data. Source: R. P. Coleman, “The Continuing Significance of Social Class in Marketing,” Journal of Consumer Research, December 1983, p. 267. Copyright 1983 by The University of Chicago. Used by permission.

The Coleman-Rainwater Social Class Hierarchy4-4TABLE

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Chapter Four The Changing American Society: Demographics and Social Stratification 131

upper-upper class. Entrepreneurs, sports stars, and entertainers who suddenly acquire substantial wealth often engage in this type of behavior. However, they are frequently unable to join the same exclusive clubs or command the social respect accorded the true “blue bloods.” Many respond by aggressively engaging in conspicuous consumption; that is, they purchase and use automobiles, homes, yachts, clothes, and so forth primarily to demonstrate their great wealth.86 Thus, it is not unusual to read about a star profes- sional athlete who owns five or ten luxury cars, multiple homes, and so forth. These individuals are referred as the nouveaux riches. Doing the “in thing” on a grand scale is important to this group. High-status brands and activities are actively sought out by the nouveaux riches.

Although small, these groups serve as important market segments for some products and as a symbol of “the good life” to the upper-middle class. Illustration 4–7 shows a product that would appeal to the upper classes.

The Upper-Middle Class The upper-middle class consists of families who possess neither family status derived from heritage nor unusual wealth. Occupation and edu- cation are key aspects of this social stratum, as it consists of successful professionals, independent businesspeople, and corporate managers. As shown in Table 4–4, members of this social class are typically college graduates, many with professional or graduate degrees.

Upper-middle-class individuals tend to be confident and forward-looking. They worry about the ability of their children to have the same lifestyle they enjoy. They realize that their success depends on their careers, which in turn depend on education. As a result, having their children get a sound education from the right schools is very important to them.

This group is highly involved in the arts and charities of their local communities. They belong to private clubs where they tend to be quite active. They are a prime market for financial services that focus on retirement planning, estate planning, and college funding issues. They consume fine homes, expensive automobiles, quality furniture, good wines, and nice resorts. Illustration  4–8 contains an advertisement aimed at this group.

This segment of the U.S. population is highly visible, and many Americans would like to belong to it. Because it is aspired to by many, it is an important positioning variable for some products. Figure  4–3 describes the upward-pull strategy often associated with the

The upper classes

are willing and able to

pay for products and

services that not only

enhance the qual-

ity of their lives but

are symbolic of their

status.

ILLUSTRATION 4-7

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Part Two External Influences132

class to mass approach discussed earlier in the chapter. Illustration  4–9 is an example of the upward-pull strategy as it provides “affordable luxury.”

Middle Americans The Middle Class The middle class is composed of white-collar workers (office workers, school teachers, lower-level man- agers) and high-paid blue-collar workers (plumbers, factory supervisors). Thus, the middle class represents the majority of the white-collar group and the top of the blue- collar group. The middle-class core typi- cally has some college education though not a degree, a white-collar or a factory supervisor position, and an average income. Many members of this class feel very inse- cure because of downsizing, outsourcing, and fluctuations in the economy.87

The middle class is concerned about respectability. They care what the neighbors think. They generally live in modest suburban homes. They are deeply concerned about the qual- ity of public schools, crime, drugs, the weakening of “traditional family values,” and their family’s financial security. Retirement is an increasing concern as firms reduce pension plans and health care costs escalate.

Members of the middle class are likely to get involved in do-it-yourself projects. They represent the primary target market for the goods and services of home improvement cen- ters, garden shops, automotive parts houses, as well as mouthwashes and deodorants. With limited incomes, they must balance their desire for current consumption with aspirations for future security. Illustration 4–10 shows an ad for Home Depot which would appeal to this segment with its “Let’s Do This” campaign.

The Working Class The working class consists of skilled and semiskilled factory, ser- vice, and sales workers. Though some households in this social stratum seek advancement, members are more likely to seek security for and protection of what they already have. This segment suffered seriously during the first half of the 1990s as their average real

An ad such as this

would appeal to the

upper-middle class. It

emphasizes elegance

and sophistication.

ILLUSTRATION 4-8

Middle class Prefer Products consumed by upper-middle class

Positioning Upper-class symbolism for middle-class products

Aspirations To belong to upper-middle class

4-3 Upward-Pull Strategy Targeted at Middle ClassFIGURE

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Chapter Four The Changing American Society: Demographics and Social Stratification 133

earnings declined. Automation and the movement of manufacturing activities to develop- ing countries also led to economic insecurity. Few of these individuals benefited from the stock market boom of the late 1990s, and many appear to have suffered the consequences of the most recent economic downturn.

Working-class families live in modest homes or apartments that are often located in marginal urban neighborhoods, decaying suburbs, or rural areas. They are greatly concerned about crime, gangs, drugs, and neighborhood deterioration. They generally cannot afford to move to a different area should their current neighborhood or school

This is an example

of an upward-pull

strategy—positioning

a moderately priced

product as one that

will allow its users to

experience some ele-

ments of the upper-

middle-class lifestyle.

ILLUSTRATION 4-9

This Home Depot

ad will appeal to the

middle class’s focus

on their homes as

well as their desire for

value.

ILLUSTRATION 4-10

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Part Two External Influences134

become unsafe or otherwise undesirable. With modest education and skill levels, the more marginal members of this class are in danger of falling into one of the lower classes.

Many working-class aristocrats dislike the upper-middle class and prefer products and stores positioned at their social-class level.88 These individuals are proud of their abil- ity to do “real work” and see themselves as the often-unappreciated backbone of America. They are heavy consumers of pickups and campers, hunting equipment, power boats, and beer. Miller Brewing Company gave up attempts to attract a broad audience for its Miller High Life beer. Instead, it is targeting working-class aristocrats with ads that feature bowl- ing alleys, diners, and country music. Homor TLC Inc.’s Huskey Tools are clearly targeted to this segment as shown in Illustration 4–11.

Lower Americans The Upper-Lower Class The upper-lower class consists of individuals who are poorly educated, have very low incomes, and work as unskilled laborers.89 Most have minimum-wage jobs. The Fair Minimum Wage Act of 2007 took an important step in helping this group by moving the minimum wage to $7.25 per hour by 2009. This is a substantial improvement but still means that a full-time, 50-week-a-year minimum- wage job is not enough to keep a family of three above the poverty line. This is a major change from the late 1960s, when the minimum wage would support a family of three.

This Husky Tools

product and ad

would appeal to the

working class, par-

ticularly the working-

class aristocrats.

ILLUSTRATION 4-11

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Chapter Four The Changing American Society: Demographics and Social Stratification 135

Compounding the problem is that many of these jobs are part-time and few provide ben- efits such as health insurance or a retirement plan. Consider John Gibson, a 50-year-old part-time janitor in Nashville who makes somewhat more than minimum wage:

“I’d like to work more,” John says. However, he is not qualified for many jobs. “I have to make sacrifices but I get by. When I get my check, the first thing I do is pay my rent.” John lives alone in a small efficiency apartment. One of the things John sacrifices in order to get by is eating at fast-food restaurants. Although he likes the food and the convenience, a co-worker convinced him that it was much cheaper to prepare food at home. He minimizes his expenses on clothing by shopping at thrift stores such as the one operated by the Salvation Army.

As a part-time employee, he has no company health insurance, but he is now eligible for some coverage from the state of Tennessee. A few years before he had this coverage he was hospital- ized. Afterward, his wages were garnished to cover his bills, and he was forced to rely on social service agencies. Today he spends a great deal of his spare time volunteering at these same agen- cies. He would enjoy golf but is seldom able to play. He has no pension plan or personal insur- ance and wonders what his retirement years will be like.90

Lack of education tends to be a defining characteristic of this group.91 Members of the upper-lower class live in marginal housing that is often located in depressed and decayed neighborhoods. Crime, drugs, and gangs are often close at hand and represent very real threats. They are concerned about the safety of their families and their children’s future. The lack of education, role models, and opportunities often produces despair that can result in harmful consumption, such as cigarettes and alcohol. It may also produce inef- ficient purchasing and a short-term time focus.92

The marketing system has not served this group effectively. They have a particularly difficult time securing financial services, and many do not have bank accounts. This means that they generally must pay a fee for cashing paychecks and other checks. How- ever, research indicates substantial marketing opportunities in this group. They tend to be value-oriented rather than just cost-focused. They tend to be very brand loyal. Firms such as Walmart and Dollar General have done a good and profitable job serving these consumers.93

The Lower-Lower Class Members of the lower-lower social stratum have very low incomes and minimal education. This segment of society is often unemployed for long periods of time and is the major recipient of government support and services provided by nonprofit organizations. Andre Hank, as described in Chapter 1, is an example of an individual who was in the upper-lower class and then wound up in the lower-lower class when he lost his job.

Marketing to the lower classes is frequently controversial. The rent-to-own business flourishes by renting durable goods, such as televisions and refrigerators, to lower-class households who frequently cannot afford to acquire them for cash and lack the credit rat- ing to charge the purchases at regular outlets. While this service appears to meet a real need, the industry is frequently criticized for charging exorbitant interest rates on the purchases.94

The marketing of “sin” products to this group is even more controversial. Malt liquors and fortified wines sell heavily in lower-class neighborhoods. However, firms that actively promote such products to this market risk significant negative public- ity. When R. J. Reynolds tried to market its Uptown cigarettes to lower-class urban blacks, public protests became so strong that the product was withdrawn. Although

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Part Two External Influences136

some might applaud this outcome, the unstated assumption of the protest is that these individuals lack the ability to make sound consumption decisions and thus require protections that other social classes do not require—an assumption that is certainly controversial.

Other firms are criticized for not marketing to the lower classes. Major retail chains, particularly food chains, and financial firms seldom provide services in lower-class neigh- borhoods. Critics argue that such businesses have a social responsibility to locate in these areas. The businesses thus criticized respond that this is a problem for all of society and the solution should not be forced on a few firms. However, a few sophisticated chain retailers such as Dollar General Corporation have begun to meet the unique needs of this segment. As one specialist in this area said:

People with lower household incomes are still consumers. They still have to buy food. They still wear clothing. They still have to take care of their kids.95

The challenge for business is to develop marketing strategies that will meet the needs of these consumers efficiently and at a reasonable profit to the firm.

THE MEASUREMENT OF SOCIAL CLASS There are two basic approaches to measuring social status: a single-item index and a multi- item index. Single-item indexes estimate social status on the basis of a single dimension such as education, income, or occupation. Since an individual’s overall status is influ- enced by several dimensions, single-item indexes are generally less accurate. Multi-item indexes take into account numerous variables simultaneously and weight these according to a scheme that reflects societal views. We focus here on the classic multi-item approach of Hollingshead.96

The Hollingshead Index of Social Position (ISP) is a two-item index that is well devel- oped and widely used. The item scales, weights, formulas, and social-class scores are shown in Table 4–5. Notice how, in the United States, occupation is given a higher weight than education. Why is this?

It is important to note that multi-item indexes were designed to measure or reflect an individual’s or family’s overall social position within a community. Because of this, it is possible for a high score on one variable to offset a low score on another. Thus, the follow- ing three individuals would all be classified as middle class on the ISP scale: (1) someone with an eighth-grade education who is a successful owner of a medium-sized firm; (2) a four-year-college graduate working as a salesperson; and (3) a graduate of a junior college working in an administrative position in the civil service. All of these individuals may well have similar standing in the community. However, it seems likely that their consumption processes for at least some products will differ, pointing out the fact that overall status may mask potentially useful associations between individual status dimensions and the consumption process for particular products.

Another important aspect of these measures is that they were developed before the rapid expansion of the role of women. No scale has been developed that fully accounts for the new reality of dual sources of status (both men and women) for a household.

Finally, it is important to realize that in some cases, the individual demographic vari- ables that make up social status (multi-item indexes) may be of more relevance in answer- ing a specific marketing question. For example, media habits might relate most closely to education while leisure activities might relate most closely to occupation. In these

LO5

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Chapter Four The Changing American Society: Demographics and Social Stratification 137

instances, marketers are better off using these direct measures of demographics than the more global measures of status. Only when an overall indication of an individual’s or family’s status is of particular relevance should measures such as the ISP be used. Recent research does suggest that social class is still an important determinant of various con- sumer behaviors in the United States.97

SOCIAL STRATIFICATION AND MARKETING STRATEGY While social stratification does not explain all consumption behaviors, it is certainly rel- evant for some product categories. For clear evidence of this, visit a furniture store in a working-class neighborhood and then an upper-class store such as Ethan Allen Galleries. Another example is the jeans market and in particular Levi Strauss. Figure 4–4 illustrates how Levi Strauss attempts to cover a large portion of the U.S. population by positioning

LO6

Occupation Scale (Weight of 7)

Description Score

Higher executives of large concerns, proprietors, and major professionals 1

Business managers, proprietors of medium-sized businesses, and lesser professionals 2

Administrative personnel, owners of small businesses, and minor professionals 3

Clerical and sales workers, technicians, and owners of little businesses 4

Skilled manual employees 5

Machine operators and semiskilled employees 6

Unskilled employees 7

Education Scale (Weight of 4)

Description Score

Professional (MA, MS, ME, MD, PhD, LLD, and the like) 1

Four-year college graduate (BA, BS, BM) 2

One to three years of college (also business schools) 3

High school graduate 4

Ten to 11 years of school (part high school) 5

Seven to nine years of school 6

Less than seven years of school 7

ISP score 5 (Occupation score 3 7) 1 (Education score 3 4)

Classification System

Social Strata Range of Scores

Upper 11–17

Upper-middle 18–31

Middle 32–47

Lower-middle 48–63

Lower 64–77

Source: Adapted from A. B. Hollingshead and F. C. Redlich, Social Class and Mental Illness (New York: John Wiley & Sons, 1958).

4-5Hollingshead Index of Social Position (ISP) TABLE

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Part Two External Influences138

various brands in such a way as to target different social class categories. How effective do you feel Levi’s has been in differentiating and positioning its brands for various social class segments?

While social class is clearly useful, sometimes looking at overall social class can mask underlying mechanisms and resulting behavioral barriers. The challenge for marketers and consumer advocates is often to dig deeper for the more fundamental aspects associated with social class, as discussed in Consumer Insight 4–2.

Finally, moving beyond brands per se to cities and communities can bring up social class issues. For example, many cities are trying to reverse so-called urban blight by work- ing to attract higher-end developers and retailers to revitalize their neighborhoods. One example is Harlem, which has attracted an increasing number of upscale boutique shops, many owned by the “new black middle class,” which has enhanced the appeal of Harlem.

Upper-class lifestyle

Upper-middle- class lifestyle

Middle-class lifestyle

Working-class lifestyle

Upper-middle-class target market (12.5%)

Middle-class target market (32%)

Working-class target market (38%)

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Working-class product position

4-4 Levi Strauss Positioning to Social Class SegmentsFIGURE

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139

CONSUMER INSIGHT 4-2 Social Class, Diet Quality, and the 99 Cent Store

Questions about the link between social class and dietary quality have been examined in a number of ways, includ- ing in the medical community.98 A recent article indicates:

A large body of epidemiological data shows that diet quality follows a socioeconomic gradient. Whereas hither-quality diets are associated with greater affluence, energy-dense diets that are nutrient-poor are prefer- entially consumed by persons of lower socioeconomic status (SES) and of more limited economic means.

The article goes on to point out that it is critical to “dig deeper” into the underlying causes associated with social class. In the case of diet, these include the fact that nutritional foods often cost more, and physical access to affordable nutritional foods for disadvantaged groups is often limited. The reason a search for underlying causes is so important is that it has consequences for how groups market high-quality diets to lower-SES/lower-income groups. That is, simply rec- ommending high-cost (but nutritional) foods to low income consumers is likely to be ineffective because the desire to consume a better diet among lower-SES/lower-income consumers would be hindered by inability to pay and limited access (no or few stores nearby that carry such foods).

The following relates the story of a lower-income con- sumer who was overweight. His access to lower-priced but nutritious foods through the 99 Cent Store became the answer to both of the barriers listed above, as you will see.

Papa Joe Aviance, a Los Angeles clothing designer and musician who weighed 450 pounds, decided he had to lose weight when he saw a video of himself. “I was 450 pounds—I was two cheeseburgers away from diabetes or high cholesterol, I have been big for pretty much all my life, and I was sick of hating myself. It was now or never.” Not able to afford the prices of the vegetables and fruits from high-end food stores like Trader Joe’s or Whole Foods, he took up the suggestion of his friend to shop at the 99 Cent Store. His weekly $50 purchase at the 99 Cent Store, which included oatmeal, tuna fish, eggs, salad dressing, veg- etables, and fruits, coupled with exercise of daily walks led to a weight loss of 250 pounds over 18 months.

The story confirms the medical article in showing that it is not social class per se that causes poor diet, but other key underlying mechanisms. Faced with inflexible food budgets, persons of lower SES find the relative high price of fruits and vegetables to be a barrier to their diet and choose the lower-priced, energy-dense foods that are high in fats and sugars. These dietary factors contribute to the observed health inequities. Individuals from lower- SES/lower-income groups have higher rates of obesity, diabetes, cardiovascular disease, and dental issues than individuals from higher-SES/higher-income groups.

The Papa Joe Aviance story highlights the key issues that (a) it is not enough to look only at social class in the abstract; (b) marketers and policymakers must look for deeper underlying factors, and address those; and (c) companies such as the 99 Cent Store can play a key role in helping lower-SES groups deal with serious health-related issues by dealing with the underlying fac- tors rather than simply telling everyone that they should eat a healthy diet.

Awareness may be the first key. Generally speaking, American’s tend to (incorrectly) believe that wealth is distributed more equally than it is. Moreover, a general awareness of the lack of physical availability of healthy food alternatives is likely lacking as well. A broader understanding of these challenges may be necessary for there to be more companies like the 99 Cent Store that tackle the hurdles facing those on the lower social strata.

Critical Thinking Questions 1. Why is it important for marketers to focus less on

social class and more on the underlying mechanisms related to social class that might affect consumers and their behaviors?

2. What challenges are faced by corporations in reduc- ing the barriers to a healthy diet faced by those con- sumers of lower SES?

3. How might general misperceptions of wealth distri- bution help to produce well-meaning but misguided approaches to encouraging healthier diets among lower-SES consumers?

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Part Two External Influences140

At the same time these boutiques have displaced local stores that have traditionally catered to the “long-term, lower class residents.”99 What are the societal implications of such urban revitalization efforts?

LO1: Understand the critical role that demo- graphics play in influencing consumer behavior American society is described in part by its demograph- ics, which include a population’s size, distribution, and structure. The structure of a population refers to its age, income, education, and occupation makeup. Demograph- ics are not static. At present, the rate of population growth is moderate, average age is increasing, and the southern and western regions are growing. In addition to actual measures of age and income, subjective measures can pro- vide additional understanding of consumption in the form of cognitive age and subjective discretionary income.

LO2: Define the concept of generations and discuss the generations that exist in America An age cohort or generation is a group of persons who have experienced a common social, political, histori- cal, and economic environment. Cohort analysis is the process of describing and explaining the attitudes, val- ues, and behaviors of an age group as well as predict- ing its future attitudes, values, and behaviors. There are six major generations functioning in America today: pre-Depression, Depression, baby boom, Generation X, Generation Y, and Generation Z.

LO3: Explain the concept of social stratification and the role that socioeconomic factors play A social class system is defined as the hierarchical divi- sion of a society into relatively permanent and homo- geneous groups with respect to attitudes, values, and lifestyles. A tightly defined social class system does not exist in the United States. What does seem to exist is a series of status continua that reflect various dimensions

or factors that the overall society values. Education, occupation, income, and, to a lesser extent, type of resi- dence are important status dimensions in this country. Status crystallization refers to the consistency of indi- viduals and families on all relevant status dimensions (e.g., high income and high educational level).

LO4: Identify and discuss the major social classes in America Although pure social classes do not exist in the United States, it is useful for marketing managers to know and understand the general characteristics of major social classes. Using Coleman and Rainwater’s system, we described American society in terms of seven major categories: upper-upper, lower-upper, upper-middle, middle, working class, upper-lower, and lower-lower.

LO5: Understand how social class is measured There are two basic approaches to the measurement of social classes: (1) use a combination of several dimen- sions, a multi-item index, or (2) use a single dimension, a single-item index. Multi-item indexes are designed to measure an individual’s overall rank or social position within the community.

LO6: Discuss the role of social class in develop- ing marketing strategies Although social class may not play a role in all prod- ucts or brands, it is obviously relevant in many situa- tions. Brands such as Levi’s appear to use social class as a segmenting tool. Targeting those in lower social classes can have ethical implications and choices regarding what products to offer, and what actions to take in this regard must be considered carefully.

SUMMARY

Age cohort 117 Class to mass 114 Cognitive age 117 Cohort analysis 117 Conspicuous consumption 131 Demographics 110 Digital Savvy 109

Generation 117 Gerontographics 118 Index of Social Position (ISP) 136 Mature market 118 Multi-item indexes 136 Nouveaux riches 131 Single-item indexes 136

Social class system 128 Societal rank 128 Status crystallization 129 Subjective discretionary income

(SDI) 114 Working-class aristocrats 134

KEY TERMS

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Chapter Four The Changing American Society: Demographics and Social Stratification 141

1. What are demographics? 2. Why is population growth an important concept

for marketers? 3. What trend(s) characterizes the occupational

structure of the United States? 4. What trend(s) characterizes the level of education

in the United States? 5. What trend(s) characterizes the level of income in

the United States? 6. What is meant by subjective discretionary income?

How does it affect purchases? 7. What trend(s) characterizes the age distribution of

the American population? 8. What is cognitive age? How is it measured? 9. What is an age cohort? A cohort analysis? 10. Describe each of the major generations in America. 11. What is a social class system? 12. What is meant by the statement, “What exists is not a

set of social classes but a series of status continua”?

13. What underlying cultural value determines most of the status dimensions in the United States?

14. What is meant by status crystallization? Is the degree of status crystallization relatively high or low in the United States? Explain.

15. Briefly describe the primary characteristics of each of the classes described in the text (assume a high level of status crystallization).

16. What is meant by the phrase class to mass and how does it relate to upward-pull?

17. What ethical issues arise in marketing to the lower social classes?

18. What are the two basic approaches used by marketers to measure social class?

19. What are the advantages of multi-item indexes? The disadvantages?

20. Describe the Hollingshead Index of Social Position. Why is occupation weighted more heavily? Would this weighting hold in other cultures?

REVIEW QUESTIONS

21. Which demographic shifts, if any, do you feel will have a noticeable impact on the market for the following in the next 10 years? Justify your answer.

a. Upscale restaurants b. Botox treatments c. Prescription drugs d. Internet shopping e. Green products f. Newspapers g. Charitable contributions 22. Given the projected changes in America’s

demographics, name five products that will face increasing demand and five that will face declining demand.

23. Why do the regional differences shown in Figure 4–1 exist? What are the implications of such differences for marketers of products such as soft drinks?

24. Will the increasing median age of our population affect the general tone of our society? In what ways?

25. Respond to the questions in Consumer Insight 4–1.

26. Which demographic variable, if any, is most related to the following?

a. Watching extreme sports on TV b. Scuba diving c. International travel d. In-home chef e. Spa treatments f. Going to a NASCAR event

27. Describe how each of the following firm’s product managers should approach the (i) pre-Depression generation, (ii) Depression generation, (iii) baby boom generation, (iv) Generation X, (v) Generation Y, and (vi) Generation Z.

a. Pepsi b. Panera Bread c. The Golf Channel d. About.com e. The Humane Society f. iPod g. Facebook h. Crest Whitener System

DISCUSSION QUESTIONS

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Part Two External Influences142

28. Respond to the questions in Consumer Insight 4–2.

29. How will your lifestyle differ from your parents’ when you are your parents’ age?

30. How could a knowledge of social stratification be used in the development of a marketing strategy for the following?

a. Jeans b. Expensive jewelry c. Fishing d. Organic milk e. Museum attendance f. Habitat for Humanity 31. Do you think the United States is becoming more

or less stratified over time? 32. Do your parents have a high or low level of status

crystallization? Explain. 33. Based on the Hollingshead two-item index, what

social class would your father be in? Your mother? What class will you be in at their age?

34. Name two products for which each of the three following demographic variables would be most influential in determining consumption. If you could combine two of the three, which would be the second demographic you would add to each? Justify your answer.

a. Income b. Education c. Occupation 35. Name three products for which subjective

discretionary income might be a better predictor of consumption than actual income. Justify your answer.

36. How do you feel about each of the ethical issues or controversies the text describes with respect to marketing to the lower classes? What other ethical issues do you see in this area?

37. Is it ethical for marketers to use the mass media to promote products that most members of the lower classes and working class cannot afford?

38. Would your answer to Question 37 change if the products were limited to children’s toys?

39. Name five products for which the upward- pull strategy shown in Figure 4–3 would be appropriate. Name five for which it would be inappropriate. Justify your answers.

40. What ethical implications arise from urban renewal efforts such as those in Harlem?

41. On the basis of the demographics of devoted coffee shop patrons, select two magazines in which the industry should advertise (use Standard Rate and Data [SRDS], Mediamark, or Simmons Research Bureau data). Justify your answer.

42. Interview a salesperson at the following locations and obtain a description of the average purchaser in demographic terms. Are the demographic shifts predicted in the text going to increase or decrease the size of this average-purchaser segment?

a. Mercedes dealership b. Electronics store c. Vacation cruise d. Children’s apparel e. Harley-Davidson dealership f. Pet store 43. Using Standard Rate and Data, Mediamark, or

Simmons Research Bureau studies, pick three

magazines that are oriented toward the different groups listed below. Analyze the differences in the products advertised and in the types of ads.

a. Income groups b. Age groups c. Occupation groups d. Education levels 44. Interview three people over 50. Measure their

cognitive age and the variables that presumably influence it. Do the variables appear to “cause” cognitive age? Try to ascertain if cognitive age or their chronological age is most influential on their consumption behavior.

45. Interview two members of the following generations. Determine the extent to which they feel the text description of their generation is accurate and how they think their generation differs from the larger society. Also determine what they think about

APPLICATION ACTIVITIES

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Chapter Four The Changing American Society: Demographics and Social Stratification 143

how they are portrayed in the mass media and how well they are served by business today.

a. Pre-Depression b. Depression c. Baby boom d. Generation X e. Generation Y f. Generation Z 46. Interview a salesperson from an expensive, a

moderate, and an inexpensive outlet for the following. Ascertain their perceptions of the social classes or status of their customers. Determine if their sales approach differs with differing classes.

a. Men’s clothing b. Women’s clothing c. Furniture d. Wine

47. Examine a variety of magazines/newspapers and clip or copy an advertisement that positions a product as appropriate for each of the seven social classes described in the text (one ad per class). Explain how each ad appeals to that class.

48. Interview an unskilled worker, a schoolteacher, a retail clerk, and a successful businessperson all in their 30s or 40s. Measure their social status using one of the multi-item measurement devices. Evaluate their status crystallization.

49. Visit a bowling alley and a golf course parking lot. Analyze the differences in the types of cars, dress, and behaviors of those patronizing these two sports.

50. Volunteer to work two days or evenings at a homeless shelter, soup kitchen, or other program aimed at very-low-income families. Write a brief report on your experiences and reactions.

1. This opener is based on “Understanding the Digital Savvy Consumer,” Scarborough Research, 2008, www.scarborough.com.

2. See, e.g., M. I. M. Rosa-Diaz, “Price Knowledge,” Journal of Product and Brand Management, 13, no. 6 (2004), pp. 406– 28; and L. Eagle, “Commercial Media Literacy,” Journal of Advertising, Summer 2007, pp. 101–10.

3. K. Dawidowska, “Caffeine Overload,” American Demographics, April 2002, p. 16.

4. D. Cohn and G. Livingston, “U.S. Birth Rate Decline Linked to Recession,” Pew Social & Demographic Trends, April 6, 2010, at http://pewsocialtrends.org, accessed March 10, 2011; and U.S. Census figures.

5. Population Division, U.S. Census Bureau, Interim State Population Projections, April 21, 2005.

6. “Poverty Thresholds by Size of Family Units: 1980–2008,” Income, Expenditures, Poverty, and Wealth (Washington, DC: U.S. Census Bureau, 2011), table 709.

7. “Mean Earnings by Highest Degree Earned: 2008,” Education (Washington, DC: U.S. Census Bureau, 2011), table 228.

8. See, e.g., M. Mittila, H. Karjaluoto, and T. Pento, “Internet Banking Adoption among Mature Consumers,” Journal of Services Marketing 17, no. 5 (2003), pp. 514–28; and V. Mittal, W. A. Kamakura, and R. Govind, “Geographic Patterns in Customer Service and Satisfaction,” Journal of Marketing, July 2004, pp. 48–62.

9. S. Fulwood III, “Americans Draw Fatter Paychecks,” (Eugene, OR) Register-Guard, September 27, 1996, p. 1; and E. Kacapyr, “Are You Middle Class?,” American Demographics, October 1996, pp. 31–35.

10. E. Saez, “Striking It Richer: The Evolution of Top Incomes in the United States,” Pathways Magazine, Stanford Center for the Study of Poverty and Inequality, Winter 2008, pp. 6–7; updates and data tables available at http://elsa.berkeley.edu/~saez.

11. D. Gross, “The Latte Era Grinds Down,” Newsweek, October 22, 2007, pp. 46–47.

12. N. Zmuda, “Why the Bad Economy Has Been Good for Target,” Advertising Age, October 4, 2010.

13. Gross, “The Latte Era Grinds Down.”

14. For an example, see F. J. Mulhern, J. D. Williams, and R. P. Leone, “Variability of Brand Price Elasticities across Retail Stores,” Journal of Retailing, 3 (1998), pp. 427–45.

15. Consumer confidence indexes also consider the subjective nature of spending and represent “leading indicators” of consumer spending. For a discussion, see M. J. Weiss, “Inside Consumer Confidence Surveys,” American Demographics, February 2003, pp. 22–29.

16. T. C. O’Guinn and W. D. Wells, “Subjective Discretionary Income,” Marketing Research, March 1989, pp. 32–41; see also P. L. Wachtel and S. J. Blatt, “Perceptions of Economic Needs and of Anticipated Future Income,” Journal of Economic Psychology, September 1990, pp. 403–15; and J. R. Rossiter, “ ‘Spending Power’ and the Subjective Discretionary Income (SDI) Scale,” in Advances in Consumer Research, vol. 22, ed. F. R. Kardes and M. Sujan (Provo, UT: Association for Consumer Research, 1995), pp. 236–40.

17. P. L. Alreck, “Consumer Age Role Norms,” Psychology & Marketing, October 2000, pp. 891–909.

18. P. Henry, “Modes of Thought That Vary Systematically with Both Social Class and Age,” Psychology & Marketing, May 2000, pp. 421–40.

19. For example, see R. Gardyn, “Shopping Attitudes by Life Stage,” American Demographics, November 2002, p. 33; and D. M. Phillips and J. L. Stanton, “Age-Related Differences in Advertising,” Journal of Targeting, Measurement and Analysis for Marketing, 13, no. 1 (2004), pp. 7–20.

REFERENCES

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Part Two External Influences144

20. “Resident Population Projections by Sex and Age: 2010 to 2050,” Statistical Abstract of the United States 2008 (Washington, DC: U.S. Bureau of the Census, 2008), table 10.

21. P. Sloan and J. Neff, “With Aging Boomers in Mind, P&G, Den-Mat Plan Launches,” Advertising Age, April 13, 1998, p. 3.

22. See K. P. Gwinner and N. Stephens, “Testing the Implied Mediational Role of Cognitive Age,” Psychology & Marketing, October 2001, pp. 1031–48; and A. Mathur and G. P. Moschis, “Antecedents of Cognitive Age,” Psychology & Marketing, December 2005, pp. 969–94.

23. S. Van Auken, T. E. Barry, and R. P. Bagozzi, “A Cross-Country Construct Validation of Cognitive Age,” Journal of the Academy of Marketing Science, Summer 2006, pp. 439–55.

24. See A. S. Wellner, “Generational Divide,” American Demographics, October 2000, pp. 53–58.

25. A. Rindfleisch, “Cohort Generational Influences on Consumer Socialization,” in Advances in Consumer Research, vol. 21, ed. C. T. Allen and D. R. John (Provo, UT: Association for Consumer Research, 1994), pp. 470–76; and R. T. Rust and K. W. Y. Yeung, “Tracking the Age Wave,” in Advances in Consumer Research, vol. 22, ed. Kardes and Sujan, pp. 680–85.

26. For a detailed treatment, see J. W. Smith and A. Clurman, Rocking the Ages (New York: Harper Business, 1997). See also Generations 2010 (Washington, D.C.: Pew Research Center, December 2010).

27. See N. Long, “Broken Down by Age and Sex,” Journal of the Market Research Society, April 1998, pp. 73–91; and G. P. Moschis, “Life Stages of the Mature Market,” American Demographics, September 1996, pp. 44–51.

28. L. L. Price, E. J. Arnould, and C. F. Curasi, “Older Consumers’ Disposition of Special Possessions,” Journal of Consumer Research, September 2000, p. 192.

29. See C. Yoon, “Age Differences in Consumers’ Processing Strategies,” Journal of Consumer Research, December 1997, pp. 329–40; S. Law, S. A. Hawkins, and F. I. M. Craik, “Repetition- Induced Belief in the Elderly,” Journal of Consumer Research, September 1998, pp. 91–107; G. P. Moschis, “Consumer Behavior in Later Life,” Research in Consumer Behavior 9 (2000), pp. 103–28; and G. P. Moschis, “Marketing to Older Adults,” Journal of Consumer Marketing, 20, no. 6 (2003), pp. 516–25.

30. P. Francese, “The Exotic Travel Boom,” American Demographics, June 2002, pp. 48–49; and Growing Old in America (Bethesda, MD: National Institute on Aging, 2007).

31. Generations 2010.

32. J. Schleimer, “Active Adults Uncovered,” Builder, February 2001, pp. 336–40.

33. J. B. Thomas and C. Peters, “Exploring the Self-Concept, Lifestyles, and Apparel Consumption of Women over Age 65,” International Journal of Retailing & Distribution Management, 37, no. 12 (2009), pp. 1018–40.

34. M. J. Weiss, “Great Expectations,” American Demographics, May 2003, pp. 26–35.

35. Growing Old in America. See also C. Yoon, C. Cole, and M. P. Lee, “Consumer Decision Making and Aging,” Journal of Consumer Psychology, 19 (2009), pp. 17–22.

36. See, e.g., R. G. Javalgi, E. G. Thomas, and S. R. Rao, “Meeting the Needs of the Elderly in the Financial Services Market,” Journal of Professional Services Marketing, 2, no. 2 (2000), pp. 87–105.

37. Inheritance and Wealth Transfer to Baby Boomers (Westport, CT: MetLife Mature Market Institute, 2010).

38. J. Saranow, “Online Deaccessioning,” The Wall Street Journal, June 28, 2004, pp. B1–B2.

39. See, e.g., T. Reisenwitz and R. Iyer, “A Comparison of Younger and Older Baby Boomers,” Journal of Consumer Marketing, 24, no. 4 (2007), pp. 202–13.

40. Generations 2010.

41. U.S. Baby Boomer Attitudes and Opportunities (Rockville, MD: Packaged Facts, June 2008).

42. J. Raymond, “The Joy of Empty Nesting,” American Demographics, May 2000, pp. 49–54; P. Francese, “Big Spenders,” American Demographics, September 2001, pp. 30–31; P. Francese, “The Coming Boom in Second-Home Ownership,” American Demographics, October 2001, pp. 26–27; S. Yin, “More at Home on the Road,” American Demographics, June 2003, pp. 26–27; and S. Yin, “Full Speed Ahead,” American Demographics, September 2003, pp. 20–21.

43. J. Raymond, “Senior Living,” American Demographics, November 2000, pp. 58–63.

44. See R. Gardyn, “Retirement Redefined,” American Demographics, November 2000, pp. 52–57; and H. Schau, M. C. Gilly, and M. Wolfinbarger, “Consumer Identity Renaissance,” Journal of Consumer Research, August 2009, pp. 255–76.

45. K. Greene, “Marketing Surprise,” The Wall Street Journal, April 6, 2004, pp. A1, 12.

46. H. Tootelian and S. B. Varshney, “The Grandparent Consumer,” Journal of Consumer Marketing, 27, no. 1 (2010), pp. 57–63.

47. J. M. Kozar and M. L. Damhorst, “Older Women’s Responses to Current Fashion Models,” Journal of Fashion Marketing and Management, 21, no. 3 (2008), pp. 338–50.

48. This insight is based on “It’s Good to Be Green,” Focalyst Insight Report, December 2007, at www.focalyst.com, accessed March 10, 2011; “How Well Do You Know Boomers?,” Focalyst Insight Report, April 2008, at www.focalyst.com, accessed March 10, 2011; Generational Market Research Bundle (Rockville, MD: Packaged Facts, December 2008); “Yesterday, Today and Tomorrow,” Focalyst Insight Report, February 2009, at www. focalyst.com, accessed March 10, 2011; “Mobile Access 2010,” Pew Internet & American Life Project, July 7, 2010, at http:// pewinternet.org, accessed March 10, 2011; and “Demographics of Internet Users,” Pew Internet & American Life Project, 2010, at http://pewinternet.org, accessed March 10, 2011.

49. Generational Market Research Bundle (Rockville, MD: Packaged Facts, 2008).

50. Study of Media and Markets (Deerfield Beach, FL: Simmons Market Research Bureau, Fall 2005).

51. S. Chen, “Women Marrying Men with Less Education, Income,” CNN.com, accessed May 17, 2010.

52. “Farther ALONG the X Axis,” American Demographics, May 2004, pp. 20–24.

53. Family Households with Own Children under 18 by Type of Family, 2000 and 2009, and by Age of Householder, 2009 (Washington, D.C.: U.S. Census Bureau, Statistical Abstract of the United States, 2011), table 65.

54. “Millenials,” PewResearchCenter Social and Demographic Trends, February 24, 2010.

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Chapter Four The Changing American Society: Demographics and Social Stratification 145

55. J. Halliday, “Volvo Goes After Younger Buyers,” Advertising Age, January 19, 2004, p. 12.

56. “Facebook Targeting,” Affiliate Marketing Blog, August 4, 2010, at www.legacyaffiliateblog.com, accessed March 13, 2011.

57. Study of Media and Markets (Deerfield Beach, FL: Simmons Market Research Bureau, Fall 2007).

58. For a discussion of the consequences of this, see A. Rindfleisch, J. E. Burroughs, and F. Denton, “Family Structure, Materialism, and Compulsive Consumption,” Journal of Consumer Research, March 1997, pp. 312–25.

59. P. Paul, “Getting inside Gen Y,” American Demographics, September 2001, pp. 43–49.

60. J. Napoli and M. T. Ewing, “The Net Generation,” Journal of International Consumer Marketing, 13, no. 1 (2001), pp. 21–34.

61. “Millenials.” 62. C. Dougherty, “For Many Adults, Marriage Can Wait, Census

Shows,” The Wall Street Journal, September 28, 2010. 63. R. J. Samuelson, “The Real Generation Gap,” Newsweek, March

15, 2010; and S. De Hauw and A. De Vos, “Millennials’ Career Perspective and Psychological Contract Expectations,” Journal of Business and Psychology, June 2010, pp. 293–303.

64. P. Paul, “Echo Boomerang,” American Demographics, June 2001, pp. 45–49; and A. Merrick, “Gap’s Greatest Generation?,” The Wall Street Journal Online, September 15, 2004, www.wsj.com.

65. S. Kang, “Chasing Generation Y,” The Wall Street Journal, September 1, 2006, p. A11.

66. Ibid. 67. Computed from U.S. Census data. 68. Generations 2010. 69. C. La Ferle, S. M. Edwards, and W. Lee, “Teens’ Use of Traditional

Media and the Internet,” Journal of Advertising Research, May 2000, pp. 55–65; and H. Fattah and P. Paul, “Gaming Gets Serious,” American Demographics, May 2002, pp. 38–43.

70. A. Walliker, “Generation Z Comes of Age,” Herald Sun, February 25, 2008; L. Schmidt and P. Hawkins, “Children of the Tech Revolution,” The Sydney (Australia) Morning Herald, July 15, 2008; and Sparxoo 2010 Report: Generation Analysis (Rochester, NY: Sparxoo, 2010).

71. Based on computations of data from the U.S. Census Bureau. 72. Good Intentions (New York, NY: Girl Scout Research Institute,

2009). 73. “Generation Z Comes of Age.” 74. “Marketing to Tweens and Teens,” ResearchandMarkets,

product brochure, at www.researchandmarkets.com, accessed March 10, 2011.

75. “Teen Spending,” money-management-works.com, accessed March 10, 2011.

76. N. Shepherdson, “New Kids on the Lot,” American Demographics, January 2000, p. 47.

77. P. Underhill, Call of the Mall (New York: Simon and Schuster, 2004), p. 160; see also D. L. Haytko and J. Baker, “It’s All at the Mall,” Journal of Retailing, 80 (2004), pp. 67–83.

78. Generations 2010; and Sparxoo 2010 Report. 79. J. Zegler, “Gatorade Repositions from Sports Drink to Sports

Performance,” Brand Packaging, September 2010. 80. E. Holmes, “Teen Stores Cater to the Ones with Money,” The

Wall Street Journal, September 23, 2009.

81. K. Labich, “Class in America,” Fortune, February 7, 1994, p. 114. 82. J. E. Fisher, “Social Class and Consumer Behavior,” in

Advances in Consumer Research, vol. 14, ed. M. Wallendorf and P. Anderson (Provo, UT: Association for Consumer Research, 1987), pp. 492–96.

83. See R. P. Heath, “The New Working Class,” American Demographics, January 1998, pp. 51–55.

84. R. Coleman, “The Continuing Significance of Social Class in Marketing,” Journal of Consumer Research, December 1983, p. 265. For a recent discussion of social class in America, see J. Scott and D. Leonhardt, “Shadowy Lines That Still Divide,” New York Times, May 15, 2005, www.nytimes.com, accessed May 28, 2008.

85. See Heath, “The New Working Class.” See also E. Sivadas, G. Mathew, and D. J. Curry, “A Preliminary Examination of the Continuing Significance of Social Class to Marketing,” Journal of Consumer Marketing, 14, no. 6 (1997), pp. 463–79.

86. See A. M. Kerwin, “Brands Pursue Old, New Money,” Advertising Age, June 11, 2001, p. S1.

87. See, e.g., R. J. Samuelson, “The End of Entitlement,” Newsweek, May 26, 2008, p. 39.

88. See J. P. Dickson and D. L. MacLachlan, “Social Distance and Shopping Behavior,” Journal of the Academy of Marketing Science, Spring 1990, pp. 153–62.

89. See also D. Watson, “In Search of the Poor,” Journal of Economic Psychology, 21 (2000), pp. 495–515.

90. P. Mergenhagen, “What Can Minimum Wage Buy?,” American Demographics, January 1996, pp. 32–36.

91. H. Fattah, “The Rising Tide,” American Demographics, April 2001, pp. 48–53.

92. For a theoretical examination, see P. Henry, “Hope, Hopelessness, and Coping,” Psychology & Marketing, May 2004, pp. 375–403.

93. Fattah, “The Rising Tide.” 94. R. H. Hill, D. L. Ramp, and L. Silver, “The Rent-to-Own

Industry and Pricing Disclosure Tactics,” Journal of Public Policy & Marketing, Spring 1998, pp. 1–10.

95. C. Miller, “The Have-Nots,” Marketing News, August 1, 1994, p. 2. 96. See A. B. Hollingshead, Elmstown’s Youth (New York: Wiley,

1949); and W. L. Warner, M. Meeker, and K. Eels, Social Class in America: A Manual of Procedure for the Measurement of Social Status (Chicago: Science Research Associates, 1949).

97. Sivadas, Mathew, and Curry, “A Preliminary Examination of the Continuing Significance of Social Class to Marketing”; and T. G. Williams, “Social Class Influences on Purchase Evaluation Criteria,” Journal of Consumer Marketing, 19, no. 3 (2002), pp. 249–76.

98. Sources for this insight include N. Darmon and A. Drewnowski, “Does Social Class Predict Diet Quality?,” American Journal of Clinical Nutrition, 87 (2008), pp. 1107–17; D. Ariely, “Americans Want to Live in a Much More Equal Country,” The Atlantic.com, August 2, 2012, www.theatlantic.com/business/archive/2012/08/ americans-want-to-live-in-a-much-more-equal-country-they-just- dont-realize-it/260639/, accessed August 27, 2014; and R. Dillon, “99 Cent Diet Helps Man Lose 250 Pounds with Foods from 99 Cent Store,” Examiner.com, June 4, 2013, www.examiner.com/ article/99-cent-diet-helps-man-lose-250-pounds-with-foods- from-99-cent-store, accessed August 27, 2014.

99. S. Zukin, “New Retail Capital and Neighborhood Change,” City & Community, March 2009, pp. 47–64.

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146

5 The Changing American Society: Subcultures chapter

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147

Understand subcultures and their influence on unique market behaviors.

Analyze the African-American subculture and the unique marketing aspects it entails.

Analyze the Hispanic subculture and the unique marketing aspects it entails.

Analyze the Asian-American subculture and the unique marketing aspects it entails.

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Analyze the Native-American, Asian-Indian- American, and Arab-American subcultures and the unique marketing aspects they entail.

Describe the various religious subcultures and their implications for marketing.

Explain the role of geographic regions as subcultures.

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

American ethnic subcultures continue to lead the way today in fashion, music, and culture.1 While we are all Americans, those from specific ethnic subcultures bring with them values, heritage, and culture that influ- ence their choices in ways that are different from so-called mainstream America. African Americans, for example, feel a strong need to embrace their specific ethnic subculture as it relates to activities and family traditions. They also are very likely to support retailers who affirm and respect their cultural heritage by carrying ethnic items and employing people who “look like me.”

Sponsorship of ethnic events offers mar- keters the opportunity to support and nour- ish the ethnic community in authentic ways. An example of one such effort is the Essence Music Festival. Originally launched in 1995 as a one-time event to celebrate the 25th anni- versary of ESSENCE, a magazine targeted toward African-American women, the event has thrived to become an annual, massive, multiday festival. Held in the New Orleans Mercedes-Benz Superdome since 1995, the Essence Music Festival is the biggest event of African-American culture and music in the

United States, drawing hundreds of thou- sands of people.

Although the superstar music headlin- ers are a draw, the Essence Music Festival is more than a music fest. Themed from its inception as “the party with a purpose,” the Essence Music Festival is designed to give back to the community. It may be the only music-themed event where not only musi- cians but motivational speakers are featured. A lineup of empowerment seminars and panels on education, careers, beauty, and family are held at a nearby convention cen- ter. Included in the program is #YesWeCode “hackathon,” which “will bring together nearly 200 of the tech industry’s brightest devel- opers, designers, and influential business professionals working alongside 50 high potential youth to solve problems with the goal of transforming their neighborhoods into thriving communities where everyone experi- ences success regardless of race, gender, abilities or other factors.”

Sponsors include Coca Cola, Ford, McDonald’s, My Black is Beautiful P&G, State Farm, Walmart, Verizon, AARP, American Cancer Society, Chevron, Colgate, and We

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Part Two External Influences148

tv. According to a company spokesperson for Essence:

The solution the festival provides is allowing our brand

marketers to engage our audience with their brand in

relevant ways. For them, the magazine delivers one

solution and the website delivers another. The festival

really rounds that out with an experiential marketing

solution. Whenever we go in to speak with our clients,

it’s not just with a magazine solution. It’s with a full

360, yearlong plan.

Some companies have stumbled in their efforts to market to, and engage, ethnic subcultures. Fully understanding an ethnic group and presenting authentic, respectful, and appropriate messages is critical to success, as demonstrated so well by Essence.

In the previous chapter, we described how changes in American demographics are creat- ing challenges and opportunities for marketers. Another extremely important aspect of the American society is its numerous subcultures, such as the African-American subculture described above. Although American society has always contained numerous subcultures, until recently, many marketers treated it as a homogeneous culture based primarily on Western European values. This view of America was never very accurate, and it is even less so today as non-European immigration, differential birthrates, and increased ethnic identification accentuate the heterogeneous nature of our society.

An array of racial, ethnic, nationality, religious, and regional groups or subcultures characterize American society today. These subcultures are growing at different rates and are themselves undergoing change. In this chapter, we describe the more important sub- cultures in America. We also highlight the marketing strategy implications of a heteroge- neous rather than a homogeneous society.

THE NATURE OF SUBCULTURES A subculture is a segment of a larger culture whose members share distinguishing values and patterns of behavior. The unique values and patterns of behavior shared by subculture group members are based on the social history of the group as well as its current situation. Subculture members are also part of the larger culture in which they exist, and they gener- ally share most behaviors and beliefs with the core culture. As Figure 5–1 indicates, the degree to which an individual behaves in a manner unique to a subculture depends on the extent to which the individual identifies with that subculture.

LO1

Individuals

Identification with core culture

Identification with a subculture

Core culture values and norms

Subculture values and norms

Mass market behaviors

Unique market behaviors

5-1 Identification with a Subculture Produces Unique Market BehaviorsFIGURE

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Chapter Five The Changing American Society: Subcultures 149

America has traditionally been viewed as a melting pot or a soup bowl. Immigrants from various countries came to America and quickly (at least by the second generation) surrendered their old languages, values, behaviors, and even religions. In their place, they acquired American characteristics that were largely a slight adaptation of Western Euro- pean, particularly British, features. The base American culture was vast enough that new immigrants did not change the flavor of the mixture to any noticeable extent. Although this is a reasonable approximation of the experience of most Western European immigrants, it isn’t very accurate for African, Hispanic, Asian, or Arabic immigrants. Nor does it accu- rately describe the experience of Native Americans.

Today, America is perhaps better described as a salad rather than a melting pot or a soup bowl. When a small amount of a new ingredient is added to a soup, it generally loses its identity completely and blends into the overall flavor of the soup. In a salad, each ingredi- ent retains its own unique identity while adding to the color and flavor of the overall salad. However, even in the salad bowl analogy, we should add a large serving of salad dressing, which represents the core American culture and blends the diverse groups into a cohesive society.

Ethnic groups are the most commonly described subcultures, but religions and geo- graphic regions are also the bases for strong subcultures in the United States. Genera- tions, as described in the previous chapter, also function like subcultures. Thus, we are all members of several subcultures. Each subculture may influence different aspects of our lifestyle. Our attitudes toward new products or imported products may be strongly influenced by our regional subculture, our taste in music by our generation subculture, our food preferences by our ethnic subculture, and our alcohol consumption by our religious subculture. These subculture influences often result in the need for marketers to adapt one or more aspects of their marketing mix, as seen in Illustration 5–1.

Identifying which subculture, if any, is an important determinant of behavior for a spe- cific product is a key task for marketing managers. In the sections that follow, we describe the major ethnic, religious, and regional subcultures in America. While we will describe the general nature of these subcultures, it must be emphasized that large variations exist within each subculture. Our focus in this chapter is on America, but all countries have a variety of subcultures that marketers must consider.

It is sometimes

important to

customize ads to

meet the require-

ments of different

ethnic markets.

ILLUSTRATION 5-1

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Part Two External Influences150

ETHNIC SUBCULTURES We define ethnic subcultures broadly as those whose members’ unique shared behaviors are based on a common racial, language, or national background. In this chapter, we describe the major ethnic subcultures separately. However, there are many Americans who identify with more than one ethnic group. Romona Douglas, of white, black, and American Indian descent, described her feelings as follows:

The assumption is that black people are a certain way, and white people are a particular way, and Asians are a certain way. Well, what about multi-racial families? I don’t appreciate a McDonald’s commercial with a street-wise black person. That is not me, that is not my upbringing. A lot of marketing campaigns are based on stereotypes of mono-racial communities.2

We describe the general characteristics of the major ethnic subcultures as a starting point, recognizing that further understanding can be gained by examining multiethnic groups as well. Figure 5–2 provides the current and projected sizes of the major ethnic groups in America.3 As this figure makes clear, non-European ethnic groups constitute a significant and growing part of our population, from 38 percent in 2010 to 47 percent by 2030. The percentages shown in the figure understate the importance of these ethnic groups to specific geographic regions.4 Thus, Hispanics are the largest population group in parts of Arizona, California, Florida, New Mexico, and Texas; Asian Americans are the largest group in Honolulu; and African Americans are a majority in parts of the South and urban areas in the Northeast and Midwest. In contrast, states such as Maine, Vermont, and West Virginia are more than 90 percent white.

The relatively faster growth rate of non-European groups is due to a higher birthrate among some of these groups and to greater immigration. Immigration has accounted for over a third of the U.S. population growth over the past several decades. Roughly one million legal immigrants enter the U.S. population each year. In 2009, the sources of these immi- grants were as follows:5

Latin America 40.8% Asia 36.5 Europe 9.3 Africa 11.2

Source: “Table 1a. Projected Population of the United States, by Race and Hispanic Origin: 2000 to 2050,” U.S. Interim Projections by Age, Sex, Race, and Hispanic Origin (Washington, DC: U.S. Bureau of the Census, 2004).

African American

0

5

10

15

20

25

P e rc

e n ta

g e o

f th

e To

ta l P

o p u la

tio n

Hispanic*

* May be of any race. ‡Includes American Indian, Alaskan Native, Native Hawaiian, Pacific Islander, and two or more races.

Asian All Other‡

2010

2020

2030 16.3

19.4

4.8 3.5 6.3

4.2 4.4 5.0

13.112.6 13

23.0

5-2 Major Ethnic Subcultures in the United States: 2010–2030FIGURE

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Chapter Five The Changing American Society: Subcultures 151

The influx of ethnic immigrants not only increases the size of ethnic subcultures, but also reinforces the unique behaviors and attitudes derived from the group’s home culture. In the following sections, we describe the major ethnic subcultures. It is critical to remem- ber that all subcultures are very diverse, and general descriptions do not apply to all of the members.

Although one’s ethnic heritage is a permanent characteristic, its influence is situational. That is, the degree to which a person’s consumption is influenced by his or her ethnicity depends on such factors as who he or she is with, where he or she is, and other physical and social cues.6 Thus, one’s ethnicity might play no role in a decision to grab a quick bite for lunch during a business meeting and a large role in deciding what to prepare for a family dinner.

In addition, ethnicity is only one factor that influences an individual’s behavior. As we saw in the previous chapter, demographic factors also play a role. For example, a 45-year- old black doctor earning $90,000 per year and a 45-year-old white doctor with the same income would probably have more consumption behaviors in common than they would with members of their own race who were low-income service workers. As shown below, the various ethnic groups have distinct demographic profiles.7 Thus, one must use cau- tion in assuming that observed consumption differences between ethnic groups are caused by their ethnicity. These differences often disappear when demographic variables such as income are held constant.

Whites Blacks Hispanics Asians

Median age (in 2015) 39 33 28 38 High school or more (25 or older) 87% 84% 62% 88% Bachelor’s or more (25 or older) 30% 19% 13% 52% Families with children under 18 47% 61% 71% 51% Growth rate (2010–2030) 16% 22% 73% 64% Median household income $52,312 $34,218 $37,913 $65,637

Examine Table 5–1. Which of these differences are caused mainly by ethnicity or race, and which are caused by other factors?

Astute marketers are aggressively pursuing opportunities created by increased ethnic diversity. However, successful marketing campaigns targeted at different ethnic groups must be based on a thorough understanding of the attitudes and values of each group, which are discussed next.

AFRICAN AMERICANS African Americans, or blacks (surveys do not indicate a clear preference for either term among African Americans),8 constitute roughly 13 percent of the American population. Concentrated in the South and the major metropolitan areas outside the South, African Americans are, on average, younger than the white population and tend to have less edu- cation and lower household income levels. However, given the diversity of this segment, opportunities exist for marketers to target diverse members of this group in terms of educa- tion and income. For example, one-third of black households earn $50,000 or more and 10 percent earn $100,000 or more.9 In addition, African Americans represent $1.1 trillion in buying power, which is expected to grow by some 25 percent through 2018, which is higher than the growth for whites.10 Thus, it is not surprising that marketers are very interested in this group. BMW has recently joined with an “urban-format channel” on Sirius and XM radio and comedian Jamie Foxx to become the automotive partner of the FoxxHole Satellite Radio Channel. The campaign will get “non-scripted on-air mentions

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Part Two External Influences152

by Foxx and other DJs” and is designed to target the African-American segment through music and comedy. The partnership should help BMW more directly target African Amer- icans, who are currently 4.5 percent of BMW’s customers. According to BMW’s Vice President of Marketing:

This partnership allows BMW to promote its brand on satellite radio with a comedian who appre- ciates the company’s cars. . . . What I love about Jamie is he is a BMW enthusiast. He’s owned BMWs.

Consumer Segments and Characteristics It would be a mistake to treat African Americans as a single segment. A recent study of 3,400 African Americans between 13 and 74 years of age identified 11 distinct seg- ments. These segments, described in Table 5–2, show the diversity of this group in terms of numerous factors including demographics, lifestyle, and technology use.11

Given the diversity suggested in Table 5–2, marketing strategies that target African Americans as a single market are likely to fail.

Media Usage African Americans make greater use of mass media than do whites, have different prefer- ences, and report more influence by mass media ads than do whites.12 While they consume

White Black Hispanic

Products Diet colas 109 48 79 Iced tea 93 136 109 Charcoal 96 129 88 Electric espresso/cappuccino maker 103 67 119

Activities Dining out (not fast food) 108 67 70 Mountain/rock climbing 91 59 116 Soccer 92 75 240 Record/CD club membership 74 272 129

Shopping Dollar General 97 139 81 Talbots 92 125 101 Starbucks 104 45 104 TGI Friday’s 84 226 84

Media Cosmopolitan 96 88 138 GQ 72 185 133 Better Homes and Gardens 106 84 66 VH1 75 241 117

Note: 100 5 Average level of use, purchase, or consumption. Source: Simmons National Consumer Study 2010, Experian Information Solutions (Costa Mesa, CA 2014).

Ethnic Subcultures and Consumption5-1TABLE

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Chapter Five The Changing American Society: Subcultures 153

general media, they also desire media specifically targeted at African-American culture, as shown below in terms of top magazines.

Black Men’s Top 5 Magazines

Black Women’s Top 5 Magazines

1. Jet 1. Ebony 2. Ebony 2. Jet 3. Sports Illustrated 3. Essence 4. Vibe 4. O, The Oprah Magazine 5. Time 5. People Magazine

Source: Simmons Market Research Bureau, Spring 2007 National Consumer Survey.

The type of TV programming viewed by blacks and whites has evidenced some conver- gence in the past several decades. However, as with magazines, differences in TV viewing exist that relate to shows dealing with African-American themes, concerns, and issues.

New Middle Class (5 percent)—Younger (25–44), highest education and income (1 in 4 earns $100k or more), most suburban, high tech users (55 hours a week on Internet), positive about future, self-describe as Black, feel “Black slang” should be avoided.

Broadcast Blacks (17 percent)—Middle age (2 in 3 over 44), female, lowest income (71 percent earn under $25k), urban, single parent, lowest tech (4 percent online), confident, independent, value education, self-describe as African American, feel “Black slang” should be avoided, strongly support “Buying Black.”

Black Is Better (11 percent)—Middle age (35–54); upper-middle income; urban; trend single parent; confident and positive; self-identify as African American; strong emphasis on faith, career, and family; prefer being around people of their own ethnicity; highest spenders on clothing.

Black Onliners (7 percent)—Younger (18–34); male; middle/upper income; brand conscious; place strongest importance on being around people of own ethnicity; most stressed about work, family, academics, and straddling black and white worlds; heaviest users of such technology as blogs and IM.

Digital Networkers (7 percent)—Younger (teens and early twenties), school or early career phase, unmarried, male, suburban, middle/upper income, heavy tech including social networking and IM, less in touch with black solidarity, less-confident attitudes, less religious, prefer to shop online.

Connected Black Teens (12 percent)—Teens living at home, over half raised by single parent, embrace black media, tech savvy, brand conscious and want brands popular with their culture, music focused, positive life attitude, respect elders, not as focused on only interacting with those of same ethnicity.

Boomer Blacks (6 percent)—Oldest segment (average age is 52), upper middle class, heavily (90 percent) online, prefer black advertising, religious, high mistrust in institutions and high awareness of prejudice, prefer being around people of their own ethnicity, strongly support “Buying Black.”

Faith Fulfills (10 percent)—Trend older (351) and female, parents, married, highly religious, spend most time volunteering for religious and nonprofit groups, upper middle class, have positive attitude about future, don’t feel they have to hide their blackness, use Internet but not tech forward.

Sick and Stressed (8 percent)—Trend older (45–65), male, suburban, parents, lower-middle income (40 percent earn less than $25k), less optimistic, stressed about health and finances, least likely to lead healthy lifestyle and have health insurance.

Family Struggles (10 percent)—Broad age group, mostly female, parents, lower income status (half earn under $25k), heaviest TV, are mostly online but lighter users, associate heavily with those of same ethnicity, lower use of social network sites, price but not brand conscious.

Stretched Black Straddlers (7 percent)—Young (18–34); female; middle income; trend unmarried; exposed to the greatest racial discrimination; self-identify as Black; report acting differently when around blacks than around other ethnicities; high stress over work, family, and money; newer to technology.

Source: Black America Today Study (Radio One and Yankelovich, 2008).

5-2African-American Segments Identified by Yankelovich TABLE

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Part Two External Influences154

Consider comments from an advertiser in the automobile industry who has worked with Black Entertainment Television (BET):

We’ve been working with BET for 15 years. There are precious few TV outlets that specifically target the African American audience. BET is far and away the flagship operation for that. What we like about BET is that it has continued to evolve and diversify its programming. The African American market isn’t really one big monolithic market, even though that’s what people think. There’s a lot of diversity in the market. BET’s current programming speaks to the old, the young, and everyone in between.13

Although African Americans have historically lagged behind the population as a whole in terms of computer ownership and Internet usage, this is no longer the case. One recent estimate is that 81 percent of African American adults are online, which is only slightly lower than the overall rate of 87 percent. Factors like education play a major role (indeed education is a much stronger determinant of Internet use than is ethnicity), with black col- lege graduates having some of the highest Internet usage.14 In addition, African-American web users15

�r� Spend more time per day surfing (4.4 hours) compared with the general population (2.3 hours).

�r� Are more likely than the general population to access the web for news and information across a number of categories, including general news, health, finances, and sports.

�r� Prefer a black perspective on news and information.

Not surprisingly, black-focused sites such as NetNoir (www.netnoir.net) and AOL’s BlackVoices (www.blackvoices.com) are attracting advertisers such as IBM, Hewlett- Packard, Wells Fargo, Walt Disney, and McDonald’s. BlackPlanet.com is currently the largest online community for African Americans. It features news, entertainment, and career information from a black perspective.

Finally, African Americans are more likely than whites to use their mobile devices for a variety of activities including text messaging, social networking sites such as Twitter, e-mail, IM, and so on.16 Clearly, companies such as P&G that utilize social networking approaches in their marketing efforts toward African Americans are tapping into these trends.

Marketing to African Americans Marketing to African Americans should be based on the same principles as marketing to any other group. Adaptation to fit the requirements of the unique segments identified in Table 5–2 may often be needed, although sometimes a general market approach will be appropriate. Overall, careful use of generalizations (often seen as stereotypes) is impor- tant. Consider the following quote by Pepper Miller, president of Hunter-Miller Group, an African-American consulting firm:

Black Generation Xers spawned one of the greatest marketing and lifestyle phenomena: the Hip Hop Culture. However, not all African American Generation Xers are Hip Hoppers. Yet market- ing communications targeting the African American Generation X segment continue to reflect typical and often stereotypical images of Hip Hop’s rap culture.17

Products African Americans have different skin tones and hair from white Americans. Cosmetics and similar products developed for white consumers are often inappropriate for

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Chapter Five The Changing American Society: Subcultures 155

black consumers. Recognition of this fact by major firms has created aggressive competi- tion for the billions that African Americans spend each year on personal care products and services, including cosmetics, hair care, and skin care. L’Oréal created its SoftSheen- Carson division specifically to serve women in this market. Iman’s line of cosmetics, which is sold through such retailers as Walgreens and Target, is similarly targeted to this market (www.i-iman.com). Illustration 5–2 shows a print advertisement for a product designed specifically for the unique needs of the African-American market and another for a prod- uct designed to meet the needs of all ethnic groups but that is being promoted to African Americans.

Numerous companies have found it worthwhile to alter their products and target them specifically to African Americans. Beyond hair and skincare, examples include:18

�r� Hallmark has a Mahogany line of greeting cards that feature black characters and sayings.

�r� Barbie offers African-American dolls. �r� GM has designed the Escalade and other models specifically with African Americans

in mind.

Communications A common mistake when communicating with any ethnic group is to assume that its members are the same as the larger culture except for superficial differ- ences. Failure to recognize this often results in commercials targeted at African Americans that simply place the firm’s standard ad in black media or that replace white actors with black actors, without changing the script, language, setting, or culturally relevant sym- bols.19 Jaguar provides a positive example in this regard in that their direct-mail campaign to affluent African Americans (a) modified the race of the actors (black husband and wife), (b) projected positive career images (wife was a surgeon, husband was a sculptor), (c) drew on historically important cultural symbols (they lived in Harlem, historically a mecca of black culture and music), and (d) projected a positive work-related theme in its tagline: “It’s not luck that got you where you are.” Notice how some aspects of the campaign (black actors and Harlem) are specific to the African-American community, while other aspects (professional careers and the “hard-work” theme) would be effective to the broader Ameri- can consumer.

The extent to which messages targeted to African Americans need to differ from those targeting other groups varies by situation. For example, sometimes advertisers can simply change the race of the models in the ads and perhaps the consumption setting to help indi- cate that the product is appropriate for the needs of African Americans. This works when the product, the appeal, and the appropriate language are the same for the black target mar- ket and the other groups being targeted. The ad on the left side in Illustration 5–2 is a good example of this approach. In other cases, more specific changes need to be made to com- municate how the product is designed to meet the specific needs of African Americans, as in the case of the ad on the right side in Illustration 5–2. In general, the use of black actors and spokespersons is important.20 This is particularly the case for ethnically relevant products such as cosmetics and for those with strong ethnic identities.21 Ads such as those in Illustration 5–2 can be run effectively in both black media and general media with a substantial black audience.

Another means of communicating with the African-American and other ethnic com- munities is event marketing, which involves creating or sponsoring an event that has a particular appeal to a market segment. For example, church is a major force in the lives of many African Americans. In order to tap into black churchgoers, Chrysler was a sponsor of Patti LaBelle’s “The Gospel According to Patti” concert tour in 2006. As part of the sponsorship, Chrysler offered test drives before each concert and donated $5 for

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each test drive to LaBelle’s chosen charity, the University of Pennsylvania’s Abramson Cancer Center.22

Retailing Retailers often adjust the merchandising mix to meet the needs of African- American shoppers. For example, Albertson’s, a national grocery retailer, adapts its mer- chandising mix in African-American neighborhoods.23 Surveys reveal that three major store-selection factors for blacks are that the store carries ethnic products (51 percent say that is important), employs people who “look like me” (40 percent), and treats customers of all races and ethnicities with respect (84 percent).24 This focus on respect is caused by the sad fact that many black shoppers still encounter obviously disrespectful acts such as being closely watched while shopping as well as more subtle discrimination such as slower ser- vice.25 The need for cultural sensitivity training for retail and service employees is clear.26

African Americans also use shopping as a form of recreation more than whites.27 This suggests that stores with black customers should pay particular attention to providing a pleasant and fun shopping environment. Blacks also respond to sales differently than do whites and have differing desires with respect to credit card, cash, and check payments.28 In addition, research suggests that African Americans are more prone to buy national brands than store brands as a way to signal status, although results in Table 5–2 show that differences in brand consciousness exist across different segments of black consumers.29 Thus, all aspects of the shopping experience need to be carefully aligned to the needs of the target shoppers.

HISPANICS The Bureau of the Census defines Hispanic as a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin regardless of race. Hispan- ics are, on average, younger than the white non-Hispanic population and tend to have less education and lower household income levels. However, given the diversity of this seg- ment, opportunities exist for marketers to target diverse members of this group in terms of education and income. For example, nearly 40 percent of Hispanic households earn $50,000 or more and 12 percent earn $100,000 or more.30 In addition, Hispanics represent $1.2 trillion in buying power, which is expected to grow by some 33 percent through 2018, which is higher than the growth for whites.31

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African-American

consumers have both

unique and shared

needs relative to

other ethnic groups.

ILLUSTRATION 5-2

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Chapter Five The Changing American Society: Subcultures 157

The Hispanic market is now the largest and fastest-growing ethnic subculture in the United States. By 2030 Hispanics are expected to represent 23 percent of the U.S. popula- tion. Marketers are definitely taking notice. Like the other ethnic groups in America, His- panics are diverse. Many marketers feel that the Hispanic subculture is not a single ethnic subculture but instead is three main and several minor nationality subcultures: Mexican Americans (66 percent), Puerto Ricans (9 percent), Cubans (4 percent), and other Latinos, mainly from Central and South America (14 percent).32 Each group speaks a slightly dif- ferent version of Spanish and has somewhat distinct values and lifestyles. Further, each group tends to live in distinct regions of the country: Mexican Americans in the Southwest and California; Puerto Ricans in New York, New Jersey, and Florida; Cubans in Florida; and other Latinos in California, New York, and Florida. Income levels also vary across the groups, with those of Cuban and Puerto Rican descent having somewhat higher incomes than those of Mexican descent.

Others argue that while one must be sensitive to nationality-based differences, the common language, the common religion (Roman Catholic for most Hispanics), and the emergence of national Spanish-language media and entertainment figures create sufficient cultural homogeneity for most products and advertising campaigns. However, at a mini- mum, the decision to treat Hispanics as a single ethnic subculture needs to take into con- sideration factors relating to acculturation, language, and generational influences, which we discuss next.

Acculturation, Language, and Generational Influences Given that roughly 40 percent of growth in the Hispanic population is attributable to immi- gration, the level of acculturation plays a major role in the attitudes and behaviors of His- panic consumers. Acculturation is the degree to which an immigrant has adapted to his or her new culture.33 Acculturation is highly related to language use and both are strongly influenced by generational factors. A recent study by the Pew Hispanic Center identifies three generations of Hispanic adults:

First-generation adults (63 percent) are those born outside the United States. This generation has the lowest income and education, is most likely to identify themselves as Hispanic (includ- ing country of origin), is most likely to have Spanish as their primary language (72 percent), and is most likely to possess traditional values including a masculine view of the family decision hierarchy.

Second-generation adults (19 percent) are those born in the United States to immigrant parents. Compared to the first generation, this generation has higher income and education, is more likely to identify themselves as Americans (though 62 percent still identify as Hispanic), is equally split between being bilingual and having English as the primary language, and is some- what less likely to ascribe to traditional values.

Third-generation (and beyond) adults (17 percent) are those born in the United States to U.S.-born parents. This group has the highest education and income, is most likely to identify as Americans (57 percent, versus 41 percent who identify themselves as Hispanic), is most likely to have English as the primary language (only 22 percent are bilingual; none are Spanish only), and is also somewhat less likely to ascribe to traditional values.34

As this discussion indicates, income, education, language, and identification with Hispanic culture change across generations. However, it is also important to note that most Hispanic adults identify more or less strongly with a Hispanic culture.35 This strong cultural identity is also true of Hispanic teens, many of whom were born in the United States and would thus be classified as second- and third-generation teens. As discussed

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158

in Consumer Insight 5–1, Hispanic teens are blending language and culture, setting cultural trends in the general U.S. population, and living truly bicultural and bilingual experiences.

The Hispanic culture is heavily influenced by the Roman Catholic religion. It is family oriented, with the extended family playing an important role across generations (unlike the general U.S. population in which extended family has lost its importance). It is also a mas- culine culture, and sports are very important to Hispanics, particularly boxing, baseball, and soccer. This masculine orientation manifests itself in many ways, including husband- dominant household decision making.37

The Hispanic culture generally has a fairly traditional view of the appropriate role of women. For example, the wife is expected to prepare the food for the family. As a result, food marketers such as Sara Lee and General Mills are engaging in a number of efforts to target Hispanic women. For example, General Mills’ website Que Rica Vida (What a Rich Life) targets their various brands to Hispanic women and deals with issues of

CONSUMER INSIGHT 5-1 Hispanic Teens: The New Bicultural Youth

Hispanic teens constitute about 20 percent of all teenagers but are far more important to marketers than that percent- age suggests.36 First, they currently represent $20 billion in spending power. This is likely to grow dramatically since this segment is projected to grow by 62 percent through 2020, which is six times faster than the overall teen market. More important, these teens are joining black teenagers as fashion and style leaders for the overall teenage market.

Hispanic teens often differ from their parents, who in many cases felt strong pressures to blend in and “be American” (i.e., act and speak like white Americans). These teens don’t. Rather, the trend for Hispanic teens is to be bicultural, that is, acculturating by adding a second culture, not replacing their first culture. To do so requires a balancing act, particularly in how the divide between inside and outside the home is accomplished. This is particularly challenging given the importance of family, both nuclear and extended, in the Hispanic culture. How this balancing act is enacted is shown in the table on the next page.

And the balancing process leading to biculturalism seems to be working. As three experts describe:

I’m always amazed by the “Hispanicness” of His- panic teens. They’re speaking Spanish at home,

both with friends, English for college and the Internet, but they’re very much into the Hispanic culture. Even when they’re born here. It’s downright breathtaking.

It’s not about being bilingual. It’s about being bicultural. They are engrossed in the American culture, but they take an incredible amount of pride in being Latino.

It’s very cool to be Hispanic at this age. It almost makes them more attractive, exotic. Hispanic teens are brushing up on their Spanish and cel- ebrating their culture.

These bicultural teens read the same English- language magazines and watch the same television programs as their non-Hispanic counterparts. In fact, they are much more likely to read such teen magazines as Seventeen and YM. One of the magazines targeting the female Hispanic teenager, Latina, is mostly English, though most of the ads are in Spanish. However, they also utilize Spanish-language magazines, television, and radio. They grew up listening not only to hip-hop and other popular music but to Hispanic-based rhythms as well—mariachi, banda, and norteño in California; tejano in Texas; salsa in Florida; and meringue in New York.

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159

food, family, and Hispanic-oriented recipes. However, because acculturation can affect gender-role views, it is critical that companies understand their target market on this dimension.38

Language is clearly important to the Hispanic market and often strongly intertwined with cultural identity. Generational and immigrant status influence the primary language spoken in a substantial way. Consider the fact that while 38 percent of Hispanics born in the United States speak only English at home, this number is only 4 percent for Hispanics born outside of the United States.39 Perhaps even more important is that Spanish-language ads are often more effective.40 Consider the following (and the Windex ad in Illustration 5–3):

When asked about advertising effectiveness, 38% of Hispanics surveyed found English language ads less effective than Spanish ads in terms of recall and 70% less effective than Spanish ads in terms of persuasion. Many younger and acculturated Latinos mix languages in the form of “Span- glish,” in which they speak English peppered with Spanish words. But, when it comes to selling, 56% of Latino adults respond best to advertising when it is presented in Spanish.41

Identity (Their Base): In-Home and Family

Belong/Blend: Out-of-Home and Friends Differentiate: U.S. Mainstream

Family Hispanic friends, but also friends of other nationalities

Use their culture and heritage to show they are different

Experience Latino food and drinks Latin food and drinks blended with mainstream products—Tacos and Lays Potato Chips

*

Speak Spanish Speak English Speak English, Spanish, and Spanglish

Presence of Latin American icons Mainstream products/brands are more effective in helping them “belong” and be cool and accepted

Successful brands that compete against mainstream brands with Urban or Spanglish twist provides pride in that they are the drivers of those brands

Listen to and watch Spanish music and TV * Listen to and watch Spanish and English radio and TV

Family helps maintain cultural identity Friends provide reassurance it’s okay to be who you are and they hang out with other cultures

Are starting to set the trends as African- American (Hip-Hop) culture becomes mainstream

*Data on specific behaviors and attitudes not available. Source: Adapted from Nuestro Futuro (Redwood Shores, CA: Cheskin, 2006), p. 24.

2. Many Hispanic teenagers are truly bicultural. What challenges does this present marketers?

3. Explain the role of family in Hispanic teenagers’ ten- dency toward biculturalism.

Now they are helping popularize these sounds and variations of them throughout the larger teen population.

Critical Thinking Questions 1. To what extent are Hispanic teenagers leading the

teenage market? Justify your response.

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Part Two External Influences160

Given these numbers, it should not be sur- prising that Univision, a Spanish-language network, is the fifth-largest network in the United States and the top three most watched networks by Hispanics are Spanish-language networks.42 In addition, recent research shows that the top 53 TV shows watched by Hispanics in the 18-to-49 demographic were in Spanish.43

Marketing to Hispanics Hispanic consumers tend to be highly brand loyal, particularly to marketers who they feel are working to adapt their prod- ucts and services to meet their distinctive needs. Price is important, but so too is the availability of high-quality national brands. Hispanics tend to be less receptive than the general market to store brands.44 Marketers

are responding with adaptations to various aspects of their marketing mix.

Communications As we saw earlier, Hispanics often speak Spanish and often prefer Spanish-language media. Therefore, although it is possible to reach part of this market using mass media, serious attempts to target Hispanics will often involve Spanish-language media as well. Univision, Telefutura, and Telemundo are the top three Spanish-language TV networks in the United States. Spanish-language radio is widespread, with both local and network stations. And there are numerous Spanish-language magazines, including Spanish versions of such magazines as Cosmopolitan, Sports Illustrated, and Maxim. There are also many Spanish-language newspapers.

With respect to communication and media, it is important to note that a youth trend is emerging, which will likely shape the future of Hispanic media strategy. Specifically, the 14-to-24-year-old demographic (which will grow rapidly over the next decade)45 spends more time viewing English-language TV, radio, and print media than Spanish. This group tends to be U.S.-born and more English-dominant in terms of language. In addition, the 18-to-34 demographic views Spanish- and English-language media about equally. In response, Telemundo is offering both bilingual and Spanish-language programming and is developing shows more in touch with the Hispanic youth market, such as the reality show Protagonistas de Novela. SiTV is a relatively new cable network that creates and deliv- ers English-language programming with a Latino theme targeted toward younger bicultural Hispanics.46

Internet use among Hispanics depends greatly on language and acculturation. For more acculturated, English-speaking Hispanics, Internet use is at 82 percent. For those born outside the United States and thus typically less acculturated, Internet use is at about 50  percent.47 These general numbers don’t tell the entire story because Hispanics (both English and Spanish-dominant) are more likely than non-Hispanic whites to have their own blog or website.48 And Facebook has 80 percent reach among Hispanics.49 Online and social network sites are clearly important to companies seeking to target Hispanics. Online sports are available through such sites as ESPN Deportes.com, and Spanish-language

Spanish language

ads such as this

Windex ad, are often

more effective when

marketing to His-

panics. This effect

may depend on

acculturation level,

however.

ILLUSTRATION 5-3

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Chapter Five The Changing American Society: Subcultures 161

Use of the Internet by

Hispanics is explod-

ing. Sites such as

ESPN Deportes.com

are being developed

to appeal to the

unique needs of this

market.

ILLUSTRATION 5-4

versions of Yahoo! and AOL have been developed. Online Spanish-language commu- nities such as CiudadFutura are also emerging. Hispanic Internet users tend to be rela- tively young, frequent both English- and Spanish-language sites, and in many cases prefer English- language media. As with traditional media providers, online Hispanic providers will be challenged to deliver content that is relevant to acculturated Hispanics, regardless of language (see Illustration 5–4).50

Language translation is a challenge. Examples of translation difficulties include the following:

�r� Tang introduced itself in its Spanish ads as jugo de chino, which worked well with Puerto Ricans, who knew it meant orange juice, but the phrase had no meaning to most other Hispanics.

�r� A Coors campaign used the word “guey,” which in modern slang terms can mean the equivalent of “dude.” However, the word can also be used as slang for “idiot” or “stupid.” According to one expert, whether or not consumers get the humor is generational.51

Successful marketing to Hispanics moves beyond accurate translations into unique appeals and symbols. It requires marketers to be “in-culture,” that is, to understand the value system and the overall cultural context of the various Hispanic groups. In fact, value congruence has been found to overcome persuasion shortfalls for second-language ads (e.g., English-language ads to bilingual Hispanics).52

�r� Levi Strauss developed a series for Discovery en Espanol that detailed the journey of a group of young Latinos who traveled along the Pan-American highway to learn more about their cultural heritage. This effort included heavy integration of Levi products and included an interactive site and social media to connect with Hispanic youth.53

�r� Best Buy created a TV spot designed to bridge the gap between younger, tech-savvy Hispanic teens and their older, less-acculturated fathers who often are uncomfortable with technology but, given the patriarchal hierarchy, must “sign off ” on the purchase. The slogan reads, “If you’re far away, get closer with Best Buy.” Best Buy says they designed the spot to get kids and their fathers talking.54

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Part Two External Influences162

Products Historically, other than specialty food products, few marketers developed unique products or services for the Hispanic market. However, given the size and growth of this market, that is changing. For example:

�r� Home Depot launched a paint line called Colores Origenes in some 400 stores that have a heavily Hispanic customer base. Based on research, the names of the colors are designed to specifically communicate to Hispanic customers in terms that evoke Latin tastes, scents, and images.55

�r� In Colorado, Walmart created Denver Bronco T-shirts specifically targeting Hispanic consumers. One version had the phrase “de todo corazón,” meaning “with all my heart” in Spanish. Walmart’s goal was to combine American sports tradition with symbols of Hispanic culture. The T-shirts became the most popular Denver Bronco’s merchandise of the season.56

�r� In addition, marketers are capturing the loyalty developed with their products in Cen- tral and South America by distributing them in areas of the United States with large Hispanic populations. For example, Colgate-Palmolive distributes its Mexican house- hold cleaner Fabuloso in Los Angeles and Miami.

Some attempts at adapting products to the Hispanic market have failed because of a failure to truly understand the needs of this market. For example, many Hispanics find the current trend in houses of having the kitchen open onto the family room to be repugnant (Hispanics tend to be uncomfortable having strangers in their kitchens) and find the homes built for Hispanic buyers to be too stereotypical.57

Retailing The primary retailing responses to this market have been an increase in the number of bilingual salespeople; the use of Spanish-language signs, directions, and point- of-purchase displays; and merchandise assortments that reflect the needs of the local His- panic community. The following provide specific examples:

�r� Walmart has identified Hispanics as one of its six key segments. Not only have they adjusted their traditional stores to include products and destinations such as tortille- ria bakeries that appeal to the Hispanic consumer, they also are opening Hispanic Walmart stores called Supermercado de Walmart in metro areas with large Hispanic populations such as Houston, Texas. The stores feature signage, layout, and prod- uct assortments designed to appeal very specifically to the Hispanic market. Aspects include cafes serving Latino pastries and coffee as well as full-service meat and fish counters.58

�r� In San Antonio, Texas, a shopping centere called Tianguis Mall has been opened. According to the developers, “Tianguis markets are popular in Latin America, provid- ing shoppers with an open-air retail marketplace. San Antonio’s Tianguis Mall will offer the convenience of having the retail stores usually found in neighborhood shop- ping centers along with restaurants, entertainment and community events in one venue resembling a charming Mexican village.”59

ASIAN AMERICANS Asian Americans represent an important subculture. Although relatively small in size, this group will continue to grow. Of particular importance to marketers is that Asian Americans are the highest-educated and highest-income group, with substantial purchasing power. Asian-American purchasing power is estimated at $713 billion and is expected to grow by 37 percent through 2018, which is higher than the growth for whites.60 However, Asian Americans are also the most diverse group, with numerous nationalities, languages, and

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Chapter Five The Changing American Society: Subcultures 163

religions. The U.S. Census includes Asian Indians in its summary figures for this group. However, we will discuss them separately in a later section.

Asian Americans are not a single subculture. Consider the Zaoboa.sg website in Illustration 5–5. Ads on this site are probably quite effective with many of the Chinese members of this subculture. However, as Figure 5–3 shows, Chinese represent only a little over a fourth of all Asian Americans, and they share neither a common language nor culture with most of the other groups.

As with Hispanics, language is a major factor. One estimate is that 80 percent of Asian Americans can be reached with “in-language” promotions. Two-thirds of Asian Americans are immigrants, and the percentage of each nationality group that uses primarily its native language is generally high.61 While language use and proficiency are clearly a function of

Ads on the Zaoboa.sg

site would appeal to

many Chinese con-

sumers but would

not reach most other

Asian Americans.

ILLUSTRATION 5-5

Other 14%

Chinese 29%

Japanese 9%

Korean 13%

Vietnamese 13%

Filipino 22%

5-3National Background of Asian Americans FIGURE

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Part Two External Influences164

acculturation and age, the following shows a wide variation in English use and proficiency across national background as well:

Country English Only at Home Non-English at Home but

English Spoken “Very Well”

Non-English at Home but English Spoken Less Than

“Very Well”

Vietnam 12 33 55

China 17 36 48

Korea 20 31 49

Philippines 34 44 22

Japan 53 20 27

Source: The American Community—Asians (Washington, DC: The Census Bureau, February 2007).

Clearly, this information suggests the need for “in-language” communications, particu- larly for those from national backgrounds where English proficiency is lower. In addition to proficiency, there is research suggesting that overall, a majority of Asian Americans prefer either in-language or bilingual communication, with only 17 percent preferring English only.62

More than languages differ among the groups. In fact, the concept and term Asian American was developed and used by marketers and others who study these groups rather than the members themselves. Members of the various nationalities involved generally refer to themselves by their nationality without the term American, that is, Vietnamese, not Vietnamese American. An exception is Japanese Americans.63

While each nationality group is a distinct culture with its own language and traditions, there are some commonalities across most of these groups. All have experienced the need to adjust to the American culture while being physically distinct from the larger popula- tion. Most come from home cultures influenced by Confucianism. Confucianism empha- sizes subordination of the son to the father, the younger to the elder, and the wife to the husband. It values conservatism and prescribes strict manners. Their base cultures have also typically placed a very strong value on traditional, extended families. Education, col- lective effort, and advancement are also highly valued.64

Consumer Segments and Characteristics Market Segment Research found three groups of Asian Americans on the basis of their demographics and attitudes that cut across nationality groups. Such commonalities can be useful starting points when designing marketing campaigns even if language and cultural symbols must be adapted. Traditionalists are older, are often retired, and have strong identification with their original culture; the native language tends to be the primary language; and they are not concerned about status. Established are older, con- servative professionals; are well educated, with strong incomes; have relatively weak identification with their native culture; have less need or desire for native-language programming; and will pay premium prices for high quality. Living for the Moment are younger, have moderate identification with their native culture, tend to be bilingual, and are spontaneous, materialistic, and impulsive shoppers who are concerned with status and quality.65

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Chapter Five The Changing American Society: Subcultures 165

Several aspects of the Asian American population may make it easier to target. The first is geographic concentration: 65 percent of both the Asian-American population and their spending power reside in just six states (California, New York, New Jersey, Hawaii, Texas, and Illinois).66 The second aspect is a trend toward an increase in skilled workers from Mandarin-speaking regions of mainland China. This trend appears to be causing a “gradual shift to Mandarin from Cantonese in Chinese communications.”67

A final aspect of the Asian-American community that may make it easier to target is one that is common to all subcultures, and that is the youth trend. Roughly a third of Asian Americans are under the age of 25, which is comparable to whites.68 In addi- tion, this second generation (sometimes referred to as Generation 2.0), which was born in the United States, is, like the African-American and Hispanic youth, still tied to its roots but blending languages and cultures, influencing general U.S. culture, and fuel- ing trends in fashion and music. As in the Hispanic market, English-language media options with Asian-American content targeted at this second generation are increasing. Pepsi aired ads in English on one such venue called Stir TV.69 Also consider the Honda initiative:

Honda Motor Co. chose to piggyback on Boba, a beverage developed in Taiwan that is all the rage in Asian youth circles. The beverage, also known as bubble tea, consists of “pearls” of black, gummy, tapioca balls that float in the mixture of sweetened iced tea. It has quickly caught on as the soft drink of Asian youth. Honda’s idea was to develop drink sleeves that surround hot beverages in the U.S. to promote its youth-oriented cars, like the Civic and Acura RSX. Ponce (manager of emerging markets) got the idea from one of her young Asian co-workers who frequents Boba stores and noticed the number of young Asians who pulled up in Hondas.70

Marketing to Asian Americans As we’ve seen, there are several Asian-American markets, based primarily on nationality and language. Each of these in turn can be further segmented on degree of acculturation,71 social class, generation, lifestyle, and other variables. And while this creates challenges for marketers, the purchase power of this group and its various segments is increasingly attractive to marketers and causing them to address these niche markets with creative prod- uct, merchandising, and media approaches.

Geographic concentration increases marketing efficiency because targeted nationali- ties can be reached through specialized media channels. For example, in San Francisco, KTSF offers in-language news and entertainment programming for Chinese and Japanese viewers. Many KTSF advertisers, such as McDonald’s, dub their existing ads in Canton- ese. Others, such as Colgate-Palmolive, run the ads they are using for the same products in Asia. Major U.S. brands such as State Farm, Wells Fargo, and McDonald’s sponsored KTSF’s coverage of the 2008 Olympic Games held in Beijing, China.

Direct broadcast satellite (DBS) is also an important TV option. DBS provides a means of reaching virtually all the native-language speakers of any nationality nationwide. For example, EchoStar’s Dish network offers a “Chinese Package” called the “Great Wall TV Package,” with over 20 channels. DirecTV offers the gamut of language options to the Asian-American audience, including offerings in Vietnamese, Cantonese, and Mandarin, which allow customers to enjoy their favorite programs “from back home.”72

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Part Two External Influences166

Asian Americans are highly tech savvy and heavy users of the Internet. Internet penetration of Asian Americans is esti- mated at 90 percent.73 They are also heavy users of social media.74 Internet-based mar- keting to the Asian community is growing rapidly. Firms can reach Chinese consum- ers in their native language on sites such as that shown in Illustration  5–5. Similar sites are gaining popularity among other Asian nationality groups, and firms such as Charles Schwab are using them as commu- nications channels.

Marketing to the various Asian nation- ality groups should follow the same basic guidelines discussed earlier for Hispanics. Thus, effective communication is more than simply translating ad copy. It also requires adopting and infusing ads with cultural sym- bols and meanings relevant to each nation- ality segment. Examine the Walmart ad in Illustration 5–6. This ad is targeted toward a particular Asian nationality group. Notice the various elements that have been incorpo- rated in order to focus attention on and com- municate with this segment.

Other examples of successful marketing to Asian Americans include:

�r� A Los Angeles chain selected four outlets with large numbers of Chinese and Viet- namese customers. At the time of the Moon Festival (an important holiday in many Asian cultures), the store ran ads and distributed coupons for free moon cakes and lanterns. Sales increased by 30 percent in these stores during the promotion. Likewise, Sears advertises the Moon Festival in Mandarin, Cantonese, Vietnamese, or Korean, depending on the population near each outlet. It provides nationality-relevant gifts and entertainment such as traditional dances.

�r� Western Union sponsors numerous Asian cultural events, such as the Asian-American Expo for the Chinese New Year in Los Angeles. A majority of Asian Americans attend cultural events relevant to their national heritage, so this is an effective strategy.75 It also partnered with World Journal to publish the Chinese Immigrant Handbook to offer prac- tical guidance to new immigrants. These represent grassroot, community-based efforts to target the very specific needs of various nationality groups. These efforts supplement their more traditional mass-media approaches using TV, radio, and magazines.76

NATIVE AMERICANS The number of Native Americans (American Indians and Alaska Natives, in U.S. Census terms) depends on the measurement used. The Census Bureau reports three numbers for Native Americans: (1) one tribe only, (2) one tribe only or in combination with another

LO5

The Walmart ad

shown here dem-

onstrates how

marketing to Asian

Americans involves

more than translating

ads into the appro-

priate languages.

Acknowledgment of

special celebrations

and symbols are also

important.

ILLUSTRATION 5-6

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Chapter Five The Changing American Society: Subcultures 167

tribe, and (3) number 2 plus in combination with any other race. The first definition pro- duces an estimate of 2.8 million Native Americans; the total jumps to 4.1 million when the third definition is used. Nearly half live in the West, and 30 percent reside in the South. While many Native Americans live on or near reservations, others are dispersed through- out the country.

There are approximately 550 Native American tribes, each with its own language and traditions. Many of the tribes have reservations and quasi-independent political status. In general, Native Americans have limited incomes,77 but this varies widely by tribe. The overall buying power of this group is estimated at $96 billion and is expected to grow by 28 percent through 2018, which is higher than the rate for whites.78 The larger tribes are as follows:

Tribes One Tribe Only Multiracial

Cherokee 281,000 730,000

Navajo 269,000 298,000

Sioux 109,000 153,000

Chippewa 106,000 150,000

Choctaw 87,000 159,000

Pueblo 60,000 74,000

Apache 57,000 97,000

Eskimo 46,000 55,000

In recent years, Native Americans have taken increasing pride in their heritage and are less tolerant of inaccurate stereotypes of either their history or their current status. Thus, marketers using Native American names or portrayals must ensure accurate and appropriate use. Native American cuisine is making its way into the American main- stream with efforts from Native American chefs like Arnold Olson. Olson blends Euro- pean and Native American styles to create interesting dishes such as bison carpaccio and caribou bruschetta. As American interest in and acceptance of diversity continue to grow, unique Native American offerings such as this will become increasingly relevant and popular.79

The larger tribes have their own newspapers and radio stations. In addition, there are national Native American–oriented newspapers, radio shows, and magazines.80 Although each tribe is small relative to the total population, the geographic concentration of each tribe provides easy access for marketers. Sponsorship of tribal events and support for tribal colleges, training centers, and community centers can produce good results for firms that do so over time. For example:

�r� Indian Summer Inc. is an organization that holds a festival each year to “educate, pre- serve and promote American Indian cultures, showcase the diversity that exists within tribal cultures, provide economic opportunities to our people and strengthen communi- cation and understanding.” Harley Davidson is among the corporate sponsors working to support this event and build a relationship with this market.81

�r� Nike has teamed up with the Indian Health Service to set up educational programs to teach and promote health and fitness on reservations.82

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Part Two External Influences168

ASIAN INDIAN AMERICANS There are approximately 2.5 million Americans of Indian heritage (from India). This segment of the population is growing rapidly as a result of immigration. Asian Indian Americans are concentrated in New York and California, with significant numbers in New Jersey, Illinois, and Texas as well. As a group, they are well educated, affluent, and fluent in English; yet most retain cultural ties to their Indian background.

Those unfamiliar with India often assume that it is a homogeneous country. However, in some ways it is more like Europe than America. It has 28 states, six union territories, 15 official languages, and dozens of other languages and dialects. Thus, while those who immigrate to America have much in common, they also have many differences based on their background in India.

Although diverse in many ways, most share a number of important cultural traits:

�r� They place great value on education, particularly their children’s education. �r� They are concerned with financial security and save at a rate much higher than the

average American. �r� They do not have a “throw-away” mentality. They shop for value and look for quality

and durability. �r� Husbands tend to have a dominant role in family decisions.

Asian Indian Americans attend to the general mass media. They can also be targeted via specialty magazines such as Silicon India and Indian Life & Style, online sites such as IndiaAbroad.com, as well as cable TV, radio stations, and newspapers in regions with significant populations. For example, Western Union advertises to this segment on Eye on Asia, a cable channel focused on this group. National reach is now possible through Echo- Star’s Dish Network’s South Asia Package with various channels from India. Long-term involvement in the Indian community is an effective way to gain support from this segment:

Metropolitan Life was a major sponsor of a Navaratri, a religious festival that attracted 100,000 participants from around New York and New Jersey. As one participant said, “One of the chief executives of the company attended the festival, and the company took out a series of ads in the souvenir program. Now we feel we should reward the company for taking an interest in us.”83

The Internet is also an effective way to market to these consumers. However, such an effort requires a sound knowledge of the community:

It’s December but Namaste.com’s holiday rush has been over for two months. Christmas is not the big season for its customers. “To suggest gifting to Indians around Christmas time doesn’t make sense. It’s the wrong marketing message. Diwali [a festival of lights that happens in late October] is the Indian ‘Christmas.’ ”84

ARAB AMERICANS The 2000 Census identified 1.25 million self-identified Arab Americans in the United States. However the Arab American Institute (the Census Bureau’s official designee for analyzing data related to Arab Americans) estimates underreporting by a factor of three and, based on additional research, has estimated the Arab-American population at about 3.5 million. Perhaps no group in America has a more inaccurate stereotype. For example: What is the most common religion of Arab Americans? Sixty-six percent identify them- selves as Christians (up from about 50 percent in the early 1990s), and 24 percent are Muslim (down from about 50 percent in the early 1990s).

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Chapter Five The Changing American Society: Subcultures 169

Arab Americans come from a variety of countries, including Morocco, Algeria, Egypt, Lebanon, Jordan, Saudi Arabia, and Kuwait. They share a common Arabic heritage and the Arabic language. Since World War II, many Arab immigrants have been business pro- prietors, landowners, or influential families fleeing political turmoil in their home coun- tries. Many of these individuals attended Western or Westernized schools and were fluent in English before arriving.

More than 80 percent of Arab Americans are U.S. citizens, with a majority having been born in the United States. They are somewhat younger than the general population, are bet- ter educated, and have a higher-than-average income. They are also much more likely to be entrepreneurs. A third of all Arab Americans live in California, New York, and Michigan.

Most Arab Americans are tired of negative stereotyping and misrepresentations about their culture. Even the film Aladdin contained insults and mistakes. Aladdin sings about the “barbaric” country from which he came. A guard threatened to cut off a young girl’s hand for stealing food for a hungry child. Such an action would be contrary to Islamic law. The storefront signs in the mythical Arabic land had symbols that made no sense in Arabic or any other language. The aftermath of the September 11, 2001, attacks on the World Trade Center and the Pentagon has aroused some prejudice against these citizens—as well as some enhanced knowledge of their backgrounds and beliefs.

The first rule in reaching this market is to treat its members with respect and accuracy. There are specialized newspapers, magazines, and radio and television stations focused on this market. EchoStar’s Dish Network offers an Arabic-language package. And Walmart has begun to adjust its product selection in areas with strong Arab-American populations, such as Dearborn, Michigan, with offerings such as falafel, olives, and Islamic greeting cards. Attention to the unique traditions of this community can pay large dividends.85

RELIGIOUS SUBCULTURES As discussed in Chapter 3, America is basically a secular society. That is, the educational system, government, and political process are not controlled by a religious group, and most people’s daily behaviors are not guided by strict religious guidelines. Nonetheless, roughly 82 percent of American adults claim a religious affiliation, 30 percent claim to attend a religious service at least once a week, and 54 percent state that religion is very important in their lives.86 Interestingly, while some are leaving religion altogether, which accounts for the ongoing decrease in those identifying with a religious affiliation over time, others are switching. A recent study indicates that 44 percent of adults have moved to another religion, moved within the Protestant denomination, or moved out of religion altogether.87

The fact that the American culture is largely secular is not viewed as optimal by all of society. Many conservative Christians would prefer a society and legal system more in line with their faith. The intense debates over abortion, prayer in schools, the teaching of evolu- tion versus creationism, homosexual rights, and a host of other issues are evidence of this division in American society.

Religion is important to, and directly influences the behaviors of, many Americans. This includes consuming religiously themed products88 and avoiding the consumption of other products such as alcohol. The different religions in America prescribe differing val- ues and behaviors. Thus, a number of religious subcultures exist in America.

Christian Subcultures Much of the American value system and the resultant political and social institutions are derived from the Christian, and largely Protestant, beliefs of the early settlers. Although American culture is basically secular, many of its traditions and values are derived from the

LO6

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Part Two External Influences170

Judeo-Christian heritage of the majority of Americans. Most of the major American holidays, including Christmas, Easter, and Thanksgiving, have a religious base. However, except for Easter, the pure religious base of these holidays is no longer the central theme that it once was.

Although the United States is predominantly Christian, the percentage of American adults claiming Christianity as their religion was 76 percent in 2010, down from 86.2 percent in 1990.89 However, Yankelovich has been tracking a psychographic segment it calls the “young religious,” composed of Gen X and Y. Following up on the huge success of the movie The Passion of the Christ, clothing firms have begun marketing trendy fashions with an edge to this younger audience, including T-shirts with the slogan “Jesus is my home-boy.” Some retailers have embraced this trend while others, concerned about offending customers, have declined.90 The C28 website shown in Illustration 5–7 appears to be targeting this group.

Chick-fil-A is rarity among national fast-food chains in that they are not open on Sunday as a matter of Christian principle based on the beliefs of its founder, Truett Cathy. The follow- ing is an excerpt from the company’s Vice President of Marketing regarding this decision:

We’ve always had pressure from our customers, even landlords. But ultimately, we feel like it’s a fundamental business issue to us . . . and we’re not tempted to open on Sunday. Ironically, a lot of people respect the fact that we put something ahead of making another dollar in life. . . .91

Christianity takes many forms in this country, each with some unique beliefs and behaviors, as discussed next.

Roman Catholic Subculture Roughly 21 percent of American adults are Roman Catho- lic. The Catholic Church is highly structured and hierarchical. The pope is the central religious authority, and individual interpretation of scripture and events is minimal. A basic tenet of the Catholic Church is that a primary purpose of a marital union is procreation. Therefore, the use of birth control devices is prohibited, though many Catholics deviate from this. A result of this is a larger average family size for Catholics than for Protestants or Jews. The larger family size makes economic gains and upward social mobility more difficult. It also has a major influence on the types of products consumed by Catholics relative to many other religions.

The Catholic Church is ethnically diverse, with some 35 percent of its adult member- ship coming from ethnic subcultures. Recall from our earlier discussion that the predominant

The C28 website

would appeal to the

“young religious”

segment

identified by

Yankelovich.

ILLUSTRATION 5-7

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Chapter Five The Changing American Society: Subcultures 171

religion among Hispanics is Catholicism. Hispanics have fueled much of the Catholic growth since 1960. Twenty-nine percent of adult Catholics are Hispanic, 3 percent are African American, and 3 percent are Asian.92 Perhaps even more telling, 50 percent of Catholics under the age of 25 are Hispanic.93 Catholics tend to be concentrated in the Northeast and in areas with large Hispanic populations. Encuentro 2000: Many Faces in God’s House was a special event that embraced people of all ethnic and racial backgrounds for the first time at a national level. The conference included Latin music, an ethnic village, workshops reflecting the Asian experience, and speakers from various ethnic backgrounds.94 This was just one step. The U.S. Conference of Catholic Bishops has a Hispanic Affairs section on its website devoted to issues of education and outreach to the Hispanic community. On a more local level, the Archdiocese of Baltimore holds an annual Mass for Our Lady of Guadalupe, who was said to have appeared to an Indian peasant in 1531 near what is now Mexico City.

Like Protestants, Catholics vary in their commitment and conservatism. The more con- servative members share many values and behaviors with Protestant religious conserva- tives. Catholics have few consumption restrictions or requirements associated with their religion. Marketers targeting this group can reach the more committed members through specialized magazines, radio programs, and community events.

Protestant Subcultures Approximately 45 percent of American adults identify them- selves as Protestant. While there are many types of Protestant faiths, with significant differ- ences between them, most emphasize direct individual experience with God as a core tenet. In general, Protestant faiths emphasize individual responsibility and control. This focus has been credited with creating a strong work ethic, a desire for scientific knowledge, a willing- ness to sacrifice for the future, and relatively small families. These characteristics in turn have created upward social mobility and produced the majority of the ruling elite in America.

Protestant values and attitudes have tended to shape the core American culture. This is particularly true for white Protestants of Western European heritage—WASPs (white Anglo- Saxon Protestants). This group has historically dominated America in terms of numbers, wealth, and power, with power historically belonging to the male members of this group.

Although Protestants constitute the basic core culture of America, the diversity across and within denominations creates numerous subcultures within the larger group. Many of these religious groups have unique beliefs of direct relevance to marketers. These gen- erally involve the consumption of products containing stimulants such as caffeine (pro- hibited by the Mormon Church) or alcohol (prohibited by the Southern Baptist church, among others). However, the basic distinction among Protestants, as among Catholics, is the degree of conservatism in their religious beliefs. Many Protestants are middle-of-the- road in terms of conservatism. This is consistent with America’s dominant cultural values. However, a sizable and growing number are very conservative and, along with conserva- tive Catholics, represent a significant subculture.

The Born-Again Christian Subculture Born-again Christians have been referred to as the Christian Right, Religious Right, Conservative Christians, Evangelical Christians, and Fundamentalist Christians. Born-again Christians are characterized by a strong belief in the literal truth of the Bible, a very strong commitment to their religious beliefs, having had a “born-again” experience, and encouraging others to believe in Jesus Christ.

Born-again Christians tend to have somewhat lower education and income levels than the general population. They tend to have a more traditional gender role orientation. Born- again Christians are best known for their political stands on issues such as abortion, homo- sexual rights, and prayer in the schools.

Their beliefs also influence their consumption patterns. They generally oppose the use of alcohol and drugs. They do not consume movies or television programs that are overly

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Part Two External Influences172

focused on sex or other activities that they consider to be immoral. In fact, various groups of born-again Christians have organized or threatened boycotts against advertisers that sponsor shows they find inappropriate or corporations whose policies and procedures (e.g., those relating to same-sex couples) run contrary to their beliefs.

In contrast, they are very receptive to programs, books, and movies that depict tradi- tional (i.e., Protestant) family (husband, wife, children) values. Firms with a reputation for supporting similar values are well received by this segment.

Non-Christian Subcultures Jewish Subculture Judaism represents 2 percent of American adults and is unique in that historically it has been an inseparable combination of ethnic and religious identity. Histori- cally, Jews in America tended to marry other Jews, although that has changed somewhat over time.95 In fact, a recent study of Match.com members found that 81 percent of Jewish single men and 72 percent of Jewish single women said they would date outside their race, ethnicity, or religion (these percentages were similar to those found for most other religions).96

Jews are heavily concentrated in the Northeast but are increasingly dispersing through- out the United States, particularly into the Sunbelt.97 American Jews tend to have higher- than-average incomes and education levels. In most ways, Jewish consumption patterns are similar to those of other Americans with similar education and income levels.

Like other religious groups, the committed, conservative Jews represent a subculture dis- tinct from mainstream Jews. Orthodox Jews have strict dietary rules that prohibit some foods such as pork and specify strict preparation requirements for other foods. Glatt Kosher Subway offers kosher lunch programs to local schools as shown in Illustration 5–8. They also strictly observe Jewish holidays, and many do not participate in even the secular aspects of the major Christian holiday, Christmas. Reform Jews and Jews less committed to the strict interpreta- tions of Judaism are less influenced by these practices.98

Muslim Subculture It is important to recall from our earlier discussion that Arab Americans are often not Muslims, and by the same token Muslims in America are not necessarily Arabs. Muslims in America (representing roughly 0.6 percent of the American adult population)99 are culturally diverse, including Arab Americans, African Americans, Asian Americans, and Hispanics. Like the Protestants, there are a variety of Muslim sects with varying belief patterns, though all are based on the Koran. As with Protestants, Catho- lics, and Jews, the most obvious division among Muslims is the degree of conservatism and the importance attached to the literal teachings of the religion. As with the other reli- gious groups in America, most Muslims’ lives are centered on work, family, school, and the pursuit of success and happiness.

In general, Muslims tend to be conservative with respect to drug and alcohol use and sex- ual permissiveness. In fact, many oppose dating. They also place considerable emphasis on the family, with the eldest male as the head of the family, and on respect for elders. The more devout Muslims avoid not only pork products but also any foods that have not been prepared in accordance with the strict rules of Islam. The following quote from a devout Pakistani Muslim on why he does not eat in Western restaurants illustrates the stress this can cause:

Well, how can I be sure that the cook who has cooked pork or bacon in a pan did not cook my vegetables in the same pan? How can I be sure that even if he used different pans he washed his hands in between cooking bacon and a vegetable? I do not think there is any way I can get a pure food out there.100

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Chapter Five The Changing American Society: Subcultures 173

These beliefs conflict with the practices in the larger society and the images portrayed on television and in the movies and are also a source of conflict between older Muslims who immigrated to America and their children who were raised here.101 Muslims in Amer- ica have their own magazines, schools, social clubs, marriage services, and bookstores. There are more than 1,100 Muslim mosques and sanctuaries in America. In general, this subculture has not attracted the attention of marketers except as it overlaps with the Arab- American subculture.

Buddhist Subculture There are nearly as many Buddhists in America as there are Muslims. They are primarily Asian American or white, although Asian Americans are more likely to be Christian (roughly 43 percent) than Buddhist (roughly 6 percent). Bud- dhists tend to be slightly above average in income and education, and they are concentrated in the West.

There are a variety of Buddhist sects in America. All emphasize the basic idea that all beings are caught in samsara, a cycle of suffering and rebirth that is basically caused by desire and actions that produce unfavorable karma. Samsara can be escaped and a state of nirvana reached by following the noble Eightfold Path. This combines ethical and disciplinary practices, training in concentration and meditation, and the development of enlightened wisdom.

Thus far, marketers have largely ignored this market. Its small size and diverse ethnic composition make it difficult to target. However, as specialized media evolve to serve Buddhists, opportunities will exist for astute marketers.

Many religions

prescribe dietary

practices for their

members. Glatt

Kosher Subway

uses its website to

highlight its ongoing

commitment to pro-

vide foods that follow

the guidelines of the

Jewish religion.

ILLUSTRATION 5-8

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Part Two External Influences174

REGIONAL SUBCULTURES Distinct regional subcultures arise as a result of climatic conditions, the natural environ- ment and resources, the characteristics of the various immigrant groups that have settled in each region, and significant social and political events. These distinct subcultures present numerous opportunities and challenges for marketers. Examples include:

�r� TGI Friday’s has a customizable menu that includes a set of 70 standard items plus 30 regional items, including chicken-fried steak, which is a hit in the Southeast but not in some other regions, and a baked brie cheese appetizer that is offered only in Michigan.

�r� Many national magazines run regional editions. TV Guide, for example, had 25 dif- ferent regional covers for their NFL preview issue. And Sports Illustrated often offers special issues devoted to sports in a specific city such as the Sports Illustrated Boston Collection.102

�r� Wahoo’s, a restaurant in Southern California, Colorado, Texas, and Hawaii (and also now online at www.wahoos.com), offers fish tacos, a menu item that may sound a bit odd to some but is popular among Hispanic consumers.

Although the most effective regional marketing strategies are often based on small geographic areas, we can observe significant consumption differences across much larger regions. Table 5–3 illustrates some of the consumption differences across the four U.S. census regions. Given such clear differences in consumption patterns, marketers realize

LO7

Northeast Midwest South West

Products

Imported beer 124 89 85 115

Tooth whiteners 107 100 94 104

Breakfast pastries 88 108 108 89

Bagels 123 103 83 105

Activities

Going to concerts 112 96 94 105

Fly fishing 93 106 76 137

Skateboarding 83 85 81 158

College football fan 64 112 131 68

Shopping

Staples 176 68 78 104

H&M 189 87 48 124

Domino’s Pizza 74 85 123 98

Chili’s 65 87 128 96

Media

The New Yorker 141 77 83 117

American Rifleman 66 93 120 102

The Amazing Race (CBS) 105 117 83 106

The Simpsons (FOX) 98 108 88 113

Note: 100 5 Average level of use, purchase, or consumption. Source: Simmons National Consumer Study 2010, Experian Information Solutions (Costa Mesa, CA 2014).

Regional Consumption Differences5-3TABLE

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Chapter Five The Changing American Society: Subcultures 175

that, for at least some product categories, the United States is no more a single market than is the European Union. Since specialized (regional) marketing programs generally cost more than standardized (national) programs, marketers must balance potential sales increases against increased costs. This decision process is exactly the same as described in the section on multinational marketing decisions in Chapter 2.

LO1: Understand subcultures and their influence on unique market behaviors The United States is becoming increasingly diverse. Much of this diversity is fueled by immigration and an increase in ethnic pride and by identification with non-European heritages among numerous Americans. Most members of a culture share most of the core val- ues, beliefs, and behaviors of that culture. However, most individuals also belong to several subcultures. A subculture is a segment of a larger culture whose members share distinguishing patterns of behavior. An array of ethnic, nationality, religious, and regional subcultures characterizes American society. The exis- tence of these subcultures provides marketers with the opportunity to develop unique marketing programs to match the unique needs of each.

Ethnic subcultures are defined broadly as those whose members’ unique shared behaviors are based on a common racial, language, or nationality background. Non-European ethnic groups constitute a significant and growing part of the U.S. population, from 38 percent in 2010 to 47 percent by 2030.

LO2: Analyze the African-American subculture and the unique marketing aspects it entails African Americans represent a substantial non- European ethnic group at roughly 13 percent of the U.S. population. Although African Americans are younger and tend to have lower incomes than the general population, their rapidly growing education, income, purchasing power, and cultural influence continue to attract marketers to this large and diverse subculture.

LO3: Analyze the Hispanic subculture and the unique marketing aspects it entails Hispanics represent the largest and fastest-growing ethnic subculture in the United States. Even though Hispanics have a variety of national backgrounds

(Mexico, Puerto Rico, Cuba, and so on), the Spanish language, a common religion (Roman Catholicism), and national Spanish-language media and entertain- ment figures have created a somewhat homogeneous Hispanic subculture.

LO4: Analyze the Asian-American subculture and the unique marketing aspects it entails Asian Americans are the most diverse of the major eth- nic subcultures. They are characterized by a variety of nationalities, languages, and religions. From a marketing perspective, it is not appropriate to consider Asian Amer- icans as a single group. Instead, Asian Americans are best approached as a number of nationality subcultures.

LO5: Analyze the Native-American, Asian- Indian-American, and Arab-American subcultures and the unique marketing aspects they entail Native Americans, Asian Indian Americans, and Arab Americans are smaller but important subcultures. Each is diverse yet shares enough common values and behaviors to be approached as a single segment for at least some products. Geographic concentration and specialized media allow targeted marketing campaigns.

LO6: Describe the various religious subcultures and their implications for marketing Although the United States is a relatively secular soci- ety, roughly 82 percent of American adults claim a religious affiliation and a majority state that religion is important in their lives. A majority of American adults identify themselves as Christian, although the percent- age has declined over time. And a variety of religious subcultures exist both within and across the Christian faiths and the Jewish, Muslim, and Buddhist faiths. Within each faith, the largest contrast is the degree of conservatism of the members.

SUMMARY

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Part Two External Influences176

1. What is a subculture? 2. What determines the degree to which a subculture

will influence an individual’s behavior? 3. Is the American culture more like a soup or a salad? 4. What is an ethnic subculture? 5. How large are the major ethnic subcultures in

America? Which are growing most rapidly? 6. What regions are the major sources of America’s

immigrants? 7. Are the various ethnic subcultures homogeneous

or heterogeneous? 8. Describe the influence of education on the Internet

use of African Americans. What are the marketing implications?

9. Describe the African-American consumer groups found by the Yankelovich group.

10. What are the basic principles that should be followed in marketing to an African-American market segment?

11. To what extent is the Spanish language used by American Hispanics? How do language and acculturation affect Internet use among Hispanics?

12. Can Hispanics be treated as a single market? 13. Describe the three Hispanic generational

groups identified by the Pew Hispanic Center.

14. How homogeneous are Asian Americans? 15. To what extent do Asian Americans use their

native language? 16. Describe three emerging aspects that may make

the Asian-American population somewhat easier to target.

17. Why is the United States considered to be a secular society?

18. Describe the Roman Catholic subculture. 19. Describe the born-again Christian subculture. 20. Describe the Jewish subculture. 21. Describe the Muslim subculture. 22. Describe the Buddhist subculture. 23. What is a regional subculture? Give some

examples.

REVIEW QUESTIONS

24. Examine Table 5–1. Which of these differences are mainly caused by ethnicity or race, and which are caused by other factors?

25. Do you agree that America is becoming more like a salad than a soup in terms of the integration of ethnic groups? Is this good or bad?

26. Do you agree with the following statement regarding ethnicity made at one point in time by a Miller Brewing representative? For what types of products is this view most correct? Least correct?

We used to have an ethnic marketing department up until several years ago. . . . [But

DISCUSSION QUESTIONS

LO7: Explain the role of geographic regions as subcultures Regional subcultures arise as a result of climatic con- ditions, the natural environment and resources, the characteristics of the various immigrant groups that

have settled in each region, and significant social and political events. Regional subcultures affect all aspects of consumption behavior, and sophisticated marketers recognize that the United States is composed of numer- ous regional markets.

Acculturation 157 Born-again Christians 171 Ethnic subcultures 150

Event marketing 155 Hispanic 156 Regional subcultures 174

Religious subcultures 169 Secular society 169 Subculture 148

KEY TERMS

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Chapter Five The Changing American Society: Subcultures 177

now we believe] the things that young Hispanic or young African American or young white people have in common are much stronger and more important than any ethnic difference.

27. Most new immigrants to America are non- European and have limited English-language skills. What opportunities does this present to marketers? Does this raise any ethical issues for marketers?

28. Does a firm’s social responsibility play a role in marketing to consumers from various ethnic subcultures whose incomes fall below the poverty line? If so, what?

29. Respond to the questions in Consumer Insight 5–1. 30. Although some of the following have very limited

incomes, others are quite prosperous. Does marketing to prosperous members of these groups require a marketing mix different from the one used to reach other prosperous consumers?

a. African Americans b. Hispanics c. Asian Americans 31. Describe how each of the following firms’

product managers should approach (i) the African- American, (ii) the Hispanic, (iii) the Asian- American, (iv) the Asian-Indian-American, (v) the Arab-American, or (vi) the Native- American markets.

a. Pepsi b. Target

c. NBA d. Sports Illustrated magazine e. The United Way f. Dell laptops g. Google.com h. Coach handbags 32. What, if any, unique ethical

responsibilities exist when marketing to ethnic subcultures?

33. Do you agree that the United States is a secular society? Why or why not?

34. Describe how each of the following firms’ product managers should approach the (i) Catholic, (ii) Protestant, (iii) born-again Christian, (iv) Jewish, (v) Muslim, and (vi) Buddhist subcultures.

a. Red Bull b. Wendy’s c. The NBA d. Maxim magazine e. The United Way f. Dell laptops g. Facebook h. Estée Lauder makeup 35. Will regional subcultures become more or less

distinct over the next 20 years? Why? 36. Select one product, service, or activity from each

category in Table 5–3 and explain the differences in consumption for the item across the regions shown.

37. Watch two hours of prime-time major network (ABC, CBS, FOX, or NBC) television. What subculture groups are portrayed in the programs? Describe how they are portrayed. Do these portrayals match the descriptions in this text? How would you explain the differences? Repeat these tasks for the ads shown during the programs.

38. Pick a product of interest and examine the Simmons Market Research Bureau or MediaMark studies on the product in your library (these are often in the journalism library on CD-ROM). Determine the extent to which its consumption varies by ethnic group and region. Does consumption also vary by age, income, or other variables? Are the differences in ethnic and regional consumption due primarily to ethnicity

and region or to the fact that the ethnic group or region is older, richer, or otherwise different from the larger culture?

39. Examine several magazines or newspapers aimed at a non-European ethnic or nationality group. What types of products are advertised? Why?

40. Interview three members of the following subcultures and ascertain their opinions of how their ethnic or nationality group is portrayed on network television shows and in national ads.

a. African Americans b. Asian Americans c. Hispanics d. Arab Americans e. Asian Indian Americans f. Native Americans

APPLICATION ACTIVITIES

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Part Two External Influences178

41. Interview three members of the following subcultures and ascertain the extent to which they identify with the core American culture, their ethnic subculture within America, or their nationality subculture. Also determine the extent to which they feel others of their ethnic/race group feel as they do and the reasons for any differences.

a. African Americans b. Asian Americans c. Hispanics d. Arab Americans e. Asian Indian Americans f. Native Americans 42. Interview three members of the following religious

subcultures and determine the extent to which

their consumption patterns are influenced by their religion.

a. Catholics b. Protestants c. Born-again Christians d. Jews e. Muslims f. Buddhists 43. Interview two students from other regions

of the United States and determine the behavior and attitudinal differences they have noticed between their home and your present location. Try to determine the causes of these differences.

1. Chapter opener is based on L. M. Keefe, “P&G’s Multicultural Marketing DNA,” Marketing News, March 1, 2004, pp. 13–14; T. Nudd, “Nivea Apologizes for Wanting to ‘Re-Civilize’ Black Man,” Adweek.com, August 18, 2011, www.adweek. com/adfreak/nivea-apologizes-wanting-re-civilize-black- man-134226, accessed August 29, 2014; F. Kelley, “Essence in New Orleans,” NPR The Record, July 9, 2012, www.npr. org/blogs/therecord/2012/07/09/156494248/essence-in-new- orleans-a-festival-that-knows-its-audience, accessed August 29, 2014; D. Ramsey, “Essence Music Festival,” theGrio.com, July 4, 2013, http://thegrio.com/2013/07/04/essence-music-festival- the-magic-and-the-business-behind-this-summers-hottest- ticket/2/, accessed August 29, 2014; and information from Essence website at www.essence.com.

2. C. Fisher, “It’s All in the Details,” American Demographics, April 1998, p. 45.

3. The 2010 percentages are from the 2010 Census and are found at Overview of Race and Hispanic Origin: 2010 (Washington, DC: U.S. Census Bureau, March 2011). All other data are from Table 4. Projections of the Population by Sex, Race, and Hispanic Origin for the United States: 2010 to 2050 (Washington, DC: U.S. Census Bureau, August 2008).

4. W. H. Frey, “Micro Melting Pots,” American Demographics, June 2001, pp. 20–23.

5. R. Monger, U.S. Legal Permanent Residents: 2009 (Washington, DC: U.S. Department of Homeland Security, 2010), p. 4.

6. M. R. Forehand and R. Deshpande, “What We See Makes Us Who We Are,” Journal of Marketing Research, August 2001, pp. 336–48.

7. Statistical Abstract of the United States: 2011 (Washington, DC: U.S. Census Bureau, 2011); and 2008 ASEC Supplement (Washington, DC: U.S. Census Bureau, 2009).

8. E. Morris, “The Difference in Black and White,” American Demographics, January 1993, p. 46.

9. “Households by Total Money Income in 2008,” 2009 Annual Social and Economic Supplement (Washington, DC: U.S. Bureau of the Census, 2009).

10. J. M. Humphreys, “The Multicultural Economy 2013,” Selig Center for Economic Growth (University of Georgia, 2013).

11. Table 5–2 was derived from results presented in Black America Today (Radio One and Yankelovich, June 2008); and information found on BlackAmericaStudy.com, accessed April 23, 2011.

12. Y. K. Kim and J. Kang, “The Effects of Ethnicity and Product on Purchase Decision Making,” Journal of Advertising Research, March 2001, pp. 39–48.

13. J. Adler, “Marketers, Agencies Praise BET’s Savvy,” Advertising Age, April 11, 2005, p. B16.

14. Demographics of Internet Users (Washington, DC: Pew Internet & American Life Project, May 2010).

15. E. Burns, “African American Online Population Is Growing,” The ClickZ Network, October 10, 2005, www.clickz.com, accessed June 7, 2008; “AOL: Some 80 Percent of African- Americans Online,” MarketingVOX, October 17, 2005, www. marketingvox.com, accessed June 7, 2008; Black America Today, 2008; and “Top U.S. Web Brands and Parent Companies for September 2009,” Nielsenwire.com, at http://blog.nielsen. com/nielsenwire/online, accessed April 24, 2011.

16. A. Smith, Technology Trends among People of Color (Washington, DC: Pew Internet & American Life Project, September 17, 2010).

17. P. Miller, African Americans Are a Heterogeneous, Not a Homogeneous, Market, Cablevision Advertising Bureau, 2005, www.onetvworld.org.

18. See, e.g., L. Sanders, “How to Target Blacks?,” Advertising Age, July 3, 2006, p. 19.

REFERENCES

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Chapter Five The Changing American Society: Subcultures 179

19. See, e.g., B. DeBerry-Spence, “Consumer Creations of Product Meaning in the Context of African-Style Clothing,” Journal of the Academy of Marketing Science, 36 (2008), pp. 395–408.

20. E. M. Simpson et al., “Race, Homophily, and Purchase Intentions and the Black Consumer,” Psychology & Marketing, October 2000, pp. 877–99. See also L. A. Perkins, K. M. Thomas, and G. A. Taylor, “Advertising and Recruitment,” Psychology & Marketing, March 2000, pp. 235–55.

21. C. L. Green, “Ethnic Evaluations of Advertising,” Journal of Advertising, Spring 1999, pp. 49–63; O. Appiah, “Ethnic Identification on Adolescents’ Evaluations of Advertisements,” Journal of Advertising Research, September 2001, pp. 7–21; and T. E. Whittler and J. S. Spira, “Model’s Race,” Journal of Consumer Psychology, 12, no. 4 (2002), pp. 291–301.

22. The African-American Market in the U.S. (New York: Packaged Facts, 2008).

23. D. Howell, “Albertson’s Caters to Different Ethnic Markets,” DSN Retailing Today, October 1, 2001, p. 18.

24. Keefe, “P&G’s Multicultural Marketing DNA.”

25. T. L. Ainscough and C. M. Motley, “Will You Help Me Please?,” Marketing Letters, May 2000, pp. 129–36; and T. L. Baker, T. Meyer, and J. D. Johnson, “Individual Differences in Perceptions of Service Failure and Recovery,” Journal of the Academy of Marketing Science, 36 (2008), pp. 552–64.

26. See V. D. Bush et al., “Managing Culturally Diverse Buyer– Seller Relationships,” Journal of the Academy of Marketing Science, Fall 2001, pp. 391–404.

27. See, e.g., The African-American Market in the U.S.

28. See, e.g., ibid.

29. R. J. Wyatt, B. D. Gelb, and S. Geirger-Oneto, “How Social Insecurity and the Social Meaning of Advertising Reinforce Minority Consumers’ Preference for National Brands,” Journal of Contemporary Issues and Research in Advertising, 30 (Spring 2008), pp. 61–70.

30. “Households by Total Money Income in 2008.”

31. Humphreys, “The Multicultural Economy 2013.”

32. The American Community Survey (Washington, DC: U.S. Census Bureau, 2009).

33. See Assimilation and Language (Washington, DC: Pew Hispanic Center, 2004) and Latino Shoppers (Rockville, MD: Packaged Facts, 2011).

34. Generational Differences (Washington, DC: Pew Hispanic Center, March 2004) and Statistical Portrait of Hispanics in the United States, 2009 (Washington, DC: Pew Hispanic Center, February 2011). See also R. Villarreal and R. A. Peterson, “Hispanic Identity and Media Behavior,” Journal of Advertising Research, June 2008, pp. 179–90.

35. G. Berman, Portrait of the New America (Coral Gables, FL: Market Segment Group, 2002), p. 21.

36. Based on R. X. Weissman, “Los Niños Go Shopping,” American Demographics, May 1999, pp. 37–39; H. Stapinski, “Generación Latino,” American Demographics, July 1999, pp. 63–68; R. Gardyn, “Habla English,” American Demographics, April 2001, pp. 54–57; J. D. Zbar, “Hispanic Teens Set Urban Beat,” Advertising Age, June 2001, p. S6; H. Chura, “Sweet

Spot,” Advertising Age, November 12, 2001, p. 1; Nuestro Futuro (Redwood Shores, CA: Cheskin, 2006); Hispanic/ Latino Market Profile (New York: Mediamark Research, 2007); and Resident Population by Race, Hispanic Origin, and Age (Washington, DC: U.S. Census Bureau, 2010).

37. C. Webster, “The Effects of Hispanic Identification on Marital Roles in the Purchase Decision Process,” Journal of Consumer Research, September 1994, pp. 319–31.

38. See, e.g., Gender Norms and the Role of Extended Family (Washington, DC: Hispanic Healthy Marriage Initiative, 2006), at www.acf.hhs.gov/healthymarriage/pdf/Gender_Norms.pdf, accessed May 6, 2011; and Latino Shoppers.

39. The American Community Survey (Washington, DC: U.S. Census Bureau, 2009).

40. The U.S. Hispanic Market (New York: Packaged Facts, October 2003); and J. Noriega and E. Blair, “Advertising to Bilinguals,” Journal of Marketing, September 2008, pp. 69–83.

41. L. Sonderup, “Hispanic Marketing,” Advertising & Marketing Review, April 2004, www.ad-mkt-review.com.

42. Hispanic Fact Pack 2010 (New York, NY: Advertising Age, 2010), p. 31.

43. W. R. Ortiz, CableTelevision Advertising Bureau, “Answering the Language Question,” press release, www.onetvworld.org, accessed May 9, 2005.

44. The U.S. Hispanic Market.

45. L. Wentz, “Rapid Change Sweeps Hispanic Advertising Industry,” AdAge.com, May 3, 2005, www.adage.com.

46. Information from SiTV website at www.sitv.com, accessed May 6, 2011.

47. Demographics of Internet Users.

48. F. Korzenny, “Multicultural Marketing and the Reasons Why,” Journal of Advertising Research, June 2008, pp. 173–76.

49. Hispanic Fact Pack 2010.

50. Hispanics Online (New York, NY: eMarketer, May 2010).

51. For these and other examples, see “Marketing to Hispanics,” Advertising Age, February 8, 1987, p. S23; M. Westerman, “Death of the Frito Bandito,” March 1989, pp. 28–32; and L. Wentz, “Debate Swirls over Slang in Coors Spot,” Advertising Age, May 17, 2004, p. 6.

52. See D. Luna, L. A. Peracchio, and M. D. de Juan, “The Impact of Language and Congruity on Persuasion in Multicultural E-Marketing,” Journal of Consumer Psychology, 13, no. 1/2 (2003), pp. 41–50; see also Gardyn, “Habla English.”

53. Latino Shoppers.

54. L. Wentz, “Best Buy Targets Hispanic Patriarchs,” Advertising Age, August 2, 2004, p. 20.

55. L. Wentz, “Home Depot Paint Line Connects with Hispanics,” Advertising Age, July 3, 2006, p. 19.

56. J. Garcia and R. Gerdes, “To Win Latino Market, Know Pitfalls, Learn Rewards,” Marketing News, March 1, 2004, pp. 14, 19.

57. A. S. Wellner, “Gen X Homes In,” American Demographics, August 1999, p. 61.

58. J. Birchall, “Walmart Targets Latino Mercados with Supermercado do Walmart,” Financial Times, March 12, 2009;

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Part Two External Influences180

and “Latino-Focused Wal-Mart, Sam’s Club Stores to Open,” Adweek, March 17, 2009.

59. Information from website at http://tianguismall.com, accessed May 6, 2011.

60. Humphreys, “The Multicultural Economy 2013.”

61. See B. Edmundson, “Asian Americans in 2001,” American Demographics, February 1997, pp. 16–17; “90 Percent of Asian Americans Go Online,” BizReport, May 10, 2007; and The Asian-American Market in the U.S. (Rockville, MD: Packaged Facts, October 2008).

62. “90 Percent of Asian Americans Go Online.”

63. M. C. Tharp, Marketing and Consumer Identity in Multicultural America (Thousand Oaks, CA: Sage, 2001), p. 259.

64. Ibid., pp. 253–57.

65. The 1993 Minority Market Report (Coral Gables, FL: Market Segment Research, 1993).

66. The American Community—Asians (Washington, DC: U.S. Census Bureau, February 2007); and Humphreys, “The Multicultural Economy 2013.”

67. “Asia Rising.” American Demographics, July–August 2002, pp. 38–43.

68. Annual Estimates of the Resident Population by Race, Age and Sex for the United States: April 1, 2000 to July 1, 2006 (Washington, DC: U.S. Census Bureau, 2007).

69. D. L. Vence, “Growth in Asian-Am. Spending Fuels Targeted Marketing,” Marketing News, June 1, 2004, pp. 11–13.

70. “Reaching Generation 2.0,” Advertising Age, July–August 2002, p. 42.

71. See, e.g., Y.-K. Kim and J. Kang, “Effects of Asian-Americans’ Ethnicity and Acculturation on Personal Influences,” Journal of Current Issues and Research in Advertising, Spring 2001, pp. 43–53.

72. Information accessed from corporate websites.

73. “Annual Asian American Consumer Behavior Study Reveals Key Findings in Retail, Automobile, Insurance, and Telecom Industries,” DiversityBusiness.com, March 7, 2007, www. diversitybusiness.com, accessed June 8, 2008.

74. Korzenny, “Multicultural Marketing and the Reasons Why.”

75. New Study Reveals Lifestyle Habits and Industry Specific Consumption Behavior among Asian Americans (Long Beach, CA: interTrend Communications, November 2005).

76. Vence, “Growth in Asian-Am. Spending Fuels Targeted Marketing.”

77. “Diversity in America,” American Demographics, November 2002, p. S17.

78. Humphreys, “The Multicultural Economy 2013.”

79. “Native American Food Goes Haute Cuisine,” CNN.com, September 30, 2004, www.cnn.com.

80. See A. S. Wellner, “Discovering Native America,” American Demographics, August 2001, p. 21.

81. Information from website at www.indiansummer.org/, accessed May 7, 2011.

82. A. M. Peterson, “Nike Boosts Indians’ Health, Its Reputation,” Marketing News, June 1, 2004, p. 10.

83. This section is based on M. Mogelonsky, “Asian Indian Americans,” American Demographics, August 1995, pp. 32–39. See also M. M. Cardona, “Segment Marketing Grows as Tool for Financial Services Leaders,” Advertising Age, November 20, 2000, p. S1.

84. A. S. Wellner, “Every Day’s a Holiday,” American Demographics, December 2000, p. 63.

85. “Arab Americans” section is based on S. El-Badry, “The Arab-American Market,” American Demographics, January 1994, pp. 22–30; L. P. Morton, “Segmenting to Target Arab Americans,” Public Relations Quarterly, Winter 2001, pp. 47–48; Arab American Institute, “Survey Reveals Arab American Experiences and Reactions Following 9/11,” press release, August 19, 2002; Arab American Institute, “Arab American Demographics,” www.aaiusa.org/demographics.htm, accessed May 14, 2005; K. Naughton, “Arab-America’s Store,” Newsweek, March 10, 2008, p. 42; and the Arab American Institute website, http://aaiusa.org, accessed May 7, 2011.

86. Numbers are for 2010 based on a Gallup poll reported at www. gallup.com/poll/1690/religion.aspx, accessed February 20, 2011.

87. “Survey: Americans Switching Faiths, Dropping Out,” CNN. com, February 25, 2008, www.cnn.com, accessed February 25, 2008.

88. See R. Cimino and D. Lattin, “Choosing My Religion,” American Demographics, April 1999, pp. 60–65.

89. Gallup poll reported at www.gallup.com/poll/1690/religion. aspx, accessed February 20, 2011. Additional information on religion in the United States can be found at Adherents. com (www.adherents.com), which collects and disseminates statistics from various sources, including two of the most comprehensive surveys of religion in the United States, namely, the National Survey of Religious Identification (NSRI: 1990) and the American Religious Identity Survey (ARIS: 2001) conducted by B. A. Kosmin, S. P. Lachman, and associates.

90. B. Ebenkamp, “The Young and Righteous,” Brandweek, April 5, 2004, p. 18; and S. Kang, “Pop Culture Gets Religion,” The Wall Street Journal, May 5, 2004, pp. B1, B2.

91. K. Wheaton, “Chik-fil-A for Sunday Lunch?,” Advertising Age, July 12, 2010, p. 3.

92. Information on ethnic diversity from ARIS research briefs, www.gc.cuny.edu.

93. Information from website of The Archdiocese of Baltimore at www.archbalt.org/news, accessed May 7, 2011.

94. Information on Encuentro 2000 from press releases by the U.S. Conference of Catholic Bishops (Washington, DC), including “Growing Asian Impact on Church to Be Felt at Encuentro 2000,” May 22, 2000; “Latin Music, Movie on Cuba, Hispanic Cultural Expressions Part of Encuento 2000 Celebration of Multi-ethnic Church,” May 30, 2000; and “Bishops’ Agenda Includes Pastoral Framework for Hispanic Ministry,” October 11, 2002, www.usccb.org.

95. B. A. Kosmin and P. Lachman, One Nation under God (New York: Harmony Books, 1993), p. 245.

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Chapter Five The Changing American Society: Subcultures 181

96. “Breaking the Rules of Engagement,” American Demographics, July–August 2002, p. 35.

97. R. Thau, “The New Jewish Exodus,” American Demographics, June 1994, p. 11.

98. Kosmin and Lachman, One Nation under God, p. 12.

99. Estimates here have been hotly debated. For an excellent discussion, see “The Largest Religious Groups in the United States of America,” Adherents.com, www.adherents.com.

100. M. Chapman and A. Jamal, “The Floodgates Open,” Enhancing Knowledge Development in Marketing (Chicago: American Marketing Association, 1996), p. 198.

101. See S. El-Badry, “Understanding Islam in America,” American Demographics, January 1994, p. 10.

102. B. Horovitz, “Down-Home Marketing,” USA Today, October 3, 1997, p. 1B.

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182

6 The American Society: Families and Households chapter

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183

Explain the concept of household types and their influence on consumption.

Summarize the household life cycle’s various stages and marketing implications.

Understand the family decision process.

LO1

LO2

LO3

Describe the role that households play in child socialization.

Explain the sources of ethical concern associ- ated with marketing to children.

LO4

LO5

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

Solo living is on the rise. According to the lat- est census figures, 27 percent of all house- holds now consist of one person (a 10 percent increase from 1970). Approximately 32  million people live alone. At no other time in history have so many people opted to live alone. According to one expert, the extraordinary upsurge in solo living is the “greatest social change since the baby boom.”1

Although delaying marriage, divorcing in greater numbers, and living longer as soli- tary widows or widowers are certainly part of the picture, there is an attitudinal component to it that cuts across age, social, and ethnic distinctions. Specifically, there is a growth in the number of people who want to live alone and can afford to do so. Single-person house- holds are more common in metropolitan areas. Over 40 percent of households in San Francisco; Seattle; Minneapolis; Washington, D.C.; Atlanta; and Denver have one occupant. The rise of single-person households is also a global phenomenon, including counties such as France, Japan, Brazil, and China.

The market and marketing implications of single-person households is powerful. Single- person households (average expenditures of $34,471) have a total buying power of $1.9  trillion. They spend 49 percent more than

the most affluent “families with children” house- holds ($23,179) and 23 percent more than “mar- ried with no children” households ($28,017). From micro-apartments, to single-serving meals, to communal dining, to “solo travel pack- ages” by cruise lines, marketers are adjusting. Indeed, real estate shortages in the metro areas where the “living single” phenomenon has taken hold are pushing the trend toward and devel- opment of small living spaces such as micro- apartments. New York City plans to build eighty 300-square-foot micro-apartments, renting at $2000 a month. To do this, it must first change its current zoning law requiring apartments to be at least 400 square feet. Micro-apartments that are 220 square feet are already available in San Jose, California, a city in the heart of technology- heavy, hard-to-find-an-affordable-place-to-rent Silicon Valley. Nearby San Francisco will follow suit, having successfully enacted legislation to change its building code. Small space dwellings have, in turn, sparked a need for space-saving, multipurpose furniture that retailers such as IKEA and Itzy Bitzy are filling.

The rise of single-person households is perhaps the most significant lifestyle trend in the last 50 years and will profoundly influ- ence marketing and the design and delivery of products and service.

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Part Two External Influences184

Single households, though important and growing, represent just one type of household. This chapter examines the nature and influence of households in American society, the household life cycle, the family decision process, consumer socialization, and marketing to children.

THE NATURE AND INFLUENCE OF AMERICAN HOUSEHOLDS The Influence of Households The household is the basic consumption unit for most consumer goods. Major items such as housing, automobiles, and appliances are consumed more by household units than by individuals. Furthermore, the consumption patterns of individual household members seldom are independent from those of other household members. For example, deciding to grant a child’s request for a bicycle may mean spending discretionary funds that could have been used to purchase a weekend away for the parents, new clothing for a sister or brother, or otherwise used by another member of the household. Therefore, it is essential that marketers understand the household as a consumption unit, as shown in Figure 6–1.

Households are important not only for their direct role in the consumption process but also for the critical role they perform in socializing children. The family household is

LO1

Structure of household unit

Stage of household life cycle

Household purchase

and consumption

behavior

Household decision process

Marketing strategy

6-1 The Household Influences Most Consumption DecisionsFIGURE

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Chapter Six The American Society: Families and Households 185

the primary mechanism whereby cultural and subcultural values and behavior patterns are passed on to the next generation. Purchasing and consumption patterns are among those attitudes and skills strongly influenced by the family household unit.

Types of Households There are a variety of types of households. The Census Bureau defines a household as all the people who occupy a housing unit (a house, apartment, group of rooms, or single room designed to be occupied as separate living quarters). It defines a family household as one having at least two members related by birth, marriage, or adoption, one of whom is the householder (a householder owns or rents the residence). A nonfamily household is a householder living alone or exclusively with others to whom he or she is not related. Table 6–1 indicates the current distribution of household types in the United States.2

Historically, the family household—and, in particular, the traditional family household— has been an important focus for marketers. The term traditional family is typically used to refer to a married opposite-sex couple and their own or adopted children living at home. However, this type of family has clearly declined over time, particularly if one considers a traditional family to be one headed by a never-divorced couple. Today, about 20 percent of all households are married couples with children living at home, down from 40 percent in 1970.3 Some of this decline is due to the increase in single-parent households. Much of the decline is due to an increase in the number of single-person households, which is a function of (a) young people pushing back marriage until their late 20s (rather than getting married in their early 20s as they did in 1970) and (b) the increase in sole survivors as our population ages.

Step families are also important and growing. The U.S. Census defines a step family as a married-couple family household with at least one child under the age of 18 who is a step- child (i.e., a son or daughter through marriage). High divorce and remarriage rates mean that a substantial number of American children grow up with stepparents and stepsiblings and often have two such families, one formed by their mother and the other by their father. One study finds that half of all young adults have at least one step relative.4 Creating and

Type of Household Number (000) Percentage

All households 117,181 100.0%

Family households 78,850 67.3 Married couples 59,118 50.5 Children under 18 at home 25,129 21.4 No children under 18 at home 33,989 29.0 Male householder (children under 18 at home) 2,111 1.8 Female householder (children under 18 at home) 8,394 7.2 Other families 9,227 7.9

Nonfamily households 38,331 32.7 Male householder 17,694 15.1 Living alone 13,758 11.7 Female householder 20,637 17.6 Living alone 17,899 15.3

Source: Households, Families, Subfamilies, and Married Couples: 1980–2009 (Washington, DC: U.S. Census Bureau, 2011), table 5.

6-1Family and Nonfamily Households TABLE

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Part Two External Influences186

revising relationship identities is critical and difficult and can revolve around consumption activities. Consider the following quote about the challenges of step relationships:

When mom and dad got divorced and mom remarried, everything changed. We, my father and I, had to find a way to create a sense of who we are without mom. We found that a passion for adventure is something we share, that mom and my sister don’t, and we took up scuba diving. Although my stepdad is certainly a part of our family, my mom, sister, and I are a different “we” with many different stories to tell and a distinct history of sharing experiences.5

Recognizing the difficult dynamics of step family relationships, Café Press offers cards, t-shirts, mugs, and other products that celebrate step families. One card reads, “It’s Love Not Blood that Makes a Forever Family.”

Consumer Insight 6–1 discusses another growing family trend, namely, multigenera- tional families.

In addition, while the Census defines a family in terms of marriage, birth, or adoption, many unmarried couples clearly view themselves as families. There are roughly 6.2 mil- lion unmarried-partner (opposite and same sex) households in the United States. In many ways, their needs are the same as married couples with similar demographics. However, there are exceptions, such as finding knowledgeable assistance with legal and financial issues concerning joint home ownership, estate planning, and so forth. While same-sex couples can be targeted via specialized media (see Chapter 3), opposite-sex couples can be more difficult to reach since targeted media are lacking.

Clearly, as American households and families evolve away from the traditional family model, marketers must adapt. Kraft recognizes the diversity and importance of families, with ads that portray various family types in scenarios revolving around food. A recent spot features a father and his daughter enjoying a quiet conversation.

Recognizing and adapting to the differing needs of various types of families or the dif- ferent needs of members within the same family can be a critical success factor. How well does Campbell’s “One Soup Fits All” campaign (see Illustration 6–1) meet the differing needs of today’s diverse household?

THE HOUSEHOLD LIFE CYCLE The traditional view of the American house- hold life cycle was quite simple. People married by their early 20s; they had several children; these children grew up and started their own families; the original couple retired; and the male would eventually die, followed after a few years by the female. This was known as the family life cycle, and it was a useful tool for segmenting markets and developing marketing strategy. The basic assumption underlying the family life cycle approach is that most families pass through an orderly progression of stages, each with its own characteristics, financial situations, and purchasing patterns.

However, as described earlier, American households follow much more complex

LO2

This Campbell’s Soup

ad is attempting to

appeal to the needs

of different family

members and the

different household

types in which they

reside.

ILLUSTRATION 6-1

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187

and varied cycles today. Therefore, researchers have developed several models of the household life cycle (HLC).7 All are based on the age and marital status of the adult members of the household and the presence and age of children. A useful version is shown in Figure 6–2.

The HLC assumes that households move into a variety of relatively distinct and well- defined categories over time. There are a variety of routes into most of the categories shown in Figure 6–2, and movement from one category into another frequently occurs. For example, it is common for singles to marry and then divorce within a few years without

CONSUMER INSIGHT 6-1 The Rise of Multigenerational Families

A multigenerational family is a family household con- taining (a) at least two adult generations or (b) a grand- parent and at least one other generation. Nearly 50 million Americans live in multigenerational house- holds, which is a 33 percent increase since 1980. A number of factors account for this trend, including:6

�t� 5IF�JODSFBTJOH�JNNJHSBOU�QPQVMBUJPO�UIJT�QPQVMB- tion is more likely to live in multigenerational fami- lies. Indeed, nearly a quarter of all Hispanics and Asian Americans live in such households.

�t� 5IF�EFMBZ�JO�NBSSJBHF�PG�ZPVOHFS�JOEJWJEVBMT�BOE� UIF�FDPOPNJD�SFDFTTJPO�CFDBVTF�ZPVOH�QFPQMF� have pushed marriage into their late 20s, those in their early 20s are often the most likely to move back in with their parents, and tough economic times have accelerated this trend.

�t� .FEJDBSF�DVUT�BOE�DVMUVSBM�CFMJFGT�BCPVU�DBSJOH�GPS� BO�FMEFS�QBSFOU�UIFSF�IBT�CFFO�BO�JODSFBTF�JO�UIF� percentage of those 65 and older moving in with their children. Economic issues may be one factor. However, over half of American adults also believe it is their responsibility to take an elder parent into their home if the parent wants to live with them.

There are different forms of multigenerational family. The first (47 percent) involves two adult generations where the youngest adult is 25 or older. The second (47 percent) involves three or more generations. The third involves a grandparent and grandchild with no parent present. This last category, called the skipped generation, represents 6 percent of all multigenera- tional families and shows the power of America’s aging

population in directly parenting and influencing multiple generations of children. It diverges considerably from our traditional notion of aging baby boomers as empty nesters focused on travel and other leisure activities.

Marketers are finding opportunities and challenges in this family type. For example:

�t� "NFSJQSJTF�BEWJTPST�BSF�USBJOFE�UP�IFMQ�XPNFO�EFBM� with the fact that if they are a caregiver to a family member or friend (and 60 percent are), that it has work and financial consequences that must be planned for.

�t� $BMEXFMM�#BOLFS�T�SFBM�FTUBUF�BHFOUT�BSF�USBJOFE�UP� position houses for multigenerational families. So, for example, a fifth bedroom could be touted as “in-law quarters.”

�t� 1SFTUP�DSFBUFE�B�QSJOUFS�EFWJDF�UP�XIJDI�F�NBJMT� and pictures can be sent and then directly printed with the push of a button to allow electronic com- munication with older family members even if they are less technologically proficient.

�t� 'PS�UIF�HSBOEQBSFOUT�SBJTJOH�UIFJS�HSBOEDIJMESFO � opportunities abound that go beyond the typi- cal gift scenario such as diapers, baby food, and other basic need products.

Critical Thinking Questions 1. Do you think the increase in multigenerational families will

continue to grow after the economic recession is over?

2. What additional marketing opportunities may exist for multigenerational families?

3. What challenges might marketers face in targeting multigenerational families?

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Part Two External Influences188

having children (moving from single to young married back to young single). Or one can become a single parent through divorce or through birth or adoption without a cohabiting partner.

Each category in the household life cycle poses a set of problems that household deci- sion makers must solve. The solution to these problems is bound intimately to the selec- tion and maintenance of a lifestyle and, thus, to consumption. For example, all young couples with no children face a need for relaxation or recreation. Solutions to this common problem differ, with some opting for an outdoors-oriented lifestyle and others choosing a sophisticated urban lifestyle. As these families move into another stage in the HLC, such as the “full nest I” stage, the problems they face change. The amount of time and resources available for recreation usually diminishes. New problems related to raising a child become more urgent.

Each stage presents unique needs and wants as well as financial conditions and experi- ences. Thus, the HLC provides marketers with relatively homogeneous household seg- ments that share similar needs with respect to household-related problems and purchases, as discussed in Consumer Insight 6–2.

While Figure  6–2 categorizes households into married and unmarried, it is “couple- ness” rather than the legal status of the relationship that drives most of the behavior of the household. Committed couples, of the same sex or of opposite sexes, tend to exhibit most of the category-specific behaviors described below whether or not they are married.

Single I This group consists of young (ages 18 to 34), unmarried individuals. There are roughly 69 million people in this age group, with 68 percent of men and 60 percent of women being single. Single I is basically the unmarried members of the Generation Yers, as described in Chapter 4. The aging of the larger Generation Y cohort along with

Marital Status Single Married

Children at HomeStage

Single l

Single parent l Full nest l Young married

Younger (< 35)

Empty nest l

Single ll Middle-aged (35–64)

Older (> 64)

< 6 years > 6 yearsNone

Delayed full nest l Full nest ll Single parent ll

Empty nest ll Single lll

6-2 Stages of the Household Life CycleFIGURE

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189

CONSUMER INSIGHT 6-2 Consumer Life Cycles and Homeowner Remodeling Decisions

Consumers and households move through somewhat predictable phases.8 As they do so, changes occur in consumption based on these shifts in household characteristics and needs and wants. Housing, of course, is needed at all the household life stages, and a relationship between the type of housing and the consumers’ household life stage exists. Consumers who are single and entering the workforce are more likely to rent than own. And while home ownership is an aspiration and reality for many Americans, the challenges associated with changes in the house- hold life cycle can generate the need to either move or remodel. Renovations are costly and can lead to unexpected and hidden costs. Two factors play into renovation decisions:

�t� 'BNJMZ� BOE�GSJFOET �BSF�UIF�TJOHMF�NPTU�JOGMVFOUJBM� factors in renovation decisions.

�t� )PVTFIPME�MJGF�DZDMF�TUBHF�DIBOHFT�DBO�USJHHFS� the need for home renovations.

A recent article shows that movements across stages (e.g., from no children to children, from children to no children) can generate the need to renovate and remodel. Some of the mechanisms are as follows:

Prioritizing�%P�IPVTFIPMET�CBMBODF�DPNQFUJOH�BOE� at times conflicting commitments in how they manage and use space at home?

Embodying�%P�IPVTFIPME�NFNCFST�IBWF�QBSUJDVMBS� physical needs, either currently or in the antici- pated future, that might affect how the home is arranged?

Adapting�"SF�IPVTFIPMET�BXBSF�PG�B�OFFE�UP�BEBQU� the physical arrangement or material surroundings of their homes?

Clearly these mechanisms can be triggered by a number of factors, but household life-cycle stage

and stage changes will have a major (if not the major) influence.

An interesting corollary effect involved in remodel- ing is called the Diderot effect which, in effect, means that one change leads to a cascade of other needed or desired changes. The following quote illustrates this effect:

I think of my parents, who a year ago remodeled a powder room and redecorated the living room. That work served to highlight the age of the rest of the home, and they have since replaced the garage door and redecorated the guest room, and are now in the process of planning to remodel the kitchen and master bath, finish the basement and redecorate another bedroom. They are nei- ther materialistic nor extravagant, but they want UIF�IPVTF�UP�MPPL�OJDF�UP�CF�VQEBUFE�BOE�XFMM� maintained.

The Diderot effect is a warning to consumers of the hidden costs subsequent to the remodeling, upgrading, and replacement of goods. To the remodeler, the Diderot effect is a promise of possible repeat business from cur- rent customers who find, to their surprise, the need for additional remodeling and serves as a reminder to pro- vide quality work.

Critical Thinking Questions 1. Why might the Diderot effect be of interest to

marketers?

2. Choose two phases of the household life cycle and describe how one of the mechanisms might be involved in triggering a need for home remodeling.

3. What decision barriers must marketers overcome if consumers are aware of the Diderot effect?

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Part Two External Influences190

continued delay of marriage has fueled growth in this market.9 During this time, individu- als generally leave home and establish their own distinct identities. It is a time of growth and change, both exciting and positive, and frightening and painful.

This group can be subdivided into those who live with one or both parents and those who live alone or with other individuals. The roughly 44 million single individuals in this age range live as follows:

Males (%) Females (%) Total (%)

Live alone 14 12 13 Live with parent(s) 46 40 43 Live with others 39 48 43

Those who live with parents tend to be younger, with 75 percent being under 25. A significant number are in school or have recently graduated from high school or college and are beginning their working careers. Though people in this group have lower relative incomes, they also have few fixed expenses. They lead active, social lives. They go to bars, movies, and concerts, and purchase sports equipment, clothes, and personal care items.

Although some of those who live with others are involved with a partner, many share quarters with one or more housemates. These individuals have more fixed living expenses than do those who live with their parents, but they generally have ample disposable income as they share rent and other fixed housing costs.

These singles are a good market for the same types of products as those who live at home as well as for convenience-oriented household products. They are also a prime market for nice apartments, sports cars, clothing Club Med vacations, and similar activities. They are beginning to develop financial portfolios such as life insurance, savings, and stocks or mutual funds. The Calvin Klein Jeans ad shown in Illustration 6–2 would appeal to both groups.

Young singles are

active and often have

significant discretion-

ary income. They are

an excellent market

for a wide array of

recreational and

leisure items. This

Calvin Klein Jeans ad

would appeal to their

desire for action and

romance.

ILLUSTRATION 6-2

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Chapter Six The American Society: Families and Households 191

Singles who live alone are older, with 70 percent being over 25. In general, they have higher incomes than the others but also higher expenses because they have no one with whom to share the fixed cost of a house or apartment. They are a good market for most of the same products and services as the other singles.

Young Couples: No Children The decision to marry, or to live together, brings about a new stage in the household life cycle. Marriage is much more likely for the 25- to 34-year-olds (50 percent) than it is for the under-25 crowd (14 percent). The lifestyles of two young singles are greatly altered as they develop a shared lifestyle. Joint decisions and shared roles in household responsibilities are in many instances new experiences.10 Sav- ings, household furnishings, major appliances, and more comprehensive insurance cov- erage are among the new areas of problem recognition and decision making to which a young married couple must give serious consideration.

Like the young single stage, the time spent by a young couple in this stage of the HLC has grown as couples either delay their start in having children or choose to remain childless.

Most households in this group have dual incomes and thus are relatively affluent. Com- pared with full nest I families, this group spends heavily on theater tickets, expensive clothes, luxury vacations, restaurant meals, and alcoholic beverages. They can afford nice cars, stylish apartments, and high-quality home appliances.

Illustration 6–3 contains an ad that would appeal to this group as well as to some mem- bers of the single I and full nest I segments. Note that romance plays a major role in the ad. It also plays on the desire to escape worries and everyday responsibilities.

Full Nest I: Young Married with Children Roughly 6 percent of households are young married couples with children. The addition of the first child to a family creates many changes in lifestyle and consumption. Naturally, new purchases in the areas of baby clothes, furniture, food, and health care products occur in this stage. Lifestyles are also greatly altered. The wife may withdraw fully or partly from the labor force (in roughly 62 percent of married couples with a child under six, the wife works outside the home)11 for several months to several years, with a resulting decline in household income. The couple may have to move to another place of residence because their current apartment may not be appropriate for children. Likewise, choices of vacations, restaurants, and auto- mobiles must be changed to accommodate young children.

This resort is posi-

tioned as ideal for

couples to escape

the pressure of a

hectic work schedule

for relaxation and

romance.

ILLUSTRATION 6-3

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Part Two External Influences192

Some of the changes in income and annual expenditures that occur as a household moves from childless to the young child stage in their late 20s and early 30s include the following:12

Expenditure Percentage Change

Income 29.4% Food at home 24.3 Meals out 29.6 Alcoholic beverages 225.0 Adult apparel 28.3 Children’s apparel 215.7 Health care 16.1 Education 228.8 Personal care products 22.6

As shown above, discretionary and adult expenditures are reduced by the need to spend on child-related products such as food, health care, and children’s apparel as well as to offset the decline in income.

Obtaining competent child care becomes an issue at this stage and remains a major concern of parents at all HLC stages. Households with a stay-at-home spouse confront this issue mainly for evenings out or weekends away. Single-parent and dual-earner house- holds generally require daily child care, which is expensive and often requires parents to make trade-offs from their ideal situation.

Moms across the HLC possess $1.7 trillion in spending power. Examples of companies going after moms in full nest I are given below.

�r� Kraft, which launched an iPad app called Big Fork Little Fork that provides parents with information on healthy food options for kids and families.13

�r� Club Mom, an online loyalty program that provides advice, resources, and discounts to moms who shop with sponsors such as Chrysler.14

�r� McDonald’s, which attempts to attract this segment by providing recreational equip- ment for the young children in these households.

Illustration 6–4 contains an ad aimed at this market segment. It shows how the choice of recreational activities may change with the addition of young children.

Single Parent I: Young Single Parents Birth or adoption by singles is increasingly common. Roughly 40 percent of children are born to unmarried mothers, a number that has risen by 13 percentage points since 1990. However, as many as 40 percent of these children may actually be born to cohabiting unmarried parents.15 Divorce, while on the decline since 1980, continues to be a significant part of American society, with 40 percent of first marriages ending in divorce.16 Although most divorced individuals remarry and most women who bear children out of wedlock eventually get married, 9 percent of Ameri- can households are single-parent families, and 80 percent of these are headed by women.

The younger members of this group, particularly those who have never been married, tend to have a limited education and a very low income. These individuals are often mem- bers of one of the lower social classes, as described in Chapter 4. The older members of this segment and the divorced members receiving support from their ex-spouses are somewhat better off financially, but most are still under significant stress as they raise their young children without the support of a partner who is physically present.

This type of family situation creates many unique needs in the areas of child care, easy- to-prepare foods, and recreation. The need to work and raise younger children creates

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Chapter Six The American Society: Families and Households 193

enormous time pressures and places tremendous demands on the energy of these parents. Most are renters and so are not a major market for home appliances and improvements. Their purchases focus on getting by and on time- and energy-saving products and services that are not overly expensive.

Middle-Aged Single The middle-aged single category is made up of people who have never married and those who are divorced and have no child-rearing responsibilities. These individuals are in the 35-to-64 age category, which is primarily the Generation X and baby boomers (Chapter 4), although older Generation Y consumers are moving into this category as well.

Middle-aged singles often live alone. In fact, living alone is increasingly viewed as a lifestyle choice that many are willing and able to make, given higher incomes. Middle-aged singles who live alone represented roughly 15 million households, which is about 47 percent of all single-person households. Middle-aged singles have higher incomes than young singles. However, all live-alone singles suffer from a lack of scale economies. That is, a couple or family needs only one dishwasher, clothes dryer, and so forth for everyone in the household; but the single-person household needs the same basic household infrastructure even though only one person uses it. Likewise, many foods and other items come in sizes inappropriate for singles, or the small sizes are disproportion- ately expensive. Thus, opportunities appear to exist to fill unmet needs among this impor- tant and growing market.17

The needs of middle-aged singles in many ways reflect those of young singles. But middle-aged singles are likely to have more money to spend on their lifestyles and they are willing to indulge themselves. Thus, they may live in nice condominiums, frequent expensive restaurants, own a luxury automobile, and travel often. They are a major market for gifts, and the males buy significant amounts of jewelry as gifts.

Empty Nest I: Middle-Aged Married with No Children Lifestyle changes in the 1980s and 1990s influenced many young couples to not have children.18 In other cases, these households represent second marriages in which children from a first marriage are

1BSFOUIPPE�CSJOHT�

both great pleasures

and great responsibil-

ities. This ad empha-

sizes the pleasures of

family activities.

ILLUSTRATION 6-4

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Part Two External Influences194

not living with the parent. This group also includes married couples whose children have left home. These three forces have produced a huge market consisting of mid- dle-aged couples without children at home. Roughly 55 percent of married couples in this age group (35 to 64) don’t have chil- dren under the age of 18. This segment has grown as baby boomers have moved through the latter stages of middle age and into retirement.

Both adults typically will have jobs, so they are very busy. However, the absence of responsibilities for children creates more free time than they have enjoyed since their youth. They also have money to spend on dining out, expensive vacations, second homes, luxury cars, and time-saving ser- vices such as housecleaning, laundry, and shopping. They are a prime market for financial services. Less obvious, they are

also heavy purchasers of upscale children’s products, as gifts for nieces, nephews, grand- children, and friends’ children.

The ad and product in Illustration 6–5 would appeal to this group.

Delayed Full Nest I: Older Married with Young Children Many members of the baby boom generation and Generation X delayed having their first child until they were in their mid-30s. This produced the new phenomenon of a large number of middle-aged, established families entering into parenthood for the first time. Recall from Table  6–1 that married couples with children under 18 make up 21.4 percent of all households. And young married couples make up only 6 percent of all households. However, middle-aged (35 to 64) married couples with children (both delayed full nest I and full nest II) make up roughly 15 percent of all households and represent 71 percent of all married couples with children under 18.19

A major difference between delayed full nest I and younger new parents is income. Older new parents’ incomes are significantly larger than those of younger new parents. They have had this income flow longer and so have acquired more capital and posses- sions. They spend heavily on child care, mortgage payments, home maintenance, lawn care, and household furnishings. In addition, they want only the best for their children and are willing and able to spend on them. For example, the specialty diaper and toiletries market is expected to have double-digit growth. And traditional mass marketers such as Kimberly-Clark are pushing high-end products like “pull-up” diapers with glow-in-the- dark animated characters.20 In addition, delayed full nest I can also spend more on non- child expenditures such as food, alcohol, and entertainment, and can make more savings and retirement contributions than can younger new parents.

Full Nest II: Middle-Aged Married with Children at Home A major difference between this group and delayed full nest I is age of the children. The children of full nest II are generally over age six and are becoming more independent. The presence of older children creates unique consumption needs, however. Families with children

This service and

ad would appeal to

empty nest I con-

sumers. They have

the resources to

afford such travel

and would welcome

the relaxation and

escape it promises.

ILLUSTRATION 6-5

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Chapter Six The American Society: Families and Households 195

six and older are the primary consumers of lessons of all types (piano, dance, gymnas- tics, and so on), dental care, soft drinks, presweetened cereals, and a wide variety of snack foods.

Greater demands for space create a need for larger homes and cars. Transporting chil- dren to multiple events places time demands on the parents and increases transportation- related expenditures. These factors, coupled with heavy demand for clothing and an increased need to save for college, create a considerable financial burden on households in this stage of the HLC. This is offset somewhat by the tendency of the wife to return to work as the children enter school. This return to work usually entails greater time pressures. ConAgra Foods has found great success tapping parents’ desire to simplify mealtime with their easy-to-prepare Banquet Crock-Pot Classics, which have all needed ingredients and can cook all day and be ready to eat in the evening with minimal hassle.21

As we saw in Chapter 4, the teenage members (the older part of Generation Z) in these households, as well as teens in the single parent II segment, are important consumers in their own right as well as important influencers on household consumption decisions.

Single Parent II: Middle-Aged Single with Children at Home Single individ- uals in the 35-to-64 age group who have children are often faced with serious finan- cial pressures. The same demands that are placed on the middle-aged married couple with children are present in the life of a middle-aged single with children. However, the single parent often lacks some or all of the financial, emotional, and time support that the presence of a spouse generally provides. Many individuals in this position are thus inclined to use time-saving alternatives such as ready-to-eat food, and they are likely to eat at fast-food restaurants. The children of this segment are given extensive household responsibilities.

It is important to note that becoming a single parent (through adoption or conception) is increasingly viewed as a lifestyle choice for older, more financially secure women who may or may not plan to marry in the future. Single Mothers by Choice is an organiza- tion that recognizes this and offers support and assistance. According to the organization, single women by choice are well-educated, career-oriented women in their 30s and 40s. As a consequence, they often have higher income and financial security than many single parents.22

Empty Nest II: Older Married Couples There are about 11 million households in this segment, and it is expected to grow rapidly over the next 10 years as baby boom- ers age. Many couples in the over-64 age group are either fully or partially retired. However, as we discussed in Chapter 4, improvements in health care and longevity, desire to stay active, and changes in Social Security will likely push retirement age upward over the decades to come. The younger members of this group are healthy, active, and often financially well-off. They have ample time. They are a big market for RVs, cruises, and second homes. They also spend considerable time and money on grandchildren. Increasingly, they take their grandchildren and occasionally their children on vacations. As described in Chapter 4, as they advance in age, health care and assisted living become more important. At this stage and the next, distribution of valued family assets such as family heirlooms, property, and money also becomes important.23 Illustration  6–6 shows an ad for a product designed to meet one of this segment’s needs.

Older Single There are around 17 million older singles in the United States, and this group will continue to grow as baby boomers age. Approximately 70 percent of

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Part Two External Influences196

all older singles are female, and roughly two-thirds of all older singles live alone. The conditions of being older, single, and generally retired create many unique needs for housing, socialization, travel, and recreation. Many financial firms have set up special programs to work with these individuals. They often have experienced a spouse’s death and now are taking on many of the financial responsibilities once handled by the other person. A recent study labeled consumers who were single as the result of the death of a spouse as “single by circumstance” rather than single by choice. Many older singles would fall into the single by circumstance category. Results of the research suggest that older singles who are single by circumstance will be less innovative, more risk averse, more price sensitive, and more likely to engage in coping behaviors, such as spending more time watching television, than their single by choice counterparts.24 What are the social and ethical issues involved in marketing to older consumers who are single by circumstance?

MARKETING STRATEGY BASED ON THE HOUSEHOLD LIFE CYCLE The HLC is an important segmentation tool given its relation to differences in the needs, wants, constraints, and consumption patterns that are unique to each stage. However, because individuals within each stage may vary on a host of other important factors such as education or income, the HLC becomes more powerful in terms of market segmentation and strategy formulation when it is combined with these factors.

For example, think of how the need for vacations differs as one moves across the stages of the household life cycle. Young singles often desire vacations focused on activities, adventure, and the chance for romance. Young married couples without children would have similar needs but without the desire to meet potential romantic partners. Full nest I and single parent I families need vacations that allow both parents and young children to enjoy themselves. The manner in which these needs will be met will vary sharply across occupational, income, and educational categories. For example, a young professional cou- ple may vacation in Paris or at a resort in the tropics. A white-collar couple may visit a

As consumers

mature, their financial

situation, free time,

and physical and

social needs change.

This ad would appeal

to active members

of the empty nest II

segment.

ILLUSTRATION 6-6

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Chapter Six The American Society: Families and Households 197

domestic ski resort or visit Hawaii on a package deal. A young blue-collar couple may visit family or go camping.

Table 6–2 presents the HLC/occupational category matrix. The vertical axis is the particular stage in the HLC, which determines the problems the household will likely encounter; the horizontal axis is a set of occupational categories, which provide a range of acceptable solutions. This version has been found to be useful across a range of prod- ucts in segmenting the market and developing appropriate marketing strategies for tar- geted segments (variables other than or in addition to occupation should be used when appropriate).

An effective use of the matrix is to isolate an activity or problem of interest to the firm, such as preparing the evening meal or providing nutritious snacks, scheduling weekend recreation, or planning a summer vacation. Research, often in the form of focus group interviews, is used to determine the following information for each relevant cell in the matrix:

1. What products or services are now being used to meet the need or perform the activity? 2. What, if any, symbolic or social meaning is associated with meeting the need or using

the current products? 3. Exactly how are the current products or services being used? 4. How satisfied are the segment members with the current solutions, and what improve-

ments are desired?

Attractive segments are those that are large enough to meet the firm’s objectives and that have needs that current products are not fully satisfying. This approach has been used successfully for movies, regional bakeries, and financial services.25 What type of automo- bile would be best suited for each cell, and what type of ad should promote it?

Occupational Category

HLC Stage Executive/Elite

Professional Administrative/

Professional Technical/Sales/

Clerical Crafts Unskilled/

Manual

Single I

Young married

Full nest I

Single parent I

Single II

Delayed full nest I

Full nest II

Single parent II

Empty nest I

Empty nest II

Single III

6-2HLC/Occupational Category Matrix TABLE

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Part Two External Influences198

FAMILY DECISION MAKING Family decision making is the process by which decisions that directly or indirectly involve two or more family members are made. Decision making by a group such as a family differs in many ways from decisions made by an individual. Consider the purchase of a breakfast cereal that children, and perhaps the adults, will consume. Who recognizes the need for the product? How are the type and brand selected? Does everyone consider the same attributes? A parent typically makes the actual purchase; does that mean that the parent also makes the choice? Or is the choice made by the children, the other parent, or some combination? Which parents are involved, and how does this change across products and over time? How does it differ by stage in the HLC?

Family purchases are often compared with organizational buying decisions. Although this comparison can produce useful insights, it fails to capture the essence of family decision making. Organizations have relatively objective criteria, such as profit maxi- mization, that guide purchases. Families generally lack such explicit, overarching goals. Most industrial purchases are made by strangers or have little impact on those not involved in the purchase. Most family purchases directly affect the other members of the family.

Most important, many family purchases are inherently emotional and affect the rela- tionships between the family members.26 The decision to buy a child a requested toy or new school clothes is more than simply an acquisition. It is a symbol of love and commit- ment to the child. The decision to take the family to a restaurant for a meal or to purchase a new television has emotional meaning to the other family members. Disagreements about how to spend money are a major cause of marital discord. The processes fami- lies use to make purchase decisions and the outcomes of those processes have important effects on the well-being of the individual family members and the family itself. Thus, while family decision making has some things in common with organizational decision making, it is not the same.

The Nature of Family Purchase Roles Figure 6–3 illustrates the six roles that frequently occur in family decision making, using a cereal purchase as an example.27 It is important to note that individuals will play various roles for different decisions.

�r� Initiator(s). The family member who first recognizes a need or starts the purchase process.

�r� Information gatherer(s). The individual who has expertise and interest in a particular purchase. Different individuals may seek information at different times or on different aspects of the purchase.

�r� Influencer(s). The person who influences the alternatives evaluated, the criteria consid- ered, and the final choice.

�r� Decisionmaker(s). The individual who makes the final decision. Of course, joint deci- sions also are likely to occur.

�r� Purchaser(s). The family member who actually purchases the product. This is typically an adult or a teenager.

�r� User(s). The user of the product. For many products there are multiple users.

Marketers must determine who in the family plays which role. Crayola shifted its advertising budget from children’s television to women’s magazines because its research

LO3

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Chapter Six The American Society: Families and Households 199

revealed that mothers rather than children were more likely to recognize the problem, evaluate alternatives, and make the purchase. Illustration  6–7 shows a product designed for use by children that is selected by both the children and the parents and purchased by the parents.

Family decision making has been categorized as husband-dominant, wife-dominant, joint, or individualized. A moment’s reflection will reveal that the above four catego- ries omit critical participants in many family decisions. Until recently, most studies have ignored the influence of children.28 Yet children, particularly teenagers, often exert a sub- stantial influence on family purchase decisions.29 Thus, we need to recognize that child- dominant and various combinations of husband, wife, and child joint decisions are also common.

Husband-dominant decisions have traditionally occurred with the purchase of such products as automobiles, liquor, and life insurance. Wife-dominant decisions were more common in the purchase of household maintenance items, food, and kitchen appliances. Joint decisions were most likely when buying a house, living room furniture, and vacations.

Children often deter-

mine the products

and brands they

use. At other times,

they influence these

choices, but parents

play the dominant

role. In such cases,

the marketer must

meet the needs of

both the child and

the parents.

ILLUSTRATION 6-7

Communications targeted at children

(taste, image)

Influencers (children)

Initiators (parents, children)

Information gatherers (parents)

Decision makers (parents, children)

Purchasers (parents)

Communications targeted at parents

(nutrition)

Users (children)

6-3The Household Decision-Making Process for Children’s Products FIGURE

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Part Two External Influences200

These patterns are much less pronounced today. As women’s occupational roles have expanded, so has the range of family decisions in which they participate or dominate.30 In fact, recent research suggests that the balance has tipped away from husband-dominant decisions even for traditionally male-dominated categories. Across a set of four categories, results are shown in the following table:31

Family Weekend Activities

Large Household Purchases

Household Finances

TV Remote Control

Wife 28% 30% 38% 27% Husband 16 19 30 26 Share 48 46 28 25

*Numbers don’t add to 100 because couples could opt for “don’t know” or “it depends” responses.

It is also important to recognize both direct and indirect influences. Parents might choose a Disney vacation without directly consulting their young children, but clearly would be influenced by their perceptions of the children’s desires. Different family mem- bers often become involved at different stages of the decision process. For example, a child might be the primary initiator of a decision to go to McDonald’s, while the parents might be more involved in the timing of that trip and most likely make the purchase itself. Finally, different family members often focus on different attributes. For example, a child may evaluate the color and style of a bicycle while one or both parents evaluate price, war- ranty, and safety features.

Determinants of Family Purchase Roles How family members interact in a purchase decision is largely dependent on the culture and subculture in which the family exists, the role specialization of different family mem- bers, the degree of involvement each has in the product area of concern, and the personal characteristics of the family members.32

Today, America has less of a masculine orientation than many other cultures. As one would expect, wives are more involved in a wider range of decisions in the United States than they are in cultures with a more masculine focus.33 However, subcultures and other groups in the United States vary on this value. As we saw in Chapter 5, the Hispanic subculture has more of a masculine orientation than the broader culture. Research indi- cates that Hispanics who identify strongly with the Hispanic culture tend to make more husband-dominant decisions than do others.

Over time, each spouse develops more specialized roles as a part of the family lifestyle and family responsibilities. Whether the roles that are adopted are traditional or modern, role specialization still tends to evolve over time because it is much more efficient.

Involvement or expertise in a product area is another major factor that affects how a family purchase decision will be made. Naturally, the more involved a spouse or other family member is with a product area, the more influence this person will have. For example, when children are the primary users of a product (e.g., toys, snacks, breakfast cereal), they tend to have more influence. Teenagers who are involved with computers often strongly influence the decision for a family computer or the choice of an Internet access service.34

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Chapter Six The American Society: Families and Households 201

Several personal characteristics have an effect on the influence individuals will have on purchase decisions.35 Education and income are two such personal characteristics. The higher a wife’s education and income, the more she will participate in or dominate major decisions.36 Figure 6–4 shows that when a husband earns more than his wife, major household financial decisions are balanced across wife-dominant, husband-dominant, and shared. However, when a wife earns more than her husband, which is an increasingly com- mon situation, wife-dominant decisions are far more likely.

Personality is also an important determinant of family decision roles. Traits such as aggressiveness, locus of control (belief in controlling one’s own situation), detachment, and compliance influence family decision power.37 For children, age matters. Older chil- dren and teens are playing an increasingly stronger role and marketers are communicat- ing directly to them, as with Pottery Barn and PBteen. Finally, the stage of the decision process influences decision roles. Purchase decisions evolve from the early stages of problem recognition and information search through choice and purchase. Children and teens tend to have more influence on earlier stages of the family decision process than on later stages.38

Conflict Resolution Given the number of decisions families make daily, disagreements are inevitable. How they are resolved is important to marketers as well as to the health of the family unit. One study revealed six basic approaches that individuals use to resolve purchase conflicts after they have arisen (most couples generally seek to avoid open conflicts):39

�r� Bargaining. Trying to reach a compromise. �r� Impression management. Misrepresenting the facts in order to win. �r� Use of authority. Claiming superior expertise or role appropriateness (the husband/wife

should make such decisions).

Source: Women, Men, and the New Economics of Marriage (Washington, DC: Pew Research Center, January 2010).

*1 Percent indicated “don’t know.”

*

Wife 36%

Husband 35%

Share 28% Wife 46%

Husband 21%

Share 33%

Wife earns moreHusband earns more

6-4Decision-Making Influence and Relative Income FIGURE

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Part Two External Influences202

�r� Reasoning. Using logical argument to win. �r� Playing on emotion. Using the silent treatment or withdrawing from the discussion. �r� Additional information. Getting additional data or a third-party opinion.

Another study found that spouses adapt their strategies across decisions and that when they use coercive means (e.g., silent treatment) to get their way, they are satis- fied with the decision outcome but dissatisfied with the decision process.40 Although neither study included children, a study focused on how children and parents attempt to influence each other found a similar though more complex set of influence strategies.41

MARKETING STRATEGY AND FAMILY DECISION MAKING Formulating an effective marketing strategy for most consumer products requires a thor- ough understanding of the family decision-making process in the selected target markets with respect to that product. Table 6–3 provides a framework for such an analysis.

The family decision-making process often varies across market segments such as stages in the family life cycle or subculture. Therefore, a marketer must analyze family decision making within each of the firm’s defined target markets. Within each target market, the marketer must:

�r� Discover which family members are involved at each stage of the decision process. �r� Determine what their motivations and interests are. �r� Develop a marketing strategy that will meet the needs of each participant.

For example, younger children are often involved in the problem recognition stage related to breakfast. They may note a new cartoon character–based cereal or discover that their friends are eating a new cereal. They are interested in identifying with the car- toon character or being like their friends. When they request the new cereal, the parents, generally the mother, may become interested. However, she is more likely to focus on nutrition and price. Thus, a marketer needs to communicate fun, taste, and excitement to

Segment:

Stage in the Decision Process

Family Members Involved

Family Members’ Motivation and Interests

Marketing Strategy and Tactics

Problem recognition

Information search

Alternative evaluation

Purchase

User/consumption

Disposition

Evaluation

Marketing Strategy Based on the Family Decision-Making Process6-3TABLE

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Chapter Six The American Society: Families and Households 203

children—and nutrition, value, and taste to parents. The children can be reached on Saturday cartoons, appropriate Internet sites, and similar media, while the mother may be more effectively communicated with through magazine ads, package infor- mation, and the Internet.

Examine the ad in Illustration 6–8. Use Table  6–3 to analyze this ad in terms of the family decision-making process and marketing strategy.

CONSUMER SOCIALIZATION The family provides the basic frame- work in which consumer socialization occurs. Consumer socialization is the process by which young people acquire skills, knowledge, and attitudes relevant to their functioning as consumers in the marketplace.42 We are concerned with under- standing both the content of consumer socialization and the process of consumer social- ization. The content of consumer socialization refers to what children learn with respect to consumption; the process refers to how they learn it. Before we address these two issues, we need to consider the ability of children of various ages to learn consumption- related skills.

The Ability of Children to Learn Younger children have limited abilities to process certain types of information. Piaget’s stages of cognitive development are a widely accepted set of stages of cognitive development:

Stage 1: The period of sensorimotor intelligence (0 to 2 years). During this period, behavior is primarily motor. The child does not yet “think” conceptually, though cogni- tive development is seen.

Stage 2: The period of preoperational thoughts (3 to 7 years). This period is character- ized by the development of language and rapid conceptual development.

Stage 3: The period of concrete operations (8 to 11 years). During these years, the child develops the ability to apply logical thought to concrete problems.

Stage 4: The period of formal operations (12 to 15 years). During this period, the child’s cognitive structures reach their greatest level of development, and the child becomes able to apply logic to all classes of problems.

While other approaches exist, the general pattern of less ability to deal with abstract, generalized, unfamiliar, or large amounts of information by younger children is common to all approaches.43

A recent study utilized Piaget’s stages to help understand different interventions designed to improve dietary intake by children. The two stages examined were younger

LO4

Segmentation analy-

sis regarding family

decision making is

critical. Who is the

target family member

for this ad and do

the tactics in the ad

match their motives?

ILLUSTRATION 6-8

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Part Two External Influences204

children (specifically the preoperational stage) and older children (specifically the con- crete operational stage). The interventions were incentives (prizes), competition (against a rival school), and a personal pledge that involved signing their name to an in-class poster. Since pledges are more abstract and difficult to understand, they were less effective for the younger children.44

The changing capabilities of children to process information as they age present chal- lenges to parents who are attempting to teach their children appropriate consumption behaviors.45 As we will discuss shortly, this also poses ethical and practical issues for marketers. Children’s limited learning capacity is the basis for substantial regulation of advertising to children, which we discuss in depth in Chapter 20.

The Content of Consumer Socialization The content of consumer learning can be broken down into three categories: consumer skills, consumption-related preferences, and consumption-related attitudes.46 Consumer skills are those capabilities necessary for purchases to occur such as understanding money, budgeting, product evaluation, and so forth. A child has to learn how to shop, how to compare similar brands, how to budget available income, and the like. The following example shows an attempt by a parent to teach her adolescent appropriate, from the par- ent’s perspective, shopping rules:

Son, look at this. This is just going to wash nicer, it will come through the laundry nicer, and you do a lot of the laundry yourself, and I just would rather that it’s something that would wash easy, that doesn’t have to be ironed, that isn’t 100 percent cotton. (Mother with son, age 13)47

Consumption-related preferences are the knowledge, attitudes, and values that cause people to attach differential evaluations to products, brands, and retail out- lets. For example, some parents through their comments and purchases may “teach” their children that Calvin Klein is a prestigious brand name and that prestigious brands are desirable. This information about Calvin Klein’s prestige is not necessary to carry out the actual purchase (consumer skills), but it is extremely important in deciding to make a purchase and in deciding what to purchase (consumption-related preferences).48

Consumption-related attitudes are cognitive and affective orientations toward mar- ketplace stimuli such as advertisements, salespeople, warranties, and so forth.49 For example, children may learn from their parents or other family members that “you get what you pay for.” This would lead them to assume a strong price–quality relationship. Or they may be taught that salespeople are not trustworthy. These attitudes will influence how they react to the various activities undertaken by marketers. What type of attitude is being formed in the following interaction?

I’m always trying to get her to learn the relative value of things and particularly the impact of advertising and its effect on driving purchases and desires. So we try to talk about that. I point out manipulative or deceptive advertising, and give her a sense of being a critical consumer. (Father with daughter, age 13)50

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Chapter Six The American Society: Families and Households 205

The Process of Consumer Socialization Consumer socialization occurs through a number of avenues, including advertising and friends. However, family is a primary source of consumer socialization. For example, a recent study of eating patterns found that children cite parents as the most important influ- ence regarding the kinds of foods they eat. This was even true of teenagers, where parental influence was highest, and friends and advertising played a much lesser role.51 Parents teach their children consumer skills, consumption-related preferences, and consumption- related attitudes. They do so both deliberately and casually through instrumental training, modeling, and mediation.

Instrumental training occurs when a parent or sibling specifically and directly attempts to bring about certain responses through reasoning or reinforcement. In other words, a parent may try directly to teach a child which snack foods should be consumed by explicitly discussing nutrition.52 Or a parent may establish rules that limit the consumption of some snack foods and encourage the consumption of others. The following example shows an approach used with older children:

One thing that we always talk about when we’re looking at something is the price of it. “For what you’re buying, is the price worth the quality of what you’re buying?” (Mother with son, age 13)53

Parents often worry that marketing messages will simply drown out any instrumental training they try to provide. In Illustration 6–9 there is an attempt on the part of the firm to be a partner in the socialization process.

Modeling occurs when a child learns appropriate, or inappropriate, consumption behaviors by observing others. Modeling generally, though not always, occurs without direct instruction from the role model and frequently without conscious thought or effort on the part of the child. Modeling is an extremely important way for children to learn relevant skills, knowledge, and attitudes. Children learn both positive and negative con- sumption patterns through modeling. For example, children whose parents smoke are more likely to start smoking than are children whose parents do not smoke.

This company clearly

recognizes that it can

be a partner with par-

ents in the socializa-

tion process.

ILLUSTRATION 6-9

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Part Two External Influences206

Mediation occurs when a parent alters a child’s initial interpretation of, or response to, a marketing or other stimulus. This can easily be seen in the following example:

CHILD: Can I have one of those? See, it can walk!

PARENT: No. That’s just an advertisement. It won’t really walk. They just make it look like it will so kids will buy them.

The advertisement illustrated a product attribute and triggered a desire, but the parent altered the belief in the attribute and in the believability of advertising in general. This is not to suggest that family members mediate all commercials. However, children often learn about the purchase and use of products during interactions with other family mem- bers. Thus, a firm wishing to influence children must do so in a manner consistent with the values of the rest of the family.

The Supermarket as a Classroom Professor James McNeal developed a five-stage model of how children learn to shop by visiting supermarkets and other retail outlets with a parent.54

Stage I: Observing Parents begin taking children to the store with them at a median age of two months. During this stage, children make sensory contact with the market- place and begin forming mental images of marketplace objects and symbols. In the early months, only sights and sounds are being processed. However, by 12 to 15 months, most children can begin to recall some of these items. This stage ends when children under- stand that a visit to the market may produce rewards beyond the stimulation caused by the environment.

Stage II: Making Requests At this stage (median age is two years), children begin requesting items in the store from their parents. They use pointing and gesturing as well as statements to indicate that they want an item. Throughout most of this stage, children make requests only when the item is physically present, as they do not yet carry mental images of the products in their minds. In the latter months of stage II, they begin to make requests for items at home, particularly when they are seen on television.

Stage III: Making Selections Actually getting an item off the shelf without assis- tance is the first act of an independent consumer (median age is three-and-a-half years). At its simplest level, a child’s desire is triggered by an item in his or her immediate presence and this item is selected. Soon, however, children begin to remember the store location of desirable items, and they are allowed to go to those areas independently or to lead the par- ent there.

Stage IV: Making Assisted Purchases Most children learn by observing (model- ing) that money needs to be given in order to get things from a store. They learn to value money given to them by their parents and others as a means to acquire things. Soon they are allowed to select and pay for items with their own money. They are now primary con- sumers (median age is five-and-a-half years).

Stage V: Making Independent Purchases Making a purchase without a parent to oversee it requires a fairly sophisticated understanding of value as well as the ability to visit a store, or a section of a store, safely without a parent. Most children remain in stage IV a long time before their parents allow them to move into stage V (median age is eight years).

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Chapter Six The American Society: Families and Households 207

McNeal’s research indicates that children learn to shop, at least in part, by going shop- ping. Retailers are developing programs based on these learning patterns. Examples include child-sized shopping carts and kids’ clubs.

MARKETING TO CHILDREN As seen in the opening example, children are a large and growing market. Brand loyalties developed at this age may produce returns for many years. Thus, it is no surprise that mar- keters are aggressively pursuing these young consumers.

However, marketing to children is fraught with ethical concerns. The major source of these concerns is the limited ability of younger children to process information and to make informed purchase decisions. There are also concerns that marketing activities, particularly advertising, produce undesirable values in children, result in inappropriate diets, and cause unhealthy levels of family conflict. We will examine questionable marketing practices focused on children and the regulations designed to control them in detail in Chapter 20.

Although marketers need to be very sensitive to the limited information-processing skills of younger consumers, ethical and effective marketing campaigns can be designed to meet the needs of children and their parents. All aspects of the marketing mix must consider the capabilities of the child. Consider the following ad and the responses to the ad from children of different ages:

The ad reads, “Inhale a lethal dose of carbon monoxide and it’s called suicide. Inhale a smaller amount and it’s called smoking. Believe it or not, cigarette smoke contains the same poisonous gas as automobile exhaust. So if you wouldn’t consider sucking on a tailpipe, why would you want to smoke?” A picture of a smoking exhaust pipe was below the copy.

Seven- and eight-year-olds’ responses: “Never stand behind a bus because you could get poisonous in your face.” “People sometimes get sick from exhaust.”

Nine- and ten-year-olds’ responses: “The person who is driving is smoking.” “No matter what kind of smoking it is, it can always make you sick.”

Eleven-year-olds’ responses: “You could hurt yourself with that stuff. The same stuff in car exhaust is in cigarettes.” “The tailpipe of a car is like the same as smoking and smoking could kill you . . . both of them could kill you.”

Only the older children could fully engage in the analogical reasoning required to com- pletely understand the ad. In contrast, a simpler ad that showed a dirty, grimy sock next to an ashtray full of cigarette butts with the word gross under the sock and really gross under the ashtray was understood by children of all ages (7 through 11).55

Reaching children used to mean advertising on Saturday morning cartoons. Now there are many more options, even for the very young. National Geographic Kids and Discov- ery Girls are just a few of the many magazines with strong readership among children. Children as young as three are active Internet users. Sites such as 4kidstv.com, Cartoon- network.com, and Nick.com are visited by millions of children aged 2 to 11. Direct mail can be an effective means to reach even very young children. Many firms target chil- dren or families with young children by forming “kids’ clubs.” Unfortunately, these clubs sometimes engage in sales techniques that are controversial if not clearly unethical. If done properly, however, they can be fun and educational for the children while delivering responsible commercial messages.

LO5

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Part Two External Influences208

Consumer skills 204 Consumer socialization 203 Consumption-related attitudes 204

Consumption-related preferences 204

Family decision making 198

Family household 185 HLC/occupational category

matrix 197

KEY TERMS

LO1: Explain the concept of household types and their influence on consumption The household is the basic purchasing and consum- ing unit and is, therefore, of great importance to marketing managers of most products. The family household consists of two or more related persons living together in a dwelling unit. Nonfamily house- holds are dwelling units occupied by one or more unrelated individuals. Family households are a pri- mary mechanism whereby cultural and social-class values and behavior patterns are passed on to the next generation.

LO2: Summarize the household life cycle’s various stages and marketing implications The household life cycle is the classification of the household into stages through which it passes over time based on the age and marital status of the adults and the presence and age of children. The house- hold life cycle is a valuable marketing tool because members within each stage or category face similar consumption problems. Thus, they represent potential market segments.

The HLC/occupational category matrix is one useful way to use the HLC to develop marketing strategy. One axis is the stages in the HLC, which determine the prob- lems the household will likely encounter; the other is a set of occupational categories, which provide a range of acceptable solutions. Each cell represents a market segment.

LO3: Understand the family decision process Family decision making involves consideration of questions such as who buys, who decides, and who uses. Family decision making is complex and involves emotion and interpersonal relations as well as product evaluation and acquisition. Household

member participation in the decision process varies by involvement with the specific product, role specialization, personal characteristics, and one’s culture and subculture. Participation also varies by stage in the decision process. Most decisions are reached by consensus. If not, a variety of conflict resolution strategies may be employed. Marketing managers must analyze the household decision pro- cess separately for each product category within each target market.

LO4: Describe the role that households play in child socialization Consumer socialization deals with the processes by which young people (from birth until 18 years of age) learn how to become consumers. Children’s learning abilities are limited at birth, then slowly evolve with experience over time. Consumer socialization deals with the learning of consumer skills, consumption- related preferences, and consumption-related atti- tudes. Families influence consumer socialization through direct instrumental training, modeling, and mediation. Young consumers appear to go through five stages of learning how to shop. This learning takes place primarily in retail outlets in interaction with the parents.

LO5: Explain the sources of ethical concern associated with marketing to children Marketing to children is fraught with ethical issues. The main source of ethical concern is the limited abil- ity of children to process information and make sound purchase decisions or requests. There are also concerns about the role of advertising in forming children’s values, influencing their diets, and causing family conflict. However, ethical and effective marketing pro- grams can be developed for children.

SUMMARY

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Chapter Six The American Society: Families and Households 209

1. The household is described as “the basic consumption unit for consumer goods.” Why?

2. What is a traditional family? Can a single-parent family be a nuclear family?

3. How does a nonfamily household differ from a family household?

4. Describe the multigenerational family. 5. How has the distribution of household types in

the United States been changing? What are the implications of these shifts?

6. What is meant by the household life cycle? 7. What is meant by the following statement? “Each

stage in the household life cycle poses a series of problems that household decision makers must solve.”

8. Describe the general characteristics of each of the stages in the household life cycle.

9. Describe the HLC/occupational category matrix. What is the logic for this matrix?

10. What is meant by family decision making? How can different members of the household be involved with different stages of the decision process?

11. How does family decision making differ from most organizational decision making?

12. The text states that the marketing manager must analyze the family decision-making process separately within each target market and for each product. Why?

13. What factors influence involvement of a household member in a purchase decision?

14. How do family members attempt to resolve conflict over purchase decisions?

15. What is consumer socialization? How is knowledge of it useful to marketing managers?

16. What are Piaget’s stages of cognitive development?

17. What do we mean when we say that children learn consumer skills, consumption-related attitudes, and consumption-related preferences?

18. What processes do parents use to teach children to be consumers?

19. Describe each of the five stages children go through as they learn to shop at stores.

20. What ethical issues arise in marketing to children?

REVIEW QUESTIONS

21. Respond to the questions in Consumer Insight 6–1. 22. Canada has legislation giving cohabiting couples

who have been living together for one year or more the same federal rights and responsibilities as married couples. Should the United States have similar legislation?

23. Rate the stages of the household life cycle in terms of their probable purchase of the following. Justify your answers.

a. Designer jeans b. Trip to Cancun c. Diapers d. Breakfast bars

e. Contribution to SPCA f. Golf clubs 24. Pick two stages in the household life cycle.

Describe how your marketing strategy for the following would differ depending on which group was your primary target market.

a. Minivan b. Razors c. Broadway show d. Casino 25. Do you think the trend toward nonfamily

households will continue? Justify your response.

DISCUSSION QUESTIONS

Household 185 Household life cycle (HLC) 187 Instrumental training 205 Mediation 206

Modeling 205 Multigenerational

family 187 Nonfamily household 185

Piaget’s stages of cognitive development 203

Step family 185 Traditional family 185

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Part Two External Influences210

38. Interview a middle school student and determine and describe the household decision process involved in the purchase of his or her

a. Backpack b. Snack foods c. Bedroom furniture d. Cell phone e. Clothing 39. Interview two sporting goods salespersons from

different price-level outlets. Try to ascertain which stages in the household life cycle constitute their primary markets and why this is so.

40. Interview one individual from each stage in the household life cycle. Determine and report the extent to which these individuals conform to the descriptions provided in the text.

41. Interview a family with a child under 13 at home. Interview both the parents and the child, but interview the child separately. Try to determine the influence of each family member on the following products for

the child’s use. In addition, ascertain what method(s) of conflict resolution is (are) used.

a. Toothbrush b. Clothes c. Cereal d. Major toys, such as the Xbox e. Television viewing f. Fast-food restaurant 42. Interview a couple who have been married for the

following periods. Ascertain and report the degree and nature of role specialization that has developed with respect to their purchase decisions. Also determine how conflicts are resolved.

a. Less than 1 year b. 1–5 years c. 6–10 years d. More than 10 years 43. Pick a product and market segment of interest, and

interview three households. Collect sufficient data to complete Table 6–3.

APPLICATION ACTIVITIES

26. What are the primary marketing implications of Table 6–1?

27. How would the marketing strategies for the following differ by stage of the HLC? (Assume each stage is the target market.)

a. Cell phone b. Scuba gear c. Power tools d. Children’s toys e. Detergent f. Colleges 28. What are the marketing implications of

Figure 6–4? 29. What type of the following would be best suited

for each cell in Table 6–2? a. Hotel b. Television program c. Restaurant for the entire household d. Lawn mower 30. Name two products for which the horizontal axis

in Table 6–2 should be the following. Justify your response.

a. Occupational category b. Income c. Education d. Social class 31. How can a marketer use knowledge of how family

members seek to resolve conflicts? 32. Describe a recent family purchase in which you

were involved. Use this as a basis for completing Table 6–3 for a marketer attempting to influence that decision.

33. Describe four types of activities or situations in which direct instrumental training is likely to occur.

34. Describe four types of activities or situations in which modeling is likely to occur.

35. Describe four types of activities or situations in which mediation is likely to occur.

36. Respond to the questions in Consumer Insight 6–2. 37. Are Piaget’s stages of cognitive development

consistent with the five stages of learning to shop that McNeal identified?

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Chapter Six The American Society: Families and Households 211

44. Pick a product of interest and, with several fellow students, complete enough interviews to fill the relevant cells in Table 6–2 using the four questions in the text. Develop an appropriate marketing strategy based on this information.

45. Interview several parents of preschool children. Determine the extent to which they agree with Piaget’s four stages and McNeal’s five stages.

46. Watch several hours of Saturday morning cartoons. What ethical concerns, if any, do they cause?

1. This opener based on E. Klinenberg, “Solo Nation,” CNN Money, January 25, 2012, http://finance.fortune.cnn.com/2012/01/25/ eric-klinenberg-going-solo/, accessed August 31, 2014; E. Klinenberg, “One’s a Crowd,” New York Times Sunday Review, February 4, 2012, www.nytimes.com/2012/02/05/opinion/ sunday/living-alone-means-being-social.html?_r50, accessed August 31, 2014; G. Ifill and R. Suarez, “Why More Americans Are Living Alone,” pbs.com, March 27, 2012, www.pbs.org/ newshour/bb/social_issues/jan-june12/goingsolo_03-27.html, accessed August 31, 2014; M. Galante, “Why Micro Apartments Are the Next Big Trend in City Living,” BusinessInsider .com, November 6, 2012, www.businessinsider.com/micro- apartment-trend-2012-10#ixzz2qP0bYtPC, accessed August 31, 2014; E. Klinenberg, Going Solo (New York: Penguin Books, 2013); J. Stanton, “A Closer Look at the Single Household,” foodprocessing.com, August 2013, www.foodprocessing.com/ articles/2013/market-view-single-household/, accessed August 31, 2014; and J. Vespa, J. Lewis, and R. Kreider, “America’s Families and Living Arrangements,” 2012 Population Characteristics (Washington, DC: U.S. Census Bureau, 2013).

2. For more detailed information, see America’s Families and Living Arrangements: 2007 (Washington, DC: U.S. Census Bureau, 2009).

3. Statistics in this section are drawn primarily from relevant U.S. Census Bureau reports and updates.

4. For more information, see A Portrait of Stepfamilies (Washington, DC: Pew Research Center, January 2011).

5. A. M. Epp and L. L. Price, “Family Identity,” Journal of Consumer Research, June 2008, pp. 50–70.

6. This insight is based on The Return of the Multi-Generational Family (Washington, DC: Pew Research Center, March 2010); B. S. Bulik, “We Are Family,” Advertising Age, August 23, 2010, pp. 1 and 20; and H. El Nasser and P. Overberg, “Census: Households Get Fuller,” USA Today, September 30, 2010, p. 3A.

7. See C. M. Schaninger and W. D. Danko, “A Conceptual and Empirical Comparison of Alternative Household Life Cycle Models,” Journal of Consumer Research, March 1993, pp. 580–94; R. E. Wilkes, “Household Life-Cycle Stages, Transitions, and Product Expenditures,” Journal of Consumer Research, June 1995, pp. 27–42; and C. M. Schaninger and D. H. Lee, “A New Full-Nest Classification Approach,” Psychology & Marketing, January 2002, pp. 25–58.

8. Insight based on K. Sweet, “250 Years of Consumer Habits,” Professional Remodeler, November 1, 2004, www.proremodeler .com/250-years-consumer-habits-0, accessed August 31, 2014; Understanding Homeowners’ Renovation Decisions (London: UK Energy Research Centre, 2013); and Homeowner Remodeling Survey (Malvern, PA: Principia Consulting, 2013).

9. See, e.g., N. Donthu and D. I. Gilliland, “The Single Consumer,” Journal of Advertising Research, November–December 2002, pp. 77–84.

10. See J. Raymond, “For Richer or Poorer,” American Demographics, July 2000, pp. 59–64.

11. “Employment Status of Women by Marital Status and Presence and Age of Children: 1970 to 2009,” Statistical Abstract of the United States 2011 (Washington, DC: U.S. Bureau of the Census, 2011).

12. Estimates based on Consumer Expenditure Survey (Washington, DC: U.S. Bureau of Labor Statistics, 2005–2006).

13. K. Pantel, “Kraft Unveils App for Apple’s iPad,” Advertising Age, July 12, 2010.

14. S. Thompson, “ClubMom Prepares National Rollout,” Advertising Age, May 3, 2004, p. 24.

15. R. Gardyn, “Unmarried Bliss,” American Demographics, December 2000, pp. 56–61.

16. For a discussion, including differences across groups, see www. divorcereform.org; and D. Hurley, “Divorce Rate,” New York Times, April 19, 2005, p. F7.

17. See, e.g., J. Morrow, “A Place for One,” American Demographics, November 2003, pp. 25–29; and P. Francese, “Well Enough Alone,” American Demographics, November 2003, pp. 32–33.

18. P. Paul, “Childless by Choice,” American Demographics, November 2001, pp. 45–50.

19. For additional information, see The New Demography of American Motherhood (Washington, DC: Pew Research Center, August 2010).

20. J. Fetto, “The Baby Business,” American Demographics, May 2003, p. 40; and J. Neff, “P&G Challenges Rival K-C in Trainers Battle,” Advertising Age, May 17, 2004, p. 10.

21. ConAgra, “New Survey Finds Parents and Children Alike Crave More Time to Talk and Relax Together,” press release, January 17, 2005.

REFERENCES

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Part Two External Influences212

22. Information from organization’s website at www. singlemothersbychoice.org.

23. T. W. Bradford, “Intergenerational Gifted Asset Dispositions,” Journal of Consumer Research, June 2009, pp. 93–111.

24. Donthu and Gilliland, “The Single Consumer.”

25. For a different approach, see L. G. Pol and S. Pak, “Consumer Unit Types and Expenditures on Food Away from Home,” Journal of Consumer Affairs, Winter 1995, pp. 403–28.

26. See J. Park, P. Tansuhaj, and E. R. Spangenberg, “An Emotion- Based Perspective of Family Purchase Decisions,” Advances in Consumer Research, vol. 22, ed. F. R. Kardes and M. Sujan (Provo, UT: Association for Consumer Research, 1995), pp. 723–28.

27. C. Lackman and J. M. Lanasa, “Family Decision-Making Theory,” Psychology & Marketing, March–April 1993, pp. 81–113.

28. An exception is S. E. Beatty and S. Talpade, “Adolescent Influence in Family Decision Making,” Journal of Consumer Research, September 1994, pp. 332–41.

29. See J. Cotte and S. L. Wood, “Families and Innovative Consumer Behavior,” Journal of Consumer Research, June 2004, pp. 78–86; A. Shoham and V. Dalakas, “He Said, She Said .  .  . They Said,” Journal of Consumer Marketing 22, no. 3 (2005), pp. 152–60; and E. Bridges and R. A. Briesch, “The ‘Nag Factor’ and Children’s Product Categories,” International Journal of Advertising, 25, no. 2 (2006), pp. 157–87.

30. See, e.g., M. A. Belch and L. A. Willis, “Family Decision at the Turn of the Century,” Journal of Consumer Behaviour, 2, no. 2 (2002), pp. 111–24; and N. Razzouk, V. Seitz, and K. P. Capo, “A Comparison of Consumer Decision-Making Behavior of Married and Cohabiting Couples,” Journal of Consumer Marketing, 24, no. 5 (2007), pp. 264–74.

31. Women Call the Shots at Home (Washington, DC: Pew Research Center, September 2008).

32. See C.-N. Chen, M. Lai, and D. D. C. Tarn, “Feminism Orientation, Product Attributes and Husband–Wife Decision Dominance,” Journal of Global Marketing, 12, no. 3 (1999), pp. 23–39; and C. Webster and M. C. Reiss, “Do Established Antecedents of Purchase Decision-Making Power Apply to Contemporary Couples?,” Psychology & Marketing, September 2001, pp. 951–72.

33. J. B. Ford, L. E. Pelton, and J. R. Lumpkin, “Perception of Marital Roles in Purchase Decision Processes,” Journal of the Academy of Marketing Science, Spring 1995, pp. 120–31.

34. See C. K. C. Lee and S. E. Beatty, “Family Structure and Influence in Family Decision Making,” Journal of Consumer Marketing, 19, no. 1 (2002), pp. 24–41; and G. Slattery and J. Butler, “Teens Are Primary Influencer on Holiday Technology Purchases,” Business Wire, November 23, 2004, p. 1.

35. See M. C. Reiss and C. Webster, “Relative Influence in Purchase Decision Making,” Advances in Consumer Research, vol. 24, ed. M. Bruck and D. J. MacInnis (Provo, UT: Association for Consumer Research, 1997), pp. 42–47; and C. Webster, “The Meaning and Measurement of Marital Power,” Advances in Consumer Research, vol. 25, ed. J. W. Alba and J. W. Hutchinson (Provo, UT: Association for Consumer Research, 1998), pp. 395–99.

36. Women, Men, and the New Economics of Marriage (Washington, DC: Pew Research Center, January 2010).

37. C. Webster, “Is Spousal Decision Making a Culturally Situated Phenomenon?,” Psychology & Marketing, December 2000, pp. 1035–58.

38. See, e.g., M. A. Belch, K. A. Krentler, and L. A. Willis-Flurry, “Teen Internet Mavens,” Journal of Business Research, 58 (2005), pp. 569–75.

39. C. Kim and H. Lee, “A Taxonomy of Couples Based on Influence Strategies,” Journal of Business Research, June 1996, pp. 157–68.

40. C. Su, E. F. Fern, and K. Ye, “A Temporal Dynamic Model of Spousal Family Purchase-Decision Behavior,” Journal of Marketing Research, August 2003, pp. 268–81. See also C. Su et al., “Harmonizing Conflict in Husband-Wife Purchase Decision Making,” Journal of the Academy of Marketing Science, 36 (2008), pp. 378–94.

41. K. M. Palan and R. E. Wilkes, “Adolescent–Parent Interaction in Family Decision Making,” Journal of Consumer Research, September 1997, pp. 159–69; see also A. Aribarg, N. Arora, and H. O. Bodur, “Understanding the Role of Preference Revision and Concession in Group Decisions,” Journal of Marketing Research, August 2002, pp. 336–49.

42. For a thorough review, see D. R. John, “Consumer Socialization of Children,” Journal of Consumer Research, December 1999, pp. 183–209. See also M. J. Dotson and E. M. Hyatt, “Major Influence Factors in Children’s Consumer Socialization,” Journal of Consumer Marketing, 22, no. 1 (2005), pp. 35–42.

43. See J. Gregan-Paxton and D. R. John, “The Emergence of Adaptive Decision Making in Children,” Journal of Consumer Research, June 1997, pp. 43–56; T. Davis, “What Children Understand about Consumption Constellations,” Advances in Consumer Research, vol. 27, ed. S. J. Hoch and R. J. Meyer (Provo, UT: Association for Consumer Research, 2000), pp. 72–78; and E. S. Moore and R. J. Lutz, “Children, Advertising, and Product Experiences,” Journal of Consumer Research, June 2000, pp. 31–47.

44. S. Raju, P. Rajagopal, and T. J. Gilbride, “Marketing Healthful Eating to Children,” Journal of Marketing, May 2010, pp. 93–106.

45. Parental responses differ across cultures; see G. M. Rose, “Consumer Socialization, Parental Style, and Developmental Timetables in the United States and Japan,” Journal of Marketing, July 1999, pp. 105–19.

46. M. Viswanathan, T. L. Childers, and E. S. Moore, “The Measurement of Intergenerational Communication and Influence on Consumption,” Journal of the Academy of Marketing Science, Summer 2000, pp. 406–24.

47. Palan and Wilkes, “Adolescent–Parent Interaction in Family Decision Making.”

48. M. F. Ji, “Children’s Relationships with Brands,” Psychology & Marketing, April 2002, pp. 369–87; and E. S. Moore, W. L. Wilkie, and R. J. Lutz, “Passing the Torch,” Journal of Marketing, April 2002, pp. 17–37.

49. See T. F. Mangleburg and T. Bristol, “Socialization and Adolescents’ Skepticism toward Advertising,” Journal of Advertising, Fall 1998, pp. 11–20; L. Carlson, R. N. Laczniak,

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Chapter Six The American Society: Families and Households 213

and J. E. Keith, “Socializing Children about Television,” Journal of the Academy of Marketing Science, Summer 2001, pp. 276–88; and P. Wright, M. Friestad, and D. M. Boush, “The Development of Marketplace Persuasion Knowledge in Children, Adolescents, and Young Adults,” Journal of Public Policy and Marketing, Fall 2005, pp. 222–33.

50. Palan and Wilkes, “Adolescent–Parent Interaction in Family Decision Making.”

51. P. Dando, “Healthier Fast-Food a Reality,” Advertising Age, March 29, 2004, p. S-7.

52. See, e.g., C. Kim, H. Lee, and M. A. Tomiuk, “Adolescents’ Perceptions of Family Communication Patterns and Some

Aspects of Their Consumer Socialization,” Psychology & Marketing, October 2009, pp. 888–907.

53. Palan and Wilkes, “Adolescent–Parent Interaction in Family Decision Making.”

54. J. U. McNeal, Kids as Consumers (New York: Lexington Books, 1992); and J. U. McNeal and C. Yeh, “Born to Shop,” American Demographics, June 1993, pp. 34–39. See also J. B. Schor, Born to Buy (New York: Scribner, 2004).

55. L. A. Peracchio and D. Luna, “The Development of an Advertising Campaign to Discourage Smoking Initiation among Children and Youth,” Journal of Advertising, Fall 1998, pp. 49–56.

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7 Group Influences on Consumer Behavior chapter

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215

Explain reference groups and the criteria used to classify them.

Discuss consumption subcultures, includ- ing brand and online communities and their importance for marketing.

Summarize the types and degree of reference group influence.

LO1

LO2

LO3

Discuss within-group communications and the importance of word-of-mouth communications to marketers.

Understand opinion leaders (both online and offline) and their importance to marketers.

Discuss innovation diffusion and use an inno- vation analysis to develop marketing strategy.

LO4

LO5

LO6

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

For most products and brands, the basic pur- chase motivation relates to the ability of the product or service itself to meet a need of the consumer. Other purchases are fundamentally different in that consumers buy membership into a group as well. A prime example is the Jeep brand.1 Many Jeep owners elect to become members of a “Jeep community.” These owners attend “brandfests” such as Jeep Jamborees, Jeep 101, and Camp Jeep. At these events, they meet and form relationships with other owners, deepen their involvement with their Jeep vehicles, and become acculturated into the rituals and tra- ditions of the community. The following quote illustrates how Susan, a first-time Jeep owner, began to become a member of this community:

I’ve been very happy. I get a lot of communications

from Jeep, which I’ve been so impressed with.

Usually you buy a car and you’re a forgotten soul.

It’s kinda like they want you to be part of the family.

As soon as I got the invitation for Jeep 101, I reg-

istered. I was very excited. But I was also nervous.

I didn’t think I would end up driving. I was very

relieved to see someone in the car with you, ’cause

it gave you the confidence to do what you’re sup-

posed to. Otherwise, I had visions of abandoning

the truck on the hill and saying, “I can’t do it!”

I thought I might wimp out, but I didn’t (smiles).

The Jeep brand has a long tradition of fos- tering a community spirit. It strives for a balance between grassroots organizing and corporate efforts. Jeep creates events for enthusiasts and venues where members contribute, thereby fostering a sense of community. In addition, Jeep owners organize their own events and clubs that have nothing to do with the com- pany. The Jeep community started offline. Events, organizations, and activities include the following:

�r� Camp Jeep—This event, hosted each year by Jeep, is a family event with activi- ties including camping, crafts, concerts by such acts as Tim McGraw, and, of course, off-road driving on a specially designed course where owners can test their skills and their Jeep vehicles.

�r� Jeep Jamboree—These are Jeep- sponsored off-road treks that are fully focused on the off-road driving experi- ence and are held all over the country in such 4 3 4 destinations as Moab, Utah.

�r� Local Jeep clubs—These are member- created clubs with their own rules, regula- tions, culture, and leadership. One is the Sacramento Jeepers club, established in 1957. Membership requires owning a

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Part Two External Influences216

four-wheel-drive Jeep, attending three meet- ings a year, and driving in three club trips a year.

While the community started offline, it has moved online as well in a number of ways, including

�r� Jeep’s Facebook fan page—Jeep has a fan page on Facebook with over 1 million fans who “like” Jeep. Fans can post questions, videos, and pictures related to their Jeep and Jeep experiences. Jeep can target Facebook users in general by finding those with interests that match the Jeep lifestyle. Jeep can target its fans even more specifically with more refined mar- keting messages, announcements, and offers.

�r� Jeep’s YouTube channel—The Jeep brand also has a YouTube channel, which is a sponsored YouTube area where Jeep and community members can post videos. Some of the videos

are Jeep commercials posted by Jeep and some are videos from members taken at Jeep Jamborees and other off-road events.

�r� Local club websites—Local clubs also have their own websites that provide information, news, classified ads, discussion forums, and so on. These sites range from simple to elabo- rate depending on the group’s culture, values, and goals.

The Jeep brand has been fostering this commu- nity for decades—sometimes leading, sometimes following, and sometimes helping. Though some Jeep owners do not join this community, members tend to be intense, active, and devoted. They are connected to the Jeep brand, the Jeep community, and the lifestyle it represents in a very deep way that permeates their lives and helps define who they are.

As demonstrated in the opening example, even in an individualistic society like America, group memberships and identity are very important to all of us. And while we don’t like to think of ourselves as conformists, most of us conform to group expectations most of the time. For example, when you decided what to wear to the last party you attended, you probably based your decision in part on the anticipated responses of the other individuals at the party. This represents a response to group influence and expectations.

TYPES OF GROUPS The terms group and reference group need to be distinguished. A group is defined as two or more individuals who share a set of norms, values, or beliefs and have certain implicitly or explicitly defined relationships to one another such that their behaviors are interdepen- dent. A reference group is a group whose presumed perspectives or values are being used by an individual as the basis for his or her current behavior. Thus, a reference group is simply a group that an individual uses as a guide for behavior in a specific situation.

Most of us belong to a number of different groups and perhaps would like to belong to several others. When we are actively involved with a particular group, it generally func- tions as a reference group. As the situation changes, we may base our behavior on an entirely different group, which then becomes our reference group. We may belong to many groups simultaneously, but we generally use only one group as our primary point of refer- ence in any given situation. This tendency is illustrated in Figure 7–1.

Groups may be classified according to a number of variables. Four criteria are particu- larly useful: (1) membership, (2) strength of social tie, (3) type of contact, and (4) attraction.

The membership criterion is dichotomous: either one is a member of a particular group or one is not a member of that group. Of course, some members are more secure in their membership than others are; that is, some members feel they really belong to a group, while others lack this confidence.

LO1

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Chapter Seven Group Influences on Consumer Behavior 217

Strength of social tie refers to the closeness and intimacy of the group linkages. Primary groups, such as family and friends, involve strong ties and frequent interaction. Primary groups often wield considerable influence. Secondary groups, such as professional and neighborhood associations, involve weaker ties and less-frequent interaction.

Type of contact refers to whether the interaction is direct or indirect. Direct contact involves face-to-face interaction; indirect contact does not. The Internet, in particular, has increased the importance of indirect reference groups in the form of online communities, which are discussed in more detail later in the chapter.

Attraction refers to the desirability that membership in a given group has for the individual. This can range from negative to positive. Groups with negative desirability—dissociative reference groups—can influence behavior just as those with positive desirability do.2 For example, teenagers tend to avoid clothing styles associated with older consumers. Nonmem- bership groups with a positive attraction—aspiration reference groups—also exert a strong influence. Individuals frequently purchase products thought to be used by a desired group in order to achieve actual or symbolic membership in the group.

Consumer Insight 7–1 shows the power of groups and social networks to influence attitudes and behaviors.

Consumption Subcultures A consumption subculture is a distinctive subgroup of society that self-selects on the basis of a shared commitment to a particular product class, brand, or consumption activity. These groups have (1) an identifiable, hierarchical social structure; (2) a set of shared beliefs or values; and (3) unique jargon, rituals, and modes of symbolic expression.3 Thus, they are reference groups for their members as well as those who aspire to join or avoid them.

LO2

Co-workers at weekend job

Hometown friends

Friends from apartment complex

Intramural basketball team

Consumer behavior classmates

Immediate family

Individual

Reference group influencing behavior at Thanksgiving Day dinner celebration

Reference group influencing behavior at “After the final exam” celebration

7-1Reference Groups Change as the Situation Changes FIGURE

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218

A number of such subcultures, ranging from hip-hop to gardening to skydiving, have been examined. Each has a set of self-selecting members. They have hierarchies at the local and national levels. And they also have shared beliefs and unique jargon and rituals. Most hobbies and participation sports have consumption-based group subcultures built

CONSUMER INSIGHT 7-1 Groups, Social Networks, and Seeding

You would probably not be surprised to learn that things like fashion and music spread through social networks.4 But what about things like obesity, happiness, altruism, or smoking? Research suggests these too are influenced via social networks. Take weight. Research shows that peo- ple with similar body mass indices are friends. There are a number of reasonable explanations. One is similarity— people choose others who are like them (be it weight, height, etc.). Another is that social networks establish norms of behavior. The evidence supports norms as a primary explanation for why people of similar weight are friends (part of the same social network or group). Slowly over time, what is considered normal weight within a group or network increases, establishing a “new normal.”

Seeding can be an effective way of marketing using the influence of group and opinion leaders within groups. For example, Rick Warren’s The Purpose Driven Life is the best-selling hardcover book in U.S. history that has been translated into 85 languages. It is a book with Christian topics, relevant to individuals of that faith, but not so much for others who don’t share that faith. It is a niche book that spread rapidly and in record numbers to evangelicals for whom the book was relevant, but remained relatively unknown to people outside of this social network. The Purpose Driven Life was launched using “seeding,” whereby free samples are given away to influential members of existing social networks. Rick Warren nurtured a group of some 1,200 pastors, provided them a free copy of the book, and encouraged them to lead their congregations through the 40-day program.

The phenomenal ability of Beats headphones to grow fivefold and reach $1 billion between 2010 to 2012, despite negative press reviews that suggested Beats headphones were overpriced and underperforming, can in part be explained by seeding Beats headphones to

celebrity influential—locker room photos of Beats around the neck of NBA player LeBron James, Beats popping up in Lady Gaga’s video “Poker Face,” and rapper Lil Wayne wearing $1 million diamond-studded Beats headphones at an NBA game.

The spread of contagion through social networks is difficult to track and measure in the physical world, but data mining of consumer activity on the Internet provides estimations of the spread and impact of contagion. The firm Lotame, for example, can identify influencers in social networks possessing the desired demographics (e.g., women 25–30 years of age) and behavior (e.g., uploaded a video of their child(ren) in the last four hours), send them the contagion (e.g., a movie trailer), and count and track the behaviors and demographics of the people connected to the influencer (e.g., people who viewed the trailer partially or in its entirety).

The downside to contagion, particularly in today’s open social media environment, is that it can be difficult to control what is “put out there” and linked to a specific brand and company. Employees who engage in such negative behaviors (e.g., prank and negatively toned videos involving a restaurant’s products and/or facilities) can be dismissed, but correcting the damage done can be much more difficult and time-consuming.

Critical Thinking Questions 1. What is seeding and how is it an effective tool for

marketers?

2. Use group structure to explain why The Purpose Driven Life had little awareness outside a specific social network.

3. In what ways has the Internet enhanced market- ers’ ability to draw on social networks for marketing purposes?

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Chapter Seven Group Influences on Consumer Behavior 219

around them. Consumption need not be shared physically to be a shared ritual that creates and sustains a group.5

Note that not all, or even most, product owners or participants in an activity become members of the consumption subculture associated with it. For example, one can enjoy the Star Trek TV shows without becoming a member of the associated subculture. Self- selecting into a consumption subculture requires commitment, acquisition of the group’s beliefs and values, participation in its activities, and use of its jargon and rituals. Consider the following excerpt regarding the consumption subculture revolving around high-end, limited-edition sneakers, where the most devoted members are called “sneakerheads”:

By 9:35 on a recent Friday night, Dominique Thomas had been camped outside the Niketown store in South Miami for two full days. Thomas, who goes by the street name DK the Line Pimp, had flown in from Denver and was the first in line to buy the $100 Cowboy Air Max 180s, which were scheduled to go on sale at 10 that night. Just 140 pairs of these limited-edition sneakers . . . were manufactured and they would be sold only at the Miami store and only that night. . . . Thomas, 21, reflected on how much getting the shoes meant to him. “Shoes run my life,” he said. “Without shoes, I don’t exist.”6

As with other types of groups, members of consumption subcultures vary in their com- mitment to and interpretation of the group’s values and norms. Consider the following quotes from sneakerheads regarding whether or not the sneakers should actually be worn:

It’s just like owning a Porsche. Every time you ride by, everyone looks at you. Well, if you have a rare, sought-after sneaker and you wear it down the street, everyone looks at you . . . .

Most collectors, you can’t tell they’re sneakerheads. They usually wear really run-of-the-mill sneakers. Real collectors don’t want to get their shoes dirty or dusty or worn . . . .7

Marketing and Consumption Subcultures Consumption subcultures based on activities obviously are markets for the requirements of the activity itself, such as golf clubs for golfers. However, these groups develop rituals and modes of symbolic commu- nication that often involve other products or services. Golf is renowned for the “uniform” that many of its adherents wear. Clothes, hats, and other items designed for golfers are based as much on providing symbolic meaning as they are for functional benefits.

While these subcultures adopt consumption patterns in large part to affirm their unique identity, the larger market often appropriates all or parts of their symbols, at least for a time. Thus, clothing initially worn by a consumption subculture, such as snowboarders or surfers, for functional or symbolic reasons may emerge as a style for a much larger group. The sneaker culture discussed earlier has given rise to a global market that puts a premium on new and cool styles. The ad in Illustration 7–1 is attempting to appeal to this broader sneaker culture, if not directly at sneakerheads themselves. The name Boxfresh is a refer- ence to hip-hop slang meaning sneakers fresh from the box.

Marketers can and should attempt to use the most respected members of a consump- tion subculture as a means for identifying trends and influencing consumers in the mass market. Again, the sneaker culture is instructive, as indicated by the director of Adidas’s Sports Style Division:

We have seen the sneaker culture increase over the past several years to the point where, today, bloggers [typically sneakerheads] are integral partners in helping spread the word about coming products. We’re putting a lot of effort into this type of consumer, and we’re spending a lot of time on them.8

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Part Two External Influences220

Brand Communities Consumption subcultures focus on the interactions of individuals around an activity, prod- uct category, or occasionally a brand. A brand community is a nongeographically bound community, based on a structured set of social relationships among owners of a brand and the psychological relationship they have with the brand itself, the product in use, and the firm.9 A community is characterized by consciousness of kind, shared rituals and tradi- tions, and a sense of moral responsibility.10

Jeep, along with its owner-enthusiasts, has created a brand community, as described at the beginning of this chapter, as have Harley-Davidson, Saab, Ford Bronco, and MG (a British sports car). The following examples illustrate the nature of brand communities.11

Consciousness of Kind There are several new classes of riders fouling the wind with the misapprehension that merely owning a Harley [Davidson] will transform them into a biker. This is the same type of dangerous ignorance that suggests that giving a dog an artichoke turns him into a gourmet.

Rituals and Traditions “For the past 7 years, we have sponsored a fall trip. [W]e always go the first weekend in October. [W]e . . . get on the Blue Ridge Parkway [which was] made for MGs, you know—high mountain roads, curves, and hills. We spend Friday and Saturday night in the mountains and then come back. The 1st year we had seven or eight people, last year we had 23 cars.”

Moral Responsibility An MG owner and enthusiast indicates a sense of dedication to help other MG owners even to the point of letting a stranger (who eventually became a friend) stay at his home for free for several nights while waiting on repair parts. “I love it because anyone who has an MG is immediately accepted. . . . I’d help anyone who has an interest in British cars.”

Brands may appro-

priate the slang

and symbols of a

consumption subcul-

ture to appeal to a

broader audience.

ILLUSTRATION 7-1

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Chapter Seven Group Influences on Consumer Behavior 221

Marketing and Brand Communities Brand communities can add value to the own- ership of the product and build intense loyalty. A “mere” Jeep owner derives the functional and symbolic benefits associated with owning a Jeep. A member of the Jeep community derives these benefits plus increases in self-esteem from gaining skill in the off-road opera- tion of a Jeep, the ability and confidence to use the Jeep in a wider range of situations, new friendships and social interactions, a feeling of belongingness, a positive association with Chrysler LLC, and a deeper relationship with his or her Jeep.

As the Jeep example suggests, brand communities create value through sets of activities or “practices” that create brand engagement. Four categories of activities and an example of each relating to the Mini Cooper brand are shown in Table 7–1.

From the firm’s perspective, building a brand community involves establishing rela- tionships with the owner and helping owners establish relationships with each other. In addition, Table 7–1 suggests a host of activities that can be encouraged and facilitated by both the brand and brand owners to enhance brand value and loyalty. For example, Mini allows individuals to customize their cars during ordering (brand use enhancement via customization) and then track the production and delivery of their vehicle as part of the “birthing” ritual (community engagement via milestoning). The Mini website also features a Mini Owners’ Lounge, which is an owners-only area where members share information about upcoming events and so on (social networking via welcoming). One such event is the Mini Getaway Tour. Brand-related events are often termed “brand fests,” which are

Social Networking—Creating, enhancing, and sustaining ties among members by welcoming, empathizing, and governing.

r� Empathizing—Lending emotional or other support to members r� �Example (relating to members’ “birthing” rituals for their Mini’s): Good job Birdman! I’m like you. I watched

cameras, checked tracking. . . . You’ll treasure having these for your “scrap book” or should I say Minibirds’s “baby book”? Jack [the car] was not on a WW ship so there were a lot less options for catching glimpses of the journey. Hang in there. Minibird is almost home!

Community Engagement—Reinforce members’ escalating engagement with community by documenting, badging, milestoning, and staking.

r� Milestoning—Noting significant events in brand ownership and consumption r� �Example (relating to length of relationship with Mini): The odometer hit 100k miles and I loved my Mini more

than ever.

Brand Use—Improving or enhancing the use of the focal brand by customizing, grooming, and commoditizing.

r� Grooming—Caring for the brand r� �Example (relating to washing the Mini appropriately): I try to wash at least once a week with a quick detail

spray during the middle of the week to keep my Zaino shining. Newt [thread initiator] prepare yourself for an onslaught of posts suggesting that you should keep your car away from those car washes.

Impression Management—Creating positive view of brand community to nonmembers by evangelizing and justifying.

r� Evangelizing—Sharing about the brand and inspiring others to use the brand r� �Example (relating to the safety of the Mini): In another MINI forum that I used to visit a lot, there were

a few people who had major accidents in their MINIs and I was shocked at just how tough and safe these little cars are. [T]hey weigh more than most small cars and are amazingly rigid and protective from what I’ve seen.

Source: Adapted from H. J. Schau, A. Muniz Jr., and E. J. Arnould, “How Brand Community Practices Create Value,” Journal of Consumer Research, September 2009, pp. 30–51.

7-1Value Creation Activities in the Mini Brand Community TABLE

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Part Two External Influences222

gatherings of owners and others for the purposes of interacting with one another in the context of learning about and using the brand.

Online Communities and Social Networks An online community is a community that interacts over time around a topic of interest on the Internet.12 These interactions can take place in various forms, including online message boards and discussion groups, blogs, as well as corporate and nonprofit websites. Research indicates that online communities exist for many participants and that there is often a sense of community online, which moves beyond mere interactions to include an affective or emotional attachment to the online group. Studies have found ongoing communications among subsets of these interest groups. In addition, the patterns of communication indicate a group structure, with the more experienced members serving as experts and leaders and the newer members seeking advice and information. These groups develop unique vocabu- laries, netiquette, and means for dealing with behaviors deemed inappropriate.

Extent of connection can vary dramatically across members. Many members observe the group discussions without participating. Others participate but only at a limited level. Others manage and create content for the group.13

The most recent and ongoing evolution relating to online communities involves online social network sites. An online social network site is a web-based service that allows indi- viduals to (1) construct a public or semipublic profile within a bounded system, (2) articulate a list of other users with whom they share a connection, and (3) view and traverse their list of connections and those made by others within the system.14 Online social network sites take many forms, including friendship (Facebook and MySpace), media sharing (Flickr and YouTube), events (NASCAR Hookup), corporate or brand (Toyota Friend), and micro- blogging (Twitter).

Illustration 7–2 shows how Care2, “the world’s largest community for good” uses vari- ous avenues including a website and Facebook to foster an online community and further solidify brand loyalty.

Marketing and Online Communities and Social Networks Online communities and social networks are attractive to marketers, who are spending over $4 billion on adver- tising on social network sites alone, which is nearly 10 percent of all online advertising.15

Online social network

sites such as Care2

shown here, are

increasingly popular

for both consum-

ers and brands as a

way to foster and be

connected to a com-

munity with similar

lifestyles, values, and

interests.

ILLUSTRATION 7-2

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Chapter Seven Group Influences on Consumer Behavior 223

Options range from relative standard banner and pop-up ads to more tailored approaches that maximize the specific characteristics of the venue such as sponsored Tweets, branded YouTube channels, or branded fan pages on Facebook.

Online communities and social networks are attractive for a number of reasons, including

�r� Consumer use is high and rising, with about half of online adults and three-quarters of online teens saying they use social networking sites.16

�r� A majority of consumers who use social network sites use them to share information, including information about brands and products.17

�r� Customer acquisition potential seems high, with 51 percent of firms on Twitter and 68  percent of firms on Facebook indicating they have acquired a customer through these channels.18

�r� Roughly two-thirds of consumers who interact with a brand via social media are more likely to recall the brand, share information about the brand with others, feel connected to the brand, and purchase the brand.19

However, consumers don’t just want entertainment or marketing; they want content that is relevant and useful to them. A recent study found the following preferences with regard to social media interactions with a firm:

Type of Social Media Interaction Preference (%)

Providing incentives such as free products and coupons 77 Providing information or solutions to my problems 46 Asking for my feedback on products and services 39 Entertaining me 28 Finding new ways to interact with me 26 Marketing to me 21

Source: Adapted from 2010 Cone Consumer New Media Study Fact Sheet (Boston, MA: Cone LLC, 2010).

While marketers are still learning about how to most effectively utilize social media, a few general guiding principles have emerged.20 The first guiding principle is to be trans- parent. In online communities it is critical that companies identify themselves and any posted content as such. Marketers who fail to do so risk being found out and subject to massive criticism from the community. Consider the case of Sony’s PSP “Flog,” or fake blog, as reported on The Consumerist blog:

[T]he forces of the internet outed a marketing company working for Sony for creating fake PSP blog. The ps3do site says it’s written by “Charlie” who wants to get the parents of his friend, “Jeremy,” to buy “Jeremy” a PSP for Christmas. The domain name is registered to the Zipatoni marketing company.21

Indeed, not only are consumers concerned about transparency, so is the FTC, the gov- ernment body tasked with regulating false and misleading advertising. When Ann Taylor offered a special gift to bloggers who posted coverage about their upcoming line, the FTC investigated. The FTC has issued new guidelines for bloggers requiring them to “clearly disclose any ‘material connection’ to an advertiser including payments for an endorsement or free product.”22 Since blogs can be and often are a part of social network sites, such issues are directly relevant. More generally it shows how important transparency is when companies interact with online groups.

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Part Two External Influences224

The second principle is to be a part of the community. Online communities often expect that the company will be part of the community and not just market to it. Consider the following excerpt:

[M]anagers tend to view social media first as a marketing tool, and indeed it is. But consumers are looking for more help, not [marketing] pitches. About two-thirds of U.S. consumers believe that companies should ramp up social media usage to “identify service/support issues and contact consumers to resolve [them].23

Search Twitter for a company of interest and gauge the ratio of promotion to customer service. You are likely to find it skewed to promotion, although the better companies will also engage in product and service-failure recovery efforts. Companies such as Target are reacting to customer complaints and issues delivered via Twitter and are reacting to them in real time.

The third principle is to take advantage of the unique capabilities of each venue. Many of the social network sites have special areas for corporate advertising and activities that extend beyond traditional banner and pop-up ads. For example, companies can have their own channel on YouTube, which they manage, monitor, and facilitate, as Jeep does. An additional example is the “like” component of Facebook:

Some companies think that getting someone to click the like button is the end of the game, but in reality it is only the opening kickoff. Consider the case of Adobe Photoshop. With little corporate involvement, it was able to accumulate 240,000 Facebook fans. Many companies would have called that a success. But Adobe wanted to do more. So it enlisted its product management team to run its Facebook page, asking fans what they wanted and learning what topics and ideas reso- nated with them. Now the page has more than 2 million likes, and fans show their engagement by adding as many as 3000 comments when Adobe posts to the page.24

Not only did Adobe utilize a special feature of Facebook (the like function), it managed it in such a way that it was meaningful and engaging to customers and thus created real value, in the form of new product ideas, for the firm.

REFERENCE GROUP INFLUENCES ON THE CONSUMPTION PROCESS We all conform in a variety of ways to numerous groups. Sometimes we are aware of this influence, but many times we are not. Before examining the marketing implications of reference groups, we need to examine the nature of reference group influence more closely.

The Nature of Reference Group Influence Reference group influence can take three forms: informational, normative, and identifica- tion. It is important to distinguish these types since marketing strategies depend on the type of influence involved.

Informational influence occurs when an individual uses the behaviors and opinions of reference group members as potentially useful bits of information. This influence is based on either the similarity of the group’s members to the individual or the expertise

LO3

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Chapter Seven Group Influences on Consumer Behavior 225

of the influencing group member.25 Thus, a person may notice that runners on the track team use a specific brand of nutrition bar. He or she may then decide to try that brand because these healthy and active runners use it. Use by the track team members thus pro- vides information about the brand. Illustration 7–3 shows another form of informational influence whereby a positive nonmember expert referent group endorses or recommends the brand.

Normative influence, sometimes referred to as utilitarian influence, occurs when an individual fulfills group expectations to gain a direct reward or to avoid a sanction.26 You may purchase a particular brand of wine to win approval from a colleague. Or you may refrain from wearing the latest fashion for fear of being teased by friends or to fit in with or be accepted by them. As you might expect, normative influence is strongest when indi- viduals have strong ties to the group and the product involved is socially conspicuous.27 Ads that promise social acceptance or approval if a product is used are relying on norma- tive influence. Likewise, ads that suggest group disapproval if a product is not used, such as a mouthwash or deodorant, are based on normative influence.

Identification influence, also called value-expressive influence, occurs when individ- uals have internalized the group’s values and norms. These then guide the individuals’ behaviors without any thought of reference group sanctions or rewards. The individual has accepted the group’s values as his or her own. The individual behaves in a manner consistent with the group’s values because his or her values and the group’s values are the same.

Figure 7–2 illustrates a series of consumption situations and the type of reference group influence that is operating in each case.

Consumers often use

nonmember expert

referent groups as a

source of information

for their purchase

decisions.

ILLUSTRATION 7-3

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Part Two External Influences226

Degree of Reference Group Influence Reference groups may have no influence in a given situation, or they may influence usage of the product category, the type of product used, or the brand used. Table 7–2 shows how two consumption situation characteristics—necessity/nonnecessity and visible/private consumption—combine to affect the degree of reference group influence likely to operate in a specific situation.

Situation Behavioral response Type of influence

A friend mentions that Brooks Brothers has a good selection of suits

At several friends’ homes, Maxwell House coffee is served

The best skier in the group uses Karhu skis

Two neighbors joke about Tim’s car being dirty

Tim notices that his friends buy premium beers, though he can’t taste the difference

An ad stresses that “Even your friends won’t tell you” if you have bad breath—they will just ignore you

Over time, Tim notices that successful executives dress conservatively

Tim sees an ad showing “smart young people on the way up” using an iPad

Many of Tim’s friends regularly consume health foods

Needing a new suit, Tim visits a Brooks Brothers store

Tim decides to give Maxwell House a try

Tim buys a set of Karhu skis

Tim washes and waxes his car

For parties, but not for home use, Tim buys premium beers

Tim buys the recom- mended mouthwash

Tim believes that a conservative image is appropriate for execu- tives and develops a conservative wardrobe

Tim begins to use an iPad

Informational

Normative

Identification

Tim decides that health foods are good for you and begins to consume them regularly

7-2 Consumption Situations and Reference Group InfluenceFIGURE

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Chapter Seven Group Influences on Consumer Behavior 227

Based on Table 7–2, the following two determinants of reference group influence emerge:

�r� Group influence is strongest when the use of product or brand is visible to the group. Products such as running shoes are highly visible. Products such as vitamins are gener- ally not. Reference group influence typically affects only those aspects (e.g., category or brand) that are visible to the group.28

�r� Reference group influence is higher the less of a necessity an item is. Thus, reference groups have strong influence on the ownership of products such as snowboards and designer clothes but much less influence on necessities such as refrigerators.

Three additional determinants of reference group influence include:

�r� In general, the more commitment an individual feels to a group, the more the individual will conform to the group norms.

�r� The more relevant a particular activity is to the group’s functioning, the stronger the pressure to conform to the group norms concerning that activity. Thus, style of dress may be important to a social group that frequently eats dinner together at nice restau- rants and unimportant to a group that meets for basketball on Thursday nights.

�r� The final factor that affects the degree of reference group influence is the individual’s confidence in the purchase situation. This can happen even if the product is not visible or important to group functioning as a result of the importance of the decision and a lack of personal decision confidence. Individual personality traits can influence confi- dence and thus be susceptible to reference group influence.29

Figure  7–3 summarizes these determinants, which marketers can use to assess the degree of group influence on their product category and brand.

MARKETING STRATEGIES BASED ON REFERENCE GROUP INFLUENCES Marketers must first determine the degree and nature of the reference group influence that exists, or can be created, for the product in question. Figure 7–3 provides the starting point for this analysis.

Degree Needed

Necessity Nonnecessity

Consumption Weak reference group influence on product

Strong reference group influence on product

Visible Strong reference group

influence on brand

Public Necessities Influence: Weak product and strong

brand Examples: Shoes Automobiles

Public Luxuries Influence: Strong product and brand Examples: Snow board Health club

Private Weak reference group

influence on brand

Private Necessities Influence: Weak product and brand Examples: Clothes washer Insurance

Private Luxuries Influence: Strong product and weak brand Examples: Hot tub Home theater system

7-2Two Consumption Situation Characteristics and Product/Brand Choice TABLE

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Part Two External Influences228

Personal Sales Strategies The power of groups was initially demonstrated in a classic series of studies. Eight sub- jects are shown four straight lines on a board—three unequal lines are grouped close together, and another appears some distance from them. The subjects are asked to deter- mine which one of the three unequal lines is closest to the length of the fourth line shown some distance away. The subjects are to announce their judgments publicly. Seven of the subjects are working for the experimenter, and they announce incorrect matches. The order of announcement is arranged so that the naive subject responds last. The naive subject almost always agrees with the incorrect judgment of the others. This is known as the Asch phenomenon. Imagine how much stronger the pressures to conform are among friends or when the task is less well defined, such as preferring one brand or style to another.

Consider this direct application of the Asch phenomenon in personal selling. A group of potential customers is brought together for a sales presentation. As each design is presented, the salesperson scans the expressions of the people in the group, looking for the one who shows approval (e.g., head nodding) of the design. The salesperson then asks that person for an opinion because the opinion is certain to be favorable. The person is asked to elaborate. Meanwhile, the salesperson scans the faces of the other people, looking for more support, and then asks for an opinion of the person now showing the most approval. The salesperson continues until the person who initially showed the most disapproval is reached. In this way, by using the first person as a model, and by social group pressure on the last person, the salesperson gets all or most of the people in the group to make a positive public state- ment about the design. Do you see any ethical issues in using group influences in this way?

Advertising Strategies Marketers often position products as appropriate for group activities. French wines gained an image of being somewhat expensive and snobbish. Many consumers viewed them as appropriate only for very special occasions. Illustration  7–4 shows an ad that positions itself toward a specific group activity.

High degree of reference group influence

Visible usage

High relevance of product to group

Low individual purchase confidence

Strong individual commitment to group

Nonnecessary item

7-3 Consumption Situation Determinants of Reference Group InfluenceFIGURE

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Chapter Seven Group Influences on Consumer Behavior 229

Marketers use all three types of reference group influence when developing advertise- ments. Informational influence in advertis- ing was shown earlier in Illustration  7–3. This type of ad uses an expert reference group (e.g., dentists, doctors, and teachers) as the information agent. Another approach is showing members of a group using a product. The message, generally unstated, is that “these types of people find this brand to be the best; if you are like them, you will too.”

Normative group influence is not por- trayed in ads as much as it once was. It involves the explicit or implicit sugges- tion that using, or not using, the brand will result in having members of a group you belong to or wish to join rewarding or punishing you. One reason for the reduced use of this technique is the ethical ques- tions raised by implying that a person’s friends would base their reactions to the individual according to his or her purchases. Ads showing a person’s friends saying negative things about the person behind his or her back because that person’s coffee was not great (yes, there was such an ad campaign) were criticized for playing on people’s insecurities and fears.

Identification influence is based on the fact that the individual has internalized the group’s values and attitudes. The advertising task is to demonstrate that the product is consistent with the group’s—and therefore the individual’s—beliefs. This often involves showing the brand being used by a particular type of group, such as socially active young singles or parents of young children.

COMMUNICATIONS WITHIN GROUPS AND OPINION LEADERSHIP We learn about new products, services, and brands, as well as retail and information out- lets, from our friends and other reference groups in two basic ways. First is by observ- ing or participating with them as they use products and services. Second is by seeking or receiving advice and information from them in the form of word-of-mouth (WOM) communications. WOM involves individuals sharing information with other individuals in a verbal form, including face-to-face, on the phone, and over the Internet. As indicated in Consumer Insight 7–2, online social media and the Internet continue to transform inter- personal communications and WOM.

Consumers generally trust the opinions of people (family, friends, acquaintances) more than marketing communications because, unlike marketing communications, these personal sources have no reason not to express their true opinions and feelings. As a consequence, WOM can have a critical influence on consumer decisions and business success. It is estimated that two-thirds of all consumer product decisions are influenced by WOM.30 Recent research shows just how much faith consumers put in WOM versus advertising across a number of products and services. The information

LO4

Marketers often

position products as

appropriate for group

activities, as shown in

this ad.

ILLUSTRATION 7-4

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230

below shows the percentage of adults who put people (WOM from friends, family, or other people), as compared with advertising, at the top of their list of best sources for information.

People Advertising

Restaurants 83% 35% Places 71 33 Prescription drugs 71 21 Hotels 63 27 Health tips 61 19 Movies 61 67 Best brands 60 33 Retirement planning 58 9 Automobiles 58 36 Clothes 50 59 Computer equipment 40 18 Websites to visit 37 12

Source: Adapted with the permission of The Free Press, a Division of Simon & Schuster, Inc., from The Influentials: One American in Ten Tells the Other Nine How to Vote, Where to Eat, and What to Buy, by Edward Keller and Jonathan Berry. Copyright © 2003 by Roper ASW, LLC. All rights reserved.

CONSUMER INSIGHT 7-2 Online Social Media, Consumer-Generated Content, and WOM

Social media are part of an ongoing revolution online, sometimes referred to as Web 2.0, which involves tech- nologies that allow users to leverage the unique interac- tive and collaborative capabilities of the Internet. These technologies and formats include online communities, social network sites, consumer review sites, and blogs. Online social media allow users not only to form, join, and communicate with groups and individuals online, but also to create and distribute original content in ways not possible in the past. Such consumer-generated content is changing the marketing landscape. Market- ers no longer completely control the communications process but now are both observers and participants in an ongoing dialogue that often is driven by consumers themselves.31

An example of consumer-generated content in online social network sites is a video titled “Fully Submerged Jeep.” It shows an amateur video posted on Metacafe of a Jeep event in which someone takes his Jeep into a pit of water that covers the vehicle completely and comes out the other side unscathed. The video has had over 350,000 views! Jeep is not in control of this content.

On the other hand, one Jeep enthusiast provided not only vicarious learning about Jeep but implicit positive WOM about the qualities of Jeep. Others then joined in and posted comments about the video and about Jeep, which kept the “conversation” going. This is the positive side, and for Jeep derives from the devoted members of its brand community.

On the negative side was the Chevy Apprentice Chal- lenge, in which Chevy invited consumers to create their own Tahoe ads with online components and tools pro- vided by the company. The problem was that one in five ads was negative, focusing on the gas guzzler aspect and coming from environmentalists. As one expert noted, the mistake was not in the use of new media but in the mass approach that the company took:

A much better approach would have been for GM to approach all owners of Tahoes—from soccer moms to hip-hop artists. They could have asked those loyal fans to create commercials using the same mate- rial Chevy provided. Or better yet—GM could have allowed them to use their own videos, images, and music to create truly personalized commercials.32

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231

When consumer input is requested by firms online, it is called crowdsourcing.33 However, crowdsourcing goes well beyond consumer-generated advertising, which was the focus of the Chevy Apprentice Challenge. Crowdsourcing can involve setting up a forum in which customers can help other customers with their prob- lems, something both Dell and Microsoft have done. It can also involve specific requests by firms for consumer input into product and service design decisions. Illustra- tion 7–5 shows an example.

The statistics presented earlier suggest that nearly 40 percent of social media users would like companies to ask for their input on such decisions. It is important to note, however, that not everyone is highly engaged in generated content online. Different types of consumers generate different types of content at different levels as follows:34

�t� Creators. These folks create content of their own—web pages, blogs, video, and video uploads to places like YouTube. Creators tend to be in the teens and early 20s.

�t� Critics. These folks are bloggers and post ratings and reviews. Critics tend to be a bit older than creators—more in the late teens and mid-20s.

�t� Joiners. These folks utilize social networking sites. Joiners range mostly from teens to late 20s.

Joiners are a much larger proportion of the popu- lation than creators and critics.

�t� Spectators. These folks consume other people’s content by reading blogs, watching videos, and so on. Spectators trend young as well, but also garner more members of the older generations.

�t� Inactives. These folks are online but don’t partici- pate in social media. Inactives trend older.

Creators and critics are the true leaders of conver- sation and opinion in Web 2.0. They are, in essence, the opinion leaders and e-fluentials, which we dis- cuss shortly, whose influence cannot be underesti- mated. Marketers are finding that in this new world of social media, they must think more in terms of join- ing and participating in the conversation rather than controlling it.

Critical Thinking Questions 1. How do online social media change marketers from

controlling communications to participating in and observing it?

2. Beyond age, what do you think are typical character- istics of creators and critics?

3. What strategies might marketers use to work in partnership with creators and critics? What pitfalls do you see?

As this information suggests, the importance of WOM is generally high, and its impor- tance relative to advertising varies somewhat across product types. In addition, traditional mass-media advertising still plays a role, particularly at the earlier stages of the decision process, including building brand awareness.

Negative experiences are powerful motivators of WOM, a factor that must be consid- ered by marketers because negative WOM can strongly influence recipients’ attitudes and behaviors.35 Negative experiences, which are highly emotional and memorable, motivate consumers to talk. While the number varies by situation and product, it is not at all uncom- mon to find that dissatisfied consumers tell twice as many people about their experience than do satisfied consumers.36 While merely satisfying consumers (delivering what they expected) may not always motivate WOM, going beyond satisfaction to deliver more than was expected also appears to have the potential to generate substantial WOM. Thus, com- panies may consider strategies for “delighting” consumers or otherwise creating positive emotional experiences that consumers are motivated to pass along in the form of positive WOM (see Chapter 18).37 Obviously, it is imperative for companies to provide both con- sistent product and service quality and quick, positive responses to consumer complaints.

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Part Two External Influences232

Moreover, it is important to note that not all personal sources are equal in value. Some folks are known in their circles as the “go-to person” for specific types of information. These individu- als actively filter, interpret, or provide product- and brand- relevant information to their family, friends, and colleagues. An individual who does this is known as an opinion leader. The process of one person’s receiving information from the mass media or other sources and passing it on to others is known as the two-step flow of com- munication. The two-step flow explains some aspects of communication within groups, but it is too simplistic to account for most communica- tion flows. What usually happens is a multistep flow of communication. Figure  7–4 contrasts the direct flow of information from a firm to custom- ers with the more realistic multistep flow of mass communications.

The multistep flow of communication involves opinion leaders for a particular product area who actively seek relevant information from the mass media as well as other sources. These opinion lead- ers process this information and transmit their inter- pretations of it to some members of their groups. These group members also receive information from the mass media as well as from group mem- bers who are not opinion leaders. Figure  7–4 also indicates that these non–opinion leaders often ini- tiate requests for information and supply feedback to the opinion leaders. Likewise, opinion leaders receive information from their followers as well as from other opinion leaders. Note how social media facilitate this multistep flow process online.

Firms are increasingly

using social media

to request consumer

input into product,

service design, and

marketing decisions.

ILLUSTRATION 7-5

Marketing activities

Direct flow

Opinion leader

Multistep flow

Other information

Marketing activities

Opinion leader

Relevant market segmentRelevant market segment

7-4 Mass Communication Information FlowsFIGURE

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Chapter Seven Group Influences on Consumer Behavior 233

Situations in Which WOM and Opinion Leadership Occur The exchange of advice and information between group members can occur directly in the form of WOM when (1) one individual seeks information from another or (2) when one individual volunteers information. It can also occur indirectly through observation as a byproduct of normal group interaction.

Imagine that you are about to make a purchase in a product category with which you are not very familiar. Further imagine that the purchase is important to you—perhaps a new sound system, skis, or a bicycle. How would you go about deciding what type and brand to buy? Chances are you would, among other things, ask someone you know who you believe is knowledgeable about the product category. This person would be an opinion leader for you. Notice that we have described a high-involvement purchase situation in which the purchaser has limited product knowledge about an important decision. Figure  7–5  illustrates how these factors lead to varying levels of opinion leadership.38

In addition to explicitly seeking or volunteering information, group members pro- vide information to each other through observable behaviors. Consider Hard Candy nail polish:

Dinah Mohajer, a student at the University of Southern California, made some funky-colored nail polish to match a pair of sandals. Other students saw her and wanted similar polishes. Soon she and her boyfriend were making nail polish in her bathtub. Next she obtained distribution for the polish, now named Hard Candy, in trendy local salons. News photos showing Quentin Tarantino and Drew Barrymore wearing it generated more interest. The actress Alicia Silverstone wore and praised the product on David Letterman. In three years sales grew to $30 million.39

Hard Candy succeeded mainly through observation. Stylish individuals were seen wearing it on campus (Dinah and her friends). Then other individual style leaders used it (by being distributed through trendy salons, it was seen and purchased by style-conscious individuals). Finally, celebrities were seen in mass media wearing Hard Candy.

LO5

Product/purchase involvement

Product knowledge

Moderate Likelihood

Low Likelihood

Moderate Likelihood

High

Low

High Likelihood

High Low

7-5Likelihood of Seeking an Opinion Leader FIGURE

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Part Two External Influences234

Obviously, observation and direct WOM often operate together. For example, you might be in the market for a digital camera and notice that a friend uses an Olympus. This might jump-start a conversation about digital cameras, the Olympus brand, and where to find the best deals. And while Hard Candy’s success depended heavily on observation, WOM was also involved as friends told other friends.

Characteristics of Opinion Leaders The most salient characteristic of opinion leaders is greater long-term involvement with the product category than the non–opinion leaders in the group. This is referred to as enduring involvement, and it leads to enhanced knowledge about and experience with the product cat- egory or activity.40 This knowledge and experience make opinion leadership possible.41 Thus, an individual tends to be an opinion leader only for a specific product or activity clusters.

Opinion leadership functions primarily through interpersonal communications and observation. These activities occur most frequently among individuals with similar demo- graphic characteristics. Thus, it is not surprising that opinion leaders are found within all demographic segments of the population and seldom differ significantly on demographic variables from the people they influence. Opinion leaders tend to be more gregarious than others are, which may explain their tendency to provide information to others. They also have higher levels of exposure to relevant media than do non–opinion leaders. And opin- ion leaders around the world appear to possess similar traits.42

Identifying and targeting opinion leaders is important. Offline, opinion leaders can be targeted through specialized media sources. For example, Nike could assume that many subscribers to Runner’s World serve as opinion leaders for jogging and running shoes.43 Online, opinion leaders can often be identified in terms of their activity and influence in a given arena.44 Matt Halfill, a sneakerhead-turned blogger (his blog is NiceKicks), is seen as an opinion leader in the sneaker culture and companies like Nike advertise on his blog.

Market Mavens, Influentials, and e-Fluentials Opinion leaders are specialists. Their knowledge and involvement tend to be product or activity specific. Therefore, while a person might be an opinion leader for motorcycles, she or he is likely to be an opinion seeker for other products, such as cell phones. However, some individuals have informa- tion about many different kinds of products, places to shop, and other aspects of mar- kets. They both initiate discussions with others about products and shopping, and respond to requests for market information. These generalized market influencers are market mavens. In essence, then, market mavens are a special type of opinion leader.

Market mavens provide significant amounts of information to others across a wide array of products, including durables and nondurables, services, and store types. They provide information on product quality, sales, usual prices, product availability, store personnel characteristics, and other features of relevance to consumers. Market mavens are extensive users of media.45 They are also more extroverted and conscientious, which drives their tendency to share information with others.46 Demographically, market mavens tend to be similar to those they influence.

Roper Starch (a market research company) has been tracking a group of generalized market influencers, which are very similar in nature to market mavens, for over 30 years. These consumers, called Influentials, represent about 10 percent of the population and have broad social networks that allow them to influence the attitudes and behaviors of the other 90 percent of the population. Influentials are heavy users of print media, such as newspapers and magazines, as well as the Internet and are more likely than the general population to engage in WOM recommendations about products, services, brands, and even what new websites to visit.47

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Chapter Seven Group Influences on Consumer Behavior 235

Internet mavens also exist. As we saw in Chapter 6, teen Internet mavens are able to influence family decisions that their parents make by operating as important gatekeep- ers to information on the web.48 Roper Starch and Burston-Marsteller have identified a related group of consumers they call e-fluentials. E-fluentials represent about 10 percent of the adult online community, but their influence is extensive as they communicate news, information, and experiences to a vast array of people both online and offline. E-fluentials actively use the Internet to gather and disseminate information through numerous online avenues including social media. Their number one factor in opening unsolicited e-mails is brand familiarity. Clearly a trusted brand and solid online presence are critical to targeting e-fluentials.49

Marketing Strategy, WOM, and Opinion Leadership Marketers are increasingly relying on WOM and influential consumers as part of their marketing strategies. Driving factors include fragmented markets that are more difficult to reach through traditional mass media, greater consumer skepticism toward advertising, and a realization that opinion leaders and online creators and critics can provide invaluable insights in the research and development process.

This is not to say that marketers have given up on traditional advertising and mass media approaches. Instead, they realize that in many cases they could make their tradi- tional media spending go a lot further if they could tap into these influential consumers who will spread the word either indirectly through observation or directly through WOM. We examine some marketing strategies designed to generate WOM and encourage opinion leadership next.

Advertising Advertising can stimulate and simulate WOM and opinion leadership. Stimulation can involve themes designed to encourage current owners to talk about (tell a friend about) the brand or prospective owners to ask current owners (ask someone who owns one) for their impressions.50 Ads can attempt to stimulate WOM by generating inter- est and excitement. Dove generated interest using a combination of advertising and so- called pass-it-on tools to stimulate WOM. They ran an ad offering two free bars of Dove to anyone who would recommend three friends, who also got a free bar of soap that was gift-wrapped with the name of the initiating friend on the outside. So instead of a sample from a giant company, it felt like a gift from a friend.51

Simulating opinion leadership involves having an acknowledged opinion leader—such as Phil Mickelson for golf equipment—endorse a brand. Illustration 7–6 is an example of this approach. Or it can involve having an apparent opinion leader recommend the product in a “slice of life” commercial. These commercials involve an “overheard” conversation between two individuals in which one person provides brand advice to the other. Finally, advertising can present the results of surveys showing that a high percentage of either knowledgeable individuals (“9 out of 10 dentists surveyed recommend .  .  .”) or typical users recommend the brand.52

Product Sampling Sampling, sometimes called “seeding,” involves getting a sample of a product into the hands of a group of potential consumers. Sampling can be a particu- larly potent WOM tool when it involves individuals likely to be opinion leaders.

In an attempt to increase the preference for Dockers among the key 24- to 35-year-old urban market, Levi Strauss created the position of “urban networker” in key cities. The networkers identified emerging trendsetters in their cities and tied them to Dockers. This could involve noticing a new band that was beginning to catch on and providing Dockers to the members. The objective was to be associated with emerging urban “happenings” and young influentials as they evolved.53

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BzzAgent (www.BzzAgent.com) recruits everyday people to actively spread WOM about products they like. BzzAgent is adamant that its “agents” acknowledge their asso- ciation with BzzAgent and provide honest opinions. Most of the WOM occurs offline in normal conversations. Agents receive a free product sample to use and are coached on various WOM approaches. Agents report back to BzzAgent about each WOM episode and redeemable points are rewarded. Importantly, the motive of most is not the points because many don’t redeem them. BzzAgent’s client list is long and growing and includes Kraft Foods, Goodyear, and Wharton School Publishing. Companies hire BzzAgent to create and field a WOM campaign. Costs vary, but a 12-week campaign involving 1,000 agents can cost $100,000 or more.54

Retailing/Personal Selling Numerous opportunities exist for retailers and sales per- sonnel to use opinion leadership. Clothing stores can create “fashion advisory boards” composed of likely style leaders from their target market. An example would be cheerlead- ers and class officers for a store like Abercrombie & Fitch, which caters to older teens and college students.

Retailers and sales personnel can encourage their current customers to pass along infor- mation to potential new customers. When those consumers are given rewards such as dis- counts, it is called a referral reward program. For example, an automobile salesperson, or the dealership, might provide a free car wash or oil change to current customers who send

Consumers often

use personal sources

as primary opinion

leaders. However,

experts whom they

don’t know person-

ally can also fill this

role as can survey

results indicating that

the brand is recom-

mended by experts

or typical users.

ILLUSTRATION 7-6

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Chapter Seven Group Influences on Consumer Behavior 237

friends in to look at a new car. Such programs are growing in popularity and companies such as United Airlines, Cingular, and RE/MAX are using them. Research demonstrates that the programs are effective, particularly for encouraging positive WOM to those with whom consumers have weak rather than strong ties.55

Creating Buzz Buzz can be defined as the exponential expansion of WOM. It happens when “word spreads like wildfire” with no or limited mass media advertising supporting it. Buzz drove demand for Hard Candy nail polish, as described earlier. It also made massive successes of Pokémon, Beanie Babies, the original Blair Witch Project, the Harry Potter books, and Toy Story 3.56 Marketers create buzz by providing opinion leaders advance information and product samples, having celebrities use the product, placing the product in movies, sponsoring “in” events tied to the product, restricting supply, courting publicity, and otherwise generating excitement and mystique about the brand.

Buzz is generally not supported by large advertising budgets, but it is often created by marketing activities. In fact, creating buzz is a key aspect of guerrilla marketing—marketing with a limited budget using nonconventional communications strategies. Guerrilla market- ing is about making an “intense connection with individuals and speed[ing] up the natural word-of-mouth process.”57 Examples of guerrilla techniques include:

�r� Sony Ericsson hired attractive actors to pose as tourists in various metro areas. They would then hand their cell phone/digital camera to locals and ask them to take a picture in an attempt to get the camera in their hands and get them talking about it.

�r� Blue Cross Blue Shield (BC/BS) hired people to be painted blue and then asked them to roam around Pittsburgh. Nobody knew what the “Blue Crew” campaign was about and it generated enormous buzz. When BC/BS revealed its linkage to the campaign, website traffic increased.58

Buzz is not just guerrilla marketing, and guerrilla tactics must be used with care. Con- sumer advocates are increasingly concerned about certain guerrilla tactics. There are (a) consumer, (b) ethical, and (c) legal issues with stealth or covert marketing efforts. Con- sider the following example:

Gillette sponsored an unbranded web site called NoScruf.org. NoScruf stands for the National Organization of Social Crusaders Repulsed by Unshaven Faces. The site was created by Porter Novelli for PR reasons on Gillette’s behalf and the .org designation was to further obfuscate Gillette’s role.

From a consumer standpoint, research shows that when consumers become aware of such covert marketing efforts, consumer trust, commitment, and purchase intentions are damaged. From an ethical standpoint, hiding a brand’s participation in a marketing effort puts consumers at a disadvantage because, when they know, they tend to be more wary of the influence attempt. From a legal standpoint, there is movement in the direction of more stringent guidelines against such covert marketing, with one example being the FTC’s new guidelines regarding bloggers and their link to marketers.59 Can you see additional ethical concerns surrounding “covert” or “guerrilla” marketing? How is BzzAgent’s approach different from Sony Ericsson’s?

Creating buzz is often part of a larger strategy that includes significant mass media advertising. Clairol attempted to create WOM for its True Intense Color line via an online sampling program. It also launched a sweepstakes, “Be the Attraction,” with a grand prize of an all-expenses-paid trip for four to the premiere of Legally Blonde to fuel the buzz. However, these efforts were soon supplemented with a major mass media advertising campaign.60

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238

Buzz and WOM are not confined to traditional offline strategies. As discussed in Consumer Insight 7–3, marketers are leveraging increasing numbers of online strategies as well.

DIFFUSION OF INNOVATIONS An innovation is an idea, practice, or product perceived to be new by the relevant individual or group. Whether or not a given product is an innovation is determined by the perceptions of the potential market, not by an objective measure of technological change. The manner by which a new product is accepted or spreads through a market is basically a group phenomenon. In this section, we will examine this process in some detail.63

LO6

CONSUMER INSIGHT 7-3 Online Buzz, WOM, and Astrosurfing

As we’ve seen, the Internet continues to change the nature of interpersonal communications. New avenues are rapidly evolving, and the rewards can be huge for companies that can harness the speed and ease of interconnectivity that the Internet allows. Here are a few examples:

�t� Viral marketing is an online “pass-it-along” strat- egy. It “uses electronic communications to trigger brand messages throughout a widespread net- work of buyers.” Viral marketing comes in many forms but often involves e-mail. Honda U.K. devel- oped a successful viral marketing campaign that started with “cutting-edge” creativity in the form of a two-minute advertisement called “The Cog.” The ad aired in the United Kingdom during the Brazilian Formula 1 Grand Prix to hit likely opinion leaders and was available on Honda’s website. That’s when the viral aspect kicked in, as people “wowed” by the ad e-mailed it to friends and acquaintances around the world. Honda, Volvo, and Gillette are among a growing list of compa- nies using viral techniques.61

�t� Blogs are personalized journals where people and organizations can keep a running dialogue.

Blogs can be used in several ways by market- ers. First, they can place banner ads in blogs and package ads with blog feeds. Second, they can use product sampling by getting their products in the hands of well-known bloggers in the category with the idea that they will create buzz about them on their blogs. Third, marketers can use blogs by observing important blog sites for marketing intel- ligence. Fourth, a company can create its own blog and put a company representative in charge of blogging, as Dell has done with Direct2Dell and its chief blogger.62

�t� Twitter is a micro-blogging tool. It limits posts to 140 characters. It has evolved quickly into one of the largest and fastest-growing social media outlets. For marketers there are a num- ber of uses for Twitter. First, as we saw earlier, consumers can post complaints or information requests to a brand’s Twitter account, to which companies can respond. Second, companies can utilize a Twitter feature called Promoted Tweets. The promotion indicator (like an adver- tisement) shows up on the Tweet and then the Tweet itself comes up on the search results,

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239

Categories of Innovations Try to recall new products that you have encountered in the past two or three years. As you reflect on these, it may occur to you that there are degrees of innovation. For example, computer tablets such as Apple’s iPad are more of an innovation than is a new fat-free snack. The changes required in one’s behavior, including attitudes and beliefs, or lifestyle if a person adopts the new product or service determine the degree of innovation, not the technical or functional changes in the product.

We can place any new product somewhere on a continuum ranging from no change to radical change, depending on the target market’s perception of the item. This continuum is often divided into three categories or types of innovations.

Continuous Innovation Adoption of this type of innovation requires relatively minor changes in behavior or changes in behaviors that are unimportant to the consumer.

even of those who aren’t the brand’s followers on Twitter. Finally, companies like Sponsored Tweets and Ad.ly are connecting brands with influential tweeters. These tweeters, often celeb- rities like Charlie Sheen and Kim Kardashian who have millions of followers, get paid for tweeting about specific brands, often at the rate of $1000 or more per tweet. As with regular blogs, full disclosure is an important facet of this model.64

�t� Customer reviews and review functionality on a website can be a critical marketing tool. Amazon and others allow consumers to eas- ily post reviews of products on their site. Given the power of WOM, this online version of WOM is a powerful decision influencer. For example, restaurant revenues have been found to increase between 5 and 9 percent if they increase their ranking on Yelp by one star. However, there are at least two factors that marketers must be concerned with regarding online reviews. First, since existing reviews are “public information,” they tend to “sway” future reviews in that direc- tion. So, if reviews trend down, that likely feeds more downward bias than if reviews were done independent of knowledge of prior reviews. This is a challenge for both marketers and

consumers. Marketers can find themselves in a battle against a misguided trend, and consum- ers likely are not getting the best, most accurate advice. A second concern is fake reviews, where it is estimated that one in seven reviews is fake. Astrosurfing is the practice whereby companies buy positive reviews of themselves and negative reviews for their competitors. Companies can use algorithms to distinguish genuine and fake reviews and then take legal action. The “buying” of fake reviews by one company for another is akin to false advertising. Samsung was recently fined for hiring people to criticize HTC (a com- petitor) products.65

Clearly marketers are learning how to leverage the WOM potential of the Internet. It will be interesting to see what the future brings!

Critical Thinking Questions 1. What other Internet alternatives exist for interpersonal

communication?

2. Do you trust online sources to provide accurate information? What can marketers do to increase consumer trust in online sources?

3. What do you think are typical characteristics of those who are heavy bloggers?

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Part Two External Influences240

Examples include Crest Vivid White Night toothpaste, Wheaties Energy Crunch cereal, and Purex 3-in-1 laundry sheets. Note that some continuous innovations require com- plex technological breakthroughs. However, their use requires little change in the owner’s behavior or attitude. Crest Vivid White Night Striped toothpaste shown in Illustration 7–7 is another example of a continuous innovation.

Dynamically Continuous Innovation Adoption of this type of innovation requires a moderate change in an important behavior or a major change in a behavior of low or moderate importance to the individual. Examples include digital cameras, personal naviga- tors, mobile apps, and Bella and Birch textured paints that are applied like wallpaper but without glue, using a special applicator. The Shout Color Catcher ad in Illustration 7–8 is a good example of a product that is a dynamically continuous innovation for most consumer groups.

Crest Vivid White

Night toothpaste

would be considered

a continuous innova-

tion by most.

ILLUSTRATION 7-7

Using Shout Color

Catcher would

require a major

change in an area of

moderate importance

for most individuals.

For these individuals,

it would be a dynami-

cally continuous

innovation.

ILLUSTRATION 7-8

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Chapter Seven Group Influences on Consumer Behavior 241

Stages in the adoption process

Awareness

Interest

Evaluation

Trial

Adoption

Steps in extended decision making

Problem recognition

Information search

Alternative evaluation

Purchase

Postpurchase evaluation

7-6Adoption Process and Extended Decision Making FIGURE

Discontinuous Innovation Adoption of this type of innovation requires major changes in behavior of significant importance to the individual or group. Examples would include the Norplant contraceptive, becoming a vegetarian, and the Toyota FCV hydrogen fuel cell car (see Illustration 7–9).

Most of the new products or alterations introduced each year tend toward the no-change end of the continuum. Much of the theoretical and empirical research, however, has been based on discontinuous innovations. For example, individual consumers presumably go through a series of distinct steps or stages known as the adoption process when purchas- ing an innovation. These stages are shown in Figure 7–6.

Most consumers

will react to this as

a discontinuous

innovation.

ILLUSTRATION 7-9

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Part Two External Influences242

Figure 7–6 also shows the steps in extended decision making, described in Chapter 1. As can be seen, the adoption process is basically a term used to describe extended deci- sion making when a new product is involved. As we will discuss in detail in Chapter 14, extended decision making occurs when the consumer is highly involved in the purchase. High purchase involvement is likely for discontinuous innovations such as the decision to purchase a hybrid car, and most studies of innovations of this nature have found that con- sumers use extended decision making.

However, it would be a mistake to assume that all innovations are evaluated using extended decision making (the adoption process). In fact, most continuous innovations probably trigger limited decision making. As consumers, we generally don’t put a great deal of effort into deciding to purchase innovations such as Jolt’s Wild Grape flavored drink or Glad microwave steaming bags.

Diffusion Process The diffusion process is the manner in which innovations spread throughout a market. The term spread refers to purchase behavior in which the product is purchased with some degree of regularity.66 The market can range from virtually the entire society (for a new soft drink, perhaps) to the students at a particular high school (for an automated fast-food and snack outlet).

For most innovations, the diffusion process appears to follow a similar pattern over time: a period of relatively slow growth, followed by a period of rapid growth, followed by a final period of slower growth. This pattern is shown in Figure 7–7. However, there are exceptions to this pattern. In particular, it appears that for continuous innovations such as new ready-to-eat cereals, the initial slow-growth stage may be skipped.

An overview of innovation studies reveals that the time involved from introduction until a given market segment is saturated (i.e., sales growth has slowed or stopped) varies from a few days or weeks to years. This leads to two interesting questions: (1) What deter- mines how rapidly a particular innovation will spread through a given market segment? and (2) In what ways do those who purchase innovations relatively early differ from those who purchase them later?

Factors Affecting the Spread of Innovations The rate at which an innovation is diffused is a function of the following 10 factors.

1. Type of group. Some groups are more accepting of change than others. In general, young, affluent, and highly educated groups accept change, including new products, readily. Thus, the target market for the innovation is an important determinant of the rate of diffusion.67

2. Type of decision. The type of decision refers to an individual versus a group decision. The fewer the individuals involved in the purchase decision, the more rapidly an inno- vation will spread.

3. Marketing effort. The rate of diffusion is heavily influenced by the extent of market- ing effort involved. Thus, the rate of diffusion is not completely beyond the control of the firm.68

4. Fulfillment of felt need. The more manifest or obvious the need that the innovation satisfies, the faster the diffusion. Rogaine, a cure for some types of hair loss, gained rapid trial among those uncomfortable with thin hair or baldness.

5. Compatibility. The more the purchase and use of the innovation are consistent with the individual’s and group’s values or beliefs, the more rapid the diffusion.69

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Chapter Seven Group Influences on Consumer Behavior 243

6. Relative advantage. The better the innovation is perceived to meet the relevant need compared with existing methods, the more rapid the diffusion. Both the perfor- mance and the cost of the product are included in relative advantage. The digital audio tape (DAT) had neither advantage compared with CDs and DVDs and thus never took off.

7. Complexity. The more difficult the innovation is to understand and use, the slower the diffusion. The key to this dimension is ease of use, not complexity of product. Special- ized blogging software is making an otherwise complex task easy and fun.70

8. Observability. The more easily consumers can observe the positive effects of adopting an innovation, the more rapid its diffusion will be. Cell phones are relatively visible. Laser eye surgery, while less visible, may be a frequent topic of conversation. On the other hand, new headache remedies are less obvious and generally less likely to be discussed.

9. Trialability. The easier it is to have a low-cost or low-risk trial of the innovation, the more rapid is its diffusion. The diffusion of products like laser eye surgery has been hampered by the difficulty of trying out the product in a realistic manner. This is much less of a problem with low-cost items such as headache remedies, or such items as camera phones, which can be borrowed or tried at a retail outlet.

10. Perceived risk. The more risk associated with trying an innovation, the slower the dif- fusion. Risk can be financial, physical, or social. Perceived risk is a function of three dimensions: (1) the probability that the innovation will not perform as desired; (2) the consequences of its not performing as desired; and (3) the ability (and cost) to reverse any negative consequences.71 Thus, many consumers may feel a need for the benefits offered by laser eye surgery and view the probability of its working successfully as being quite high. However, they perceive the consequences of failure as being extreme and irreversible and therefore do not adopt this innovation.

100

0

Fast diffusion

Typical diffusion

Slow diffusion

Time

Percentage of total group adopting innovation

7-7Diffusion Rate of an Innovation over Time FIGURE

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Part Two External Influences244

Figure  7–8 shows the diffusion curves for various consumer electronic products. How would you explain the differences in diffusion rates across these products in U.S. households?

Characteristics of Individuals Who Adopt an Innovation at Varying Points in Time The curves shown in Figures 7–7 and 7–8 are cumulative curves that illustrate the increase in the percentage of adopters over time. If we change those curves from a cumulative format to one that shows the percentage of a market that adopts the innova- tion at any given point in time, we will have the familiar bell-shaped curves shown in Figure 7–9.

Figure  7–9 reemphasizes the fact that a few individuals adopt an innovation very quickly, another limited group is reluctant to adopt the innovation, and the majority of the group adopts at some time in between the two extremes. Researchers have found it useful to divide the adopters of any given innovation into five groups based on the relative time at which they adopt. These groups, called adopter categories, are shown in Figure 7–9 and defined below:

Innovators: The first 2.5 percent to adopt an innovation.

Early adopters: The next 13.5 percent to adopt.

Early majority: The next 34 percent to adopt.

Late majority: The next 34 percent to adopt.

Laggards: The final 16 percent to adopt.

How do these groups differ? The following descriptions, though general, provide a good starting point. Clearly, however, research by product category would be necessary in fully understanding specific marketing situations.

Innovators are venturesome risk takers. They are capable of absorbing the financial and social costs of adopting an unsuccessful product. They are cosmopolitan in outlook

Source: ECONOMIST by Economist. Copyright 2005 by Economist Newspaper Group. Reproduced with permission of Economist Newspaper Group in the format Textbook via Copyright Clearance Center.

0

20

40

60

80

100

1920 198019601940 20072000

Radio

TV

Cable

VHS

Video games DVD

Broadband

Satellite TV

Satellite Radio

Digital video recorder

*Projections

* Multiplying messages

U S

h o

u se

h o

ld p e n e tr

a tio

n r

a te

, %

7-8 Diffusion Rates for Consumer ElectronicsFIGURE

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Chapter Seven Group Influences on Consumer Behavior 245

and use other innovators rather than local peers as a reference group. They tend to be younger, better educated, and more socially mobile than their peers. Innovators make extensive use of commercial media, sales personnel, and professional sources in learning of new products.

Early adopters tend to be opinion leaders in local reference groups. They are suc- cessful, well educated, and somewhat younger than their peers. They are willing to take a calculated risk on an innovation but are concerned with failure. Early adopters also use commercial, professional, and interpersonal information sources, and they provide infor- mation to others.

Early majority consumers tend to be cautious about innovations. They adopt sooner than most of their social group but also after the innovation has proved successful with others. They are socially active but seldom leaders. They tend to be somewhat older, less well educated, and less socially mobile than the early adopters. The early majority relies heavily on interpersonal sources of information.

Late majority members are skeptical about innovations. They often adopt more in response to social pressures or a decreased availability of the previous product than because of a positive evaluation of the innovation. They tend to be older and have less social status and mobility than those who adopt earlier.

Laggards are locally oriented and engage in limited social interaction. They tend to be relatively dogmatic and oriented toward the past. Laggards adopt innovations only with reluctance.

Marketing Strategies and the Diffusion Process Market Segmentation Since earlier purchasers of an innovation differ from later pur- chasers, firms should consider a “moving target market” approach. That is, after selecting a general target market, the firm should initially focus on those individuals within the

Slow diffusion

Early adopters

Early majority

Late majority

Laggards Innovators

21/2% 131/2% 34% 34% 16% 21/2% 131/2% 34% 34% 16%

Late majority

Early majority

Early adopters

Innovators

Fast diffusion

Time Time

Laggards

7-9Adoptions of an Innovation over Time FIGURE

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Part Two External Influences246

target market most likely to be innovators and early adopters.72 Messages to this group can often emphasize the newness and innovative characteristics of the product as well as its functional features. Since this group is frequently very involved with, and knowledgeable about, the product category, marketing communications may be able to focus on the new technical features of the product and rely on the audience to understand the benefits these features will provide.73

As the innovation gains acceptance, the focus of attention should shift to the early and late majority. This will frequently require different media. In addition, message themes should generally move away from a focus on radical newness. Instead, they should empha- size the acceptance the product has gained and its proven performance record.

Diffusion Enhancement Strategies Table 7–3 provides a framework for develop- ing strategies to enhance the market acceptance of an innovation. The critical aspect of this process is to analyze the innovation from the target market’s perspective. This analy- sis will indicate potential obstacles—diffusion inhibitors—to rapid market acceptance. The manager’s task is then to overcome these inhibitors with diffusion enhancement strat- egies. Table 7–3 lists a number of potential enhancement strategies, but many others are possible.

Consider the innovation shown in Illustration 7–10. Which factors will inhibit its diffu- sion, and what strategies can be used to overcome them?

Diffusion Determinant Diffusion Inhibitor Diffusion Enhancement Strategies

1. Nature of group Conservative Search for other markets Target innovators within group

2. Type of decision Group Choose media to reach all deciders Provide conflict reduction themes

3. Marketing effort Limited Target innovators within group Use regional rollout Leverage buzz

4. Felt need Weak Use extensive advertising showing importance of benefits

5. Compatibility Conflict Stress attributes consistent with normative values

6. Relative advantage Low Lower price Redesign product

7. Complexity High Distribute through high-service outlets Use skilled sales force Use product demonstrations Use extensive marketing efforts

8. Observability Low Use extensive advertising Target visible events when appropriate

9. Trialability Difficult Use free samples to early adopter types Provide special prices to rental agencies Use high-service outlets

10. Perceived risk High Use success documentation Obtain endorsement by credible sources Provide guarantees

Innovation Analysis and Diffusion Enhancement Strategies7-3TABLE

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Chapter Seven Group Influences on Consumer Behavior 247

LO1: Explain reference groups and the criteria used to classify them A reference group is a group whose presumed perspec- tives or values are being used by an individual as the basis for his or her current behavior. Thus, a reference group is simply a group that an individual uses as a guide for behavior in a specific situation. Reference groups, as with groups in general, may be classified according to a number of variables including member- ship, strength of social tie, type of contact, and attraction.

LO2: Discuss consumption subcultures, includ- ing brand and online communities and their importance for marketing A consumption subculture is a group that self-selects on the basis of a shared commitment to a particular product or consumption activity. These subcultures also have (1) an identifiable, hierarchical social structure; (2) a set of shared beliefs or values; and (3) unique jargon, rituals, and modes of symbolic expression. A brand community is a nongeographically bound com- munity, based on a structured set of social relationships among owners of a brand and the psychological rela- tionship they have with the brand itself, the product in use, and the firm. Brand communities can add value to the ownership of the product and build intense loyalty. An online community is a community that interacts over

time around a topic of interest on the Internet. Online communities have evolved over time to include online social network sites, which are web-based services that allow individuals to (1) construct a public or semipub- lic profile within a bounded system, (2) articulate a list of other users with whom they share a connection, and (3) view and traverse their list of connections and those made by others within the system.

LO3: Summarize the types and degree of reference group influence Informational influence occurs when an individual uses the behaviors and opinions of reference group members as potentially useful bits of information. Normative influence, sometimes referred to as utili- tarian influence, occurs when an individual fulfills group expectations to gain a direct reward or to avoid a sanction. Identification influence, also called value- expressive influence, occurs when individuals have internalized the group’s values and norms.

The degree of conformity to a group is a function of (1) the visibility of the usage situation, (2) the level of commitment the individual feels to the group, (3) the relevance of the behavior to the functioning of the group, (4) the individual’s confidence in his or her own judgment in the area, and (5) the level of neces- sity reflected by the nature of the product.

SUMMARY

Ten factors deter-

mine the success of

innovations. How do

you think this innova-

tion will fare based

on these 10 factors?

ILLUSTRATION 7-10

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Part Two External Influences248

LO4: Discuss within-group communications and the importance of word-of-mouth commu- nications to marketers Communication within groups is a major source of information about certain products. Information is com- municated within groups either directly through word- of-mouth (WOM) communication or indirectly through observation. WOM via personal sources such as family and friends is trusted more than marketer-based mes- sages and can therefore have a critical influence on consumer decisions and business success. Two-thirds of all consumer product decisions are thought to be influenced by WOM. Negative experiences are a strong driver of negative WOM for all consumers.

LO5: Understand opinion leaders (both online and offline) and their importance to marketers Opinion leaders are highly knowledgeable about spe- cific products or activities and are seen as the “go-to person” for specific types of information. These indi- viduals actively filter, interpret, or provide product- and brand-relevant information to their family, friends, and colleagues. A defining characteristic of opinion leaders is their enduring involvement with the product category, which leads to their expertise and the trust people have in their opinions.

A special type of opinion leader is market mavens. These are individuals who are general market influ- encers. They have information about many different kinds of products, places to shop, and other aspects of markets. Internet mavens describe their online counterparts.

Marketers attempt to identify opinion leaders pri- marily through their media habits and social activities. Identified opinion leaders then can be used in market- ing research, product sampling, retailing/personal sell- ing, advertising, and creating buzz. Various offline and online strategies exist for stimulating WOM, opinion leadership, and buzz. Online strategies include viral marketing, blogs, and Twitter.

LO6: Discuss innovation diffusion and use an innovation analysis to develop marketing strategy Groups greatly affect the diffusion of innovations. Innovations vary in degree of behavioral change required and the rate at which they are diffused. The first purchasers of an innovative product or service are termed innovators; those who follow over time are known as early adopters, early majority, late majority, and laggards. Each of these groups differs in person- ality, age, education, and reference group member- ship. These characteristics help marketers identify and appeal to different classes of adopters at different stages of an innovation’s diffusion.

The time it takes for an innovation to spread from innovators to laggards is affected by several factors: (1) nature of the group involved, (2) type of innovation decision required, (3) extent of marketing effort, (4) strength of felt need, (5) compatibility of the inno- vation with existing values, (6) relative advantage, (7) complexity of the innovation, (8) ease in observing usage of the innovation, (9) ease in trying the innova- tion, and (10) perceived risk in trying the innovation.

Adopter categories 244 Adoption process 241 Asch phenomenon 228 Aspiration reference groups 217 Blogs 238 Brand community 220 Buzz 237 Community 220 Consumption subculture 217

Customer reviews 239 Diffusion process 242 Dissociative reference groups 217 Early adopters 245 Early majority 245 Enduring involvement 234 Group 216 Identification influence 225 Informational influence 224

Innovation 238 Innovators 244 Laggards 245 Late majority 245 Market mavens 234 Multistep flow of

communication 232 Normative influence 225 Online community 222

KEY TERMS

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Chapter Seven Group Influences on Consumer Behavior 249

Online social network site 222 Opinion leader 232 Primary groups 217 Reference group 216

Secondary groups 217 Twitter 238 Two-step flow of

communication 232

Viral marketing 238 Word-of-mouth (WOM)

communications 229

1. How does a group differ from a reference group? 2. What criteria are used by marketers to classify

groups? 3. What is a dissociative reference group? In what

way can dissociative reference groups influence consumer behavior?

4. What is an aspiration reference group? How can an aspiration reference group influence behavior?

5. What is a consumption-based group or a consumption subculture? How can marketers develop strategy based on consumption subcultures?

6. What is a brand community? What are the characteristics of such a group?

7. How can a marketer foster a brand community? 8. What is an online social network site? What are

the guidelines for marketers operating in online communities and social networking sites?

9. What types of group influence exist? Why must a marketing manager be aware of these separate types of group influence?

10. What five factors determine the strength of reference group influence in a situation?

11. What is the Asch phenomenon and how do marketers utilize it?

12. How can a marketer use knowledge of reference group influences to develop advertising strategies?

13. What is an opinion leader? How does an opinion leader relate to the multistep flow of communication?

14. What characterizes an opinion leader? 15. What determines the likelihood that a consumer

will seek information from an opinion leader? 16. How does a market maven differ from an opinion

leader? 17. Explain the role of enduring involvement in

driving opinion leadership. 18. How can marketing managers identify opinion

leaders? 19. How can marketers utilize opinion leaders? 20. What is buzz? How can marketers create it? 21. What is a blog? 22. What is an innovation? Who determines whether a

given product is an innovation? 23. What are the various categories of innovations?

How do they differ? 24. What is the diffusion process? What pattern does

the diffusion process appear to follow over time? 25. Describe the factors that affect the diffusion

rate for an innovation. How can these factors be utilized in developing marketing strategy?

26. What are adopter categories? Describe each of the adopter categories.

27. How can a marketer use knowledge of adopter categories to develop marketing strategy?

REVIEW QUESTIONS

28. Respond to the questions in Consumer Insight 7–1. 29. Using college students as the market segment,

describe the most relevant reference group(s) and indicate the probable degree of influence on decisions for each of the following:

a. Brand of toothpaste b. Purchase of a hybrid car

c. Purchase of breakfast cereal d. Becoming a vegetarian e. Choice of a computer tablet such as the iPad. Answer Questions 30 to 33 using (a) shoes, (b) barbeque grill, (c) car, (d) toaster, (e) iPad, and (f) adopting a pet from a shelter.

DISCUSSION QUESTIONS

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Part Two External Influences250

30. How important are reference groups to the purchase of the above-mentioned products or activities? Would their influence also affect the brand or model? Would their influence be informational, normative, or identification? Justify your answers.

31. What reference groups would be relevant to the decision to purchase the product or activity (based on students on your campus)?

32. What are the norms of the social groups of which you are a member concerning the product or activity?

33. Respond to the questions in Consumer Insight 7–2. 34. Describe two groups that serve as aspiration

reference groups for you. In what ways, if any, have they influenced your consumption patterns?

35. Describe two groups to which you belong. For each, give two examples of instances when the group has exerted (a) informational, (b) normative, and (c) identification influence on you.

36. Develop two approaches using reference group theory to reduce drug, alcohol, or cigarette consumption among teenagers.

37. What ethical concerns arise in using reference group theory to sell products?

38. Describe a consumption subculture to which you belong. How does it affect your consumption behavior? How do marketers attempt to influence your behavior with respect to this subculture?

39. Do you belong to a brand community? If so, describe the benefits you derive from this group and how it affects your consumption.

40. Do you belong to an online community or social network site? If so, describe the benefits you derive from this group and how it affects your consumption.

41. Answer the following questions for (i) Dyson bladeless fan, (ii) space flight, (iii) cell phone– based GPS.

a. Is the product an innovation? Justify your answer. b. Using the student body on your campus as a

market segment, evaluate the perceived attri- butes of the product.

c. Who on your campus would serve as opinion leaders for the product?

d. Will the early adopters of the product use the adoption process (extended decision making), or is a simpler decision process likely?

42. Describe two situations in which you have served as or sought information from an opinion leader. Are these situations consistent with the discussion in the text?

43. Are you aware of market mavens on your campus? Describe their characteristics, behaviors, and motivation.

44. Have you used Twitter recently? Why? How did it work? What marketing implications does this suggest?

45. Identify a recent (a) continuous innovation, (b) dynamically continuous innovation, and (c) discontinuous innovation. Justify your selections.

46. Analyze the Roomba (robotic vacuum cleaner) in terms of the determinants in Table 7–3 and suggest appropriate marketing strategies.

47. Conduct a diffusion analysis and recommend appropriate strategies for the innovation shown in Illustration 7–10.

48. Assume that you are a consultant to firms with new products. You have members of the appropriate market segments rate innovations on the 10 characteristics described in Table 7–3. Based on these ratings, you develop marketing strategies. Assume that a rating of 9 is extremely favorable (e.g., strong relative advantage or a lack of complexity) and 1 is extremely unfavorable. Suggest appropriate strategies for each of the following consumer electronic products (see table).

Product

Attribute A B C D E F G H I

Fulfillment of felt need 9 7 3 8 8 5 7 8 9 Compatibility 8 8 8 8 9 2 8 9 8 Relative advantage 9 2 8 9 7 8 9 8 8 Complexity 9 9 9 9 9 3 8 8 7 Observability 8 8 9 1 9 4 8 8 8 Trialability 8 9 8 9 9 2 9 2 9 Nature of group 3 8 7 8 9 9 7 7 3 Type of decision 3 7 8 8 6 7 7 3 7 Marketing effort 6 7 8 7 8 6 3 8 7 Perceived risk 3 8 7 7 3 7 8 8 5

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Chapter Seven Group Influences on Consumer Behavior 251

49. Find two advertisements that use reference groups in an attempt to gain patronage. Describe the advertisement, the type of reference group being used, and the type of influence being used.

50. Develop an advertisement for (i) breath strips, (ii) an energy drink, (iii) an upscale club, (iv) Red Cross, (v) scooters, or (vi) vitamins using the following.

a. An informational reference group influence b. A normative reference group influence c. An identification reference group influence 51. Interview two individuals who are strongly

involved in a consumption subculture. Determine how it affects their consumption patterns and what actions marketers take toward them.

52. Interview an individual who is involved in a brand community. Describe the role the firm plays in maintaining the community, the benefits the person gets from the community, and how it affects his or her consumption behavior.

53. Identify and interview several opinion leaders on your campus for the following. To what extent

do they match the profile of an opinion leader as described in the text?

a. Local restaurants b. Sports equipment c. Music d. Computer equipment 54. Interview two salespersons for the following

products. Determine the role that opinion leaders play in the purchase of their product and how they adjust their sales process in light of these influences.

a. Cell phones b. Golf equipment c. Computers d. Art e. Jewelry f. Sunglasses 55. Follow a brand on Twitter for a week. What types

of marketing strategies are they engaged in and how are they utilizing Twitter to facilitate brand awareness and solve customer problems.

APPLICATION ACTIVITIES

1. The Chapter 7 opener is based on J. H. McAlexander, J. W. Schouten, and H. F. Koenig, “Building Brand Community,” Journal of Marketing, January 2002, pp. 38–54, as well as information from various websites, including www.jeep.com, www.youtube.com/ user/thejeepchannel, and www.facebook.com/jeep.

2. K. White and D. W. Dahl, “To Be or Not Be?,” Journal of Consumer Psychology, 16, no. 4 (2006), pp. 404–14.

3. J. W. Schouten and J. H. McAlexander, “Subcultures of Consumption,” Journal of Consumer Research, June 1995, p. 43.

4. N. Christakis and J. Fowler, CONNECTED (New York: Little, Brown & Company, 2009); S. Clifford, “Video Prank at Domino’s Taints Brand,” nytimes.com, April 15, 2009, www. nytimes.com/2009/04/16/business/media/16dominos.html?_ r50, accessed September 1, 2014; E. Rosen, The Anatomy of Buzz Revisited: Real-Life Lessons in Word-of-Mouth Marketing (New York: Random House, 2009); J. Sanburn, “How Dr. Dre Made $300 Headphones a Must-Have Accessory,” Time, January 16, 2013, business.time.com/2013/01/16/how-dr- dre-made-300-headphones-a-must-have-accessory/, accessed September 1, 2014; and D. Gilgoff, “Short Takes: Gauging the impact of ‘Purpose Driven Life,’ 10 Years on,” Belief blog, November 29, 2012, http://religion.blogs.cnn.com/2012/11/29/ short-takes-gauging-the-impact-of-purpose-driven-life-10- years-on/, accessed September 1, 2014.

5. B. Gainer, “Ritual and Relationships,” Journal of Business Research, March 1995, pp. 253–60. See also E. J. Arnould and

P. L. Price, “River Magic,” Journal of Consumer Research, June 1993, pp. 24–45.

6. A. Hamilton and J. DeQuine, “Freaking for Sneakers,” Time, March 13, 2006.

7. Excerpts from L. Beward, “Sneakerheads Share a Passion for Rare Soles,” McClatchy-Tribune Business News, July 10, 2009.

8. T. Wasserman, “Sneakerheads Rule,” Adweek, October 19, 2009, pp. 10–14.

9. Based on McAlexander, Schouten, and Koenig, “Building Brand Community.”

10. A. M. Muniz Jr. and T. C. O’Guinn, “Brand Community,” Journal of Consumer Research, March 2001, p. 413. See also R. P. Bagozzi, “On the Concept of Intentional Social Action in Consumer Behavior,” Journal of Consumer Research, December 2000, pp. 388–96; and A. M. Muniz Jr. and H. J. Schau, “Religiosity in the Abandoned Apple Newton Brand Community,” Journal of Consumer Research, March 2005, pp. 737–47.

11. Harley-Davidson example from Schouten and McAlexander, “Subcultures of Consumption.” MG examples from T. W. Leigh, C. Peters, and J. Shelton, “The Consumer Quest for Authenticity: The Multiplicity of Meanings within the MG Subculture of Consumption,” Journal of the Academy of Marketing Science, 34, no. 4 (2006), pp. 481–93.

12. Q. Jones, “Virtual Communities, Virtual Settlements, and CyberArchaeology,” Journal of Computer-Mediated

REFERENCES

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Part Two External Influences252

Communication, 3, no. 3 (1997), www.ascusc.org/jcmc/vol3/ issue3/jones.html; C. Okleshen and S. Grossbart, “Usenet Groups, Virtual Community and Consumer Behaviors,” and S. Dann and S. Dann, “Cybercommuning,” both in Advances in Consumer Research, vol. 25, ed. J. W. Alba and J. W. Hutchinson (Provo, UT: Association for Consumer Research, 1998), pp. 276–82 and 379–85, respectively; C. L. Beau, “Cracking the Niche,” American Demographics, June 2000, pp. 38–40; and P. Maclaran and M. Catterall, “Researching the Social Web,” Marketing Intelligence and Planning, 20, no. 6 (2002), pp. 319–26.

13. A. L. Blanchard and M. L. Markus, “The Experienced ‘Sense’ of a Virtual Community,” Database for Advances in Information Systems, Winter 2004, pp. 65–79.

14. D. M. Boyd and N. B. Ellison, “Social Network Sites,” Journal of Computer-Mediated Communication, 13, no. 1 (2007), http:// jcmc.indiana.edu, accessed June 17, 2008.

15. Statistics are estimates for 2012 from eMarketer.com.

16. A. Lenhart et al., Social Media & Mobile Internet Use among Teens and Young Adults (Washington, DC: Pew Research Center, February 3, 2010).

17. B. Thompson, How to Use Social Media to Improve Customer Service and Cut Costs (Birlingame, CA: Customer Think, March 2010).

18. State of Inbound Marketing Report (Cambridge, MA: HubSpot, 2010).

19. 2010 Cone Consumer New Media Study Fact Sheet (Boston, MA: Cone LLC, 2010).

20. For additional information and expertise, visit Site Logic Marketing at www.sitelogicmarketing.com and the online marketing blog “Marketing Logic,” written by Matt Bailey, Site Logic’s president.

21. Excerpt from http://consumerist.com/consumer/blogs/sonys- pspblog-flog-revealed-221384.php.

22. N. Zmuda, “Ann Taylor Investigation Shows FTC Keeping Close Eye on Blogging,” Advertising Age, April 28, 2010.

23. B. Thompson, Voice of Customer 2.0 (Birlingame, CA: Customer Think, March 2010).

24. D. A. Williamson, “So You Like My Brand on Facebook. Now What?,” Advertising Age, May 18, 2011.

25. See T. F. Mangleburg and T. Bristol, “Socialization and Adolescents’ Skepticism toward Advertising,” Journal of Advertising, Fall 1998, pp. 11–20. See also T. F. Mangleburg, P. M. Doney, and T. Bristol, “Shopping with Friends and Teens’ Susceptibility to Peer Influence,” Journal of Retailing 80 (2004), pp. 101–16.

26. See R. J. Fisher and D. Ackerman, “The Effects of Recognition and Group Need on Volunteerism,” Journal of Consumer Research, December 1998, pp. 262–77.

27. See K. R. Lord, M.-S. Lee, and P. Choong, “Differences in Normative and Informational Social Influence,” Advances in Consumer Research, vol. 28, ed. M. C. Gilly and J. Meyers-Levy (Provo, UT: Association for Consumer Research, 2001), pp. 280–85.

28. See W. Amaldoss and S. Jain, “Pricing and Conspicuous Goods,” Journal of Marketing Research, February 2005, pp. 30–42.

29. See, e.g., M. Mourali, M. Laroche, and F. Pons, “Individualistic Orientation and Consumer Susceptibility to Interpersonal Influence,” Journal of Services Marketing, 19, no. 3 (2005), pp. 164–73.

30. M. Gladwell, “Alternative Marketing Vehicles,” Consumer Insight Magazine (an ACNielsen publication), Spring 2003, pp. 6–11, www2.acnielsen.com.

31. M. Creamer, “How to Win Web 2.0,” Advertising Age, November 13, 2006, pp. 3, 57; and “How Businesses Are Using Web 2.0,” McKinsey Quarterly, March 2007, www. mckinseyquarterly.com, accessed January 18, 2008.

32. “New Media Marketing Plays,” AdvancedBusinessBlogging. com, May 15, 2006.

33. T. Bunzel, The Best of Both Worlds, ebook, available at www. professorppt.com.

34. J. Hempel, “Web Strategies That Cater to Customers,” Inside Innovation (a BusinessWeek publication), June 2007, p. 6.

35. See, e.g., R. N. Laczniak, T. E. DeCarlo, and S. N. Ramaswami, “Consumers’ Responses to Negative Word-of-Mouth Communication,” Journal of Consumer Psychology, 11, no. 1 (2001), pp. 57–73.

36. E. Rosen, The Anatomy of Buzz (New York: Doubleday, 2000); see also D. S. Sundaram, K. Mitra, and C. Webster, “Word-of- Mouth Communications,” Advances in Consumer Research, vol. 25, ed. Alba and Hutchinson, pp. 527–31; and A. A. Bailey, “The Interplay of Social Influence and Nature of Fulfillment,” Psychology & Marketing, April 2004, pp. 263–78.

37. M. Johnson, G. M. Zinkhan, and G. S. Ayala, “The Impact of Outcome, Competency, and Affect on Service Referral,” Journal of Services Marketing, 5 (1998), pp. 397–415.

38. For a thorough discussion, see D. F. Duhan, S. D. Johnson, J. B. Wilcox, and G. D. Harrell, “Influences on Consumer Use of Word-of-Mouth Recommendation Sources,” Journal of the Academy of Marketing Science, Fall 1997, pp. 283–95; and C. Pornpitakpan, “Factors Associated with Opinion Seeking,” Journal of Global Marketing, 17, no. 2/3 (2004), pp. 91–113.

39. R. Dye, “The Buzz on Buzz,” Harvard Business Review, November 2000, p. 145.

40. G. M. Rose, L. R. Kahle, and A. Shoham, “The Influence of Employment-Status and Personal Values on Time-Related Food Consumption Behavior and Opinion Leadership,” in Advances in Consumer Research, vol. 22, ed. F. R. Kardes and M. Sujan (Provo, UT: Association for Consumer Research, 1995), pp. 367–72; and U. M. Dholakia, “Involvement-Response Models of Joint Effects,” in Advances in Consumer Research, vol. 25, ed. Alba and Hutchinson, pp. 499–506.

41. See M. C. Gilly, J. L. Graham, M. F. Wolfinbarger, and L. J. Yale, “A Dyadic Study of Interpersonal Information Search,” Journal of the Academy of Marketing Science, Spring 1998, pp. 83–100.

42. R. Marshall and I. Gitosudarmo, “Variation in the Characteristics of Opinion Leaders across Borders,” Journal of International Consumer Marketing, 8, no. 1 (1995), pp. 5–22.

43. See I. M. Chaney, “Opinion Leaders as a Segment for Marketing Communications,” Marketing Intelligence and Planning, 19, no. 5 (2001), pp. 302–308.

44. Methods for understanding network influences online are still being developed. For one approach, see M. Trusov, A. V. Bodapati, and R. E. Bucklin, “Determining Influential Users in Internet Social Networks,” Journal of Marketing Research, August 2010, pp. 643–58.

45. L. F. Feick and L. L. Price, “The Market Maven,” Journal of Marketing, January 1987, pp. 83–97. See also R. A. Higie, L. F. Feick, and L. L. Price, “Types and Amount of Word-of-Mouth

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Chapter Seven Group Influences on Consumer Behavior 253

Communications about Retailers,” Journal of Retailing, Fall 1987, pp. 260–78; K. C. Schneider and W. C. Rodgers, “Generalized Marketplace Influencers’ Attitudes toward Direct Mail as a Source of Information,” Journal of Direct Marketing, Autumn 1993, pp. 20–28; and J. E. Urbany, P. R. Dickson, and R. Kalapurakal, “Price Search in the Retail Grocery Market,” Journal of Marketing, April 1996, pp. 91–104.

46. T. A. Mooradian, “The Five Factor Model and Market Mavenism,” Advances in Consumer Research, vol. 23, ed. K. P. Corfman and J. G. Lynch (Provo, UT: Association for Consumer Research, 1996), pp. 260–63. For additional motivations driving mavens, see G. Walsh, K. P. Gwinner, and S. R. Swanson, “What Makes Mavens Tick?,” Journal of Consumer Marketing, 21, no. 2 (2004), pp. 109–22.

47. E. Keller and J. Berry, The Influentials (New York: Free Press, 2003). See also D. Godes and D. Mayzlin, “Firm-Created Word-of-Mouth Communication,” Harvard Business School Marketing Research Papers, no. 04-03 (July 2004).

48. M. A. Belch, K. A. Krentler, and L. A. Willis-Flurry, “Teen Internet Mavens,” Journal of Business Research, 58 (2005), pp. 569–75.

49. I. Cakim, “E-Fluentials Expand Viral Marketing,” iMedia Connection, October 28, 2002, www.imediaconnection.com; see also information on Burson-Marsteller’s website at www. efluentials.com.

50. See also E. Keller and B. Fay, “The Role of Advertising in Word of Mouth,” Journal of Advertising Research, June 2009, pp. 154–58.

51. Rosen, The Anatomy of Buzz. 52. See C. S. Areni, M. E. Ferrell, and J. B. Wilcox, “The Persuasive

Impact of Reported Group Opinions on Individuals Low vs. High in Need for Cognition,” Psychology & Marketing, October 2000, pp. 855–75.

53. A. Z. Cuneo, “Dockers Strives for Urban Credibility,” Advertising Age, May 25, 1998, p. 6.

54. See R. Walker, “The Hidden (in Plain Sight) Persuaders,” New York Times Magazine, December 5, 2004; and materials on BzzAgent’s website at www.BzzAgent.com.

55. See E. Biyalogorsky, E. Gerstner, and B. Libai, “Customer Referral Management,” Marketing Science, Winter 2001, pp. 82–95; and G. Ryu and L. Feick, “A Penny for Your Thoughts,” Journal of Marketing, January 2007, pp. 84–94.

56. Dye, “The Buzz on Buzz,” p. 140; and J. Lehrer, “Head Case: The Buzz on Buzz,” The Wall Street Journal, October 16, 2010, p. C12.

57. T. F. Lindeman, “More Firms Use Unique ‘Guerrilla Marketing’ Techniques to Garner Attention,” Knight Ridder Tribune Business News, January 18, 2004, p. 1.

58. Ibid. 59. C. Ashley and H. A. Leonard, “Betrayed by the Buzz?,” Journal

of Public Policy and Marketing, Fall 2009, pp. 212–20. 60. K. Fitzgerald, “Bristol-Meyers Builds Buzz,” Advertising Age,

April 23, 2001, p. 18. 61. A. Dobele, D. Toleman, and M. Beverland, “Controlled

Infection!,” Business Horizons 48 (2005), pp. 143–49. 62. “Two Years after Launching Brand Blogs, Vespa Forgets Them,”

http://blog.clickz.com, January 2, 2007; R. Ford, “No Wrench Required,” Knight Ridder Tribune Business News, January 8, 2007, p. 1; J. Jarvis, “Dell Learns to Listen,” BusinessWeek, October 29, 2007, pp. 118, 120; and presentation by Matt Bailey, president of Site Logic Marketing, November 27, 2007.

63. See also V. Mahajan, E. Muller, and F. M. Bass, “New Product Diffusion Models in Marketing,” Journal of Marketing, January 1990, pp. 1–26; E. M. Rogers, Diffusion of Innovations, 4th ed. (New York: Free Press, 1995). For an alternative to the traditional adoption diffusion model, see C.-F. Shih and A. Venkatesh, “Beyond Adoption,” Journal of Marketing, January 2004, pp. 59–72.

64. Who Tweets? (Washington, DC: Pew Internet, 2009); J. Van Grove, “Sponsored Tweets Launches,” mashable.com, August 3, 2009, accessed May 23, 2011; “Americans Spend 2 Hours, 12 Minutes per Month on Twitter,” Blog.searchenginewatch.com, January 26, 2011, accessed March 17, 2011; “How Charlie Sheen and Other Stars Get Paid to Tweet,” blogs.wsj.com, March 6, 2011, accessed May 25, 2011; and “How Does Twitter Make Money?,” Buzzle.com, accessed May 23, 2011.

65. D. Pogue, “Critical Mass,” Scientific American, May 17, 2011, www.scientificamerican.com/article/critical-mass/, accessed September 1, 2014; D. Streitfeld, “In a Race to Out-Rave, 5-Star Web Reviews Go for $5,” nytimes.com, August 19, 2011, www.nytimes.com/2011/08/20/technology/finding-fake- reviews-online.html, accessed September 1, 2014; D. Streitfeld, “Give Yourself 5 Stars? Online, It Might Cost You,” nytimes. com, September 22, 2013, www.nytimes.com/2013/09/23/ technology/give-yourself-4-stars-online-it-might-cost-you. html?_r50, accessed September 1, 2014; C. Conner, “Online Reputation,” Forbes.com, October 30, 2013, www.forbes. com/sites/cherylsnappconner/2013/10/30/online-reputation- new-methods-emerge-for-quashing-fake-defamatory-reviews/, accessed September 1, 2014.

66. See M. I. Nabith, S. G. Bloem, and T. B. C. Poiesz, “Conceptual Issues in the Study of Innovation Adoption Behavior,” Advances in Consumer Research, vol. 24, ed. M. Bruck and D. J. MacInnis (Provo, UT: Association for Consumer Research, 1997), pp. 190–96.

67. See, e.g., S. L. Wood and J. Swait, “Psychological Indicators of Innovation Adoption,” Journal of Consumer Psychology, 12, no. 1 (2002), pp. 1–13.

68. See, e.g., E.-J. Lee, J. Lee, and D. W. Schumann, “The Influence of Communication Source and Mode on Consumer Adoption of Technological Innovations,” Journal of Consumer Affairs, Summer 2002, pp. 1–27.

69. See N. Y.-M. Siu and M. M.-S. Cheng, “A Study of the Expected Adoption of Online Shopping,” Journal of International Consumer Marketing, 13, no. 3 (2001), pp. 87–106.

70. For a discussion of how type of innovation and consumer expertise interact, see C. P. Moreau, D. R. Lehmann, and A. B. Markman, “Entrenched Knowledge Structures and Consumer Response to New Products,” Journal of Marketing Research, February 2001, pp. 14–29.

71. For a more complete analysis, see U. M. Dholakia, “An Investigation of the Relationship between Perceived Risk and Product Involvement,” Advances in Consumer Research, vol. 24, ed. Bruck and MacInnis, pp. 159–67; and M. Herzenstein, S. S. Posavac, and J. J. Brakus, “Adoption of New and Really New Products,” Journal of Marketing Research, May 2007, pp. 251–60.

72. For a discussion of when this is not appropriate, see V. Mahajan and E. Muller, “When Is It Worthwhile Targeting the Majority Instead of the Innovators in a New Product Launch?,” Journal of Marketing Research, November 1998, pp. 488–95.

73. See, e.g., Chaney, “Opinion Leaders as a Segment for Marketing Communications.”

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254

Part Two 2–1 BMW TAPS THE EMERGING CHINESE LUXURY MARKET

Companies around the world are focused on the huge poten- tial of the Chinese consumer market. Perhaps nowhere is this more evident than in the automobile market. BMW is one of several Western automotive companies currently doing business in China. They have invested heavily in developing appropriate relationships and distribution out- lets since their entry into the market in 2003. China is now BMW’s second largest market (ahead of the United States) and ongoing growth is expected. Growth expectations seem reasonable since currently only 50 of every 1,000 Chinese citizens own a car and yet the Chinese auto market is still the largest in the world, outstripping the United States by roughly 40 percent. By 2030, estimates suggest that there will be 400 to 500 vehicles per 1,000 Chinese citizens!

As China’s prevalence in the global economy grows, the average earnings of Chinese workers are also increasing. Chinese workers have seen double-digit growth in their earnings in recent years. Along with this greater purchasing power has come a desire for more consumer goods and services. Beyond a growing econ- omy and incomes, several other factors are contributing to greater automobile ownership in China, including

�r� Increasing availability of credit. �r� Expanding automobile dealer networks. �r� Widespread road construction in rural areas. �r� Greater purchase ability due to higher savings

(saving is a Chinese cultural norm).

As China’s consumer culture becomes more pro- lific, the newly rich Chinese place more emphasis on status and especially favor European luxury brands. Many Chinese consumers also spend disproportionate amounts of their income on cars. For example, those who make more than 50,000 yuan per year buy vehicles for prices that are roughly equivalent to their annual income. According to BMW Brilliance’s senior vice president, 2010 yielded a 70 percent increase in luxury car sales and he expects further growth in the Chinese luxury vehicles market over the next five years.

Tapping this highly desirable market is not without its challenges. Business is done differently in China. China maintains legal restrictions on foreign ownership

that essentially requires joint ventures within which technology and trade secrets are shared. In addition, foreign automakers entering China must spend time developing guanxi, a form of relationship based on trust and interpersonal relationships. Consider the following comment by one Chinese expert:

You really have to do your homework and research the kind of connections you want to create and drive them by yourself. Otherwise, you won’t end up with the right relationships or will find them too hard to sustain. [Some multinational companies] don’t have the patience or will- ingness to give equal respect to local partners and under- stand what they can do and offer. Their local knowledge and expertise is undermined and overlooked. That’s bad for business and doesn’t sustain Guanxi between partners.

Chinese consumers also have their own unique tastes and preferences. In response, BMW has modified their product offerings to better suit these unique wants and desires. Among the customized automobiles that BMW has developed are:

�r� Special edition China-only models—These have lengthened wheelbases and more limo-like features. Unlike the U.S. market, the expanding Chinese mid- dle class does not favor SUVs, but prefers the luxu- rious features of European sedans.

�r� Adaptations to regional preferences—Northern Chinese prefer larger vehicles than those in the South because they associate size with prestige or social status, so regional adaption is desirable.

�r� Electric and hybrid vehicles—Electric and hybrid vehicles are becoming more popular than traditional gas-only engines due, in part, to China’s worsening traffic jams. In response, BMW recently unveiled a new plug-in hybrid that will be built in Shenyang, China, and will only be available in China.

Discussion Questions

1. There is often a natural tendency to assume that in collectivist cultures such as that in China, luxury products would not be popular.

CASES*

*Part Two Cases are contributed by Carolyn Findley Musgrove, Assistant Professor of Marketing, Indiana University Southeast.

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a. Explain how luxury products such as the BMW automobile might fulfill needs even within the traditional collectivist value-set of China.

b. Explain other factors that might be driving the desire for luxury in China.

2. Develop a sample advertisement for BMW in China. Include the major theme, the key copy points, and the visual that you would utilize. Explain and defend your choices based on the case and materials in Chapter 2.

3. Growth in car ownership in China is expected to explode in the next 20 years. This will, for many Chinese, involve buying and owning a car for the very first time. In terms of adoption of innovation (see Chapter 7) for these first-time buyers: a. What type of innovation is the car for Chinese

consumers who have never owned one? Explain. b. The current car owners in China, comprising

5 percent of the population, would fall into which adoption categories?

c. Analyze the likelihood that such growth can be achieved, using Table 7–2 as a structure.

d. Do you think the values and desires of later adopters in China will be different from the 5 percent who currently own cars? Explain.

4. The automobile is an innovation that is not as widespread in China as in other countries. Chapter 7 discusses the innovation process and factors affect- ing the spread of innovations. Figures 7–7 through 7–9 give examples of various diffusion curves based on different diffusion rates. Draw two separate adoption curves, one for rural consumers and one for urban consumers in China. Defend your answer based on demographics, values, and lifestyle factors.

5. BMW and other foreign auto makers are adapting their products to better suit the Chinese market. To what extent should BMW customize their offerings to local tastes and preferences? What are the risks of extreme customization?

6. Developing guanxi is a vital part of business in China. Using the text and case, explain how a Western company could build guanxi with their Chinese business partner.

7. China is not the only Asian country with a large population that represents opportunity for new customers who have their own unique tastes. Similar to BMW Brilliance, BMW India serves the Indian market and launches certain models especially for India. Discuss factors that make India attractive to BMW. Compare and contrast India and China in terms of the key elements that BMW must address.

Source: “BMW Group,” China CSR Map.org, www.chinacsrmap.org; D. Lienert, “The Rising Chinese Car Market,” Forbes.com, December 15, 2003, www.forbes.com; S. Chen, “How China Buys Cars,” Forbes, July 31, 2007, www.forbes.com; N. Madden, “Winning Consumers in China,” Advertising Age White Paper, May 1, 2009, http://adage.com; E. Gilligan, “How to Make Business Connections in China,” Harvard Business Review, January 20, 2009, http://blogs.hbr.org; “Chinese Workers Earning More Pay and Power,” Association for Operations Management, August 6, 2010, www.apics.org; “China Is Now BMW’s Second Largest Market, Topping the U.S.,” www.BMWcoop.com, August 8, 2010, www.bmwcoop.com; “Luxury Car Sales in China May Reach 1.1 Million Units by 2015,” InAutoNews. com, September 10, 2010, www.inautonews.com; C. Lee, “BMW Brilliance’s Senior Vice President Is Optimistic about Chinese Luxury Car Market,” Gasgoo.com, January 13, 2011, http://autonews.gasgoo.com; “Earthquake Dents Japan’s Chances in China’s Luxury Car Market,” Reuters, March 15, 2011, www.reuters.com; “BMW to Unveil a 5-Series Plug-in Hybrid Prototype for China,” AutoObserver.com, April 7, 2011, www.autoobserver. com; L. Dian-Wei, “International Auto Brands Thrive by Catering to Chinese Consumers,” WantChinaTimes.com, May 1, 2011, www.wantchinatimes.com; K. Chan, “China Market a Big Draw for International Car Companies: But Automakers Find That Deals Come with a Big Price Tag,” Pittsburgh Post Gazette, May 3, 2011, www.post-gazette.com; and J. Kell, “China’s Auto Market to Overcome Oil’s Rise—JD Power,” The Wall Street Journal, June 14, 2011, http://online.wsj.com.

2–2 CVS CAREMARK DISCONTINUES THE SALE OF TOBACCO PRODUCTS

According to the American Cancer Society, smoking has resulted in $96 million in health care costs from 2000 to 2014. A well-established link exists between tobacco use and cancer. Public awareness of the dangers of smok- ing has led to shifting cultural norms, such that smoking is increasingly viewed as negative. Cigarette smok- ing in the United States has been on the decline since the 1950s. However, about one out of five Americans

continues to smoke cigarettes. Cigarette smoking and cancer have been strongly linked particularly for lung, oral, and throat cancer where, for both men and women, smoking has been found to account for half or more of the cancer cases in these regions of the body.

Overall cancer rates (not specific to smoking) across gender and ethnicity in the United States are also shown in the following table.

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Part Two External Influences256

Lung and Bronchus Cancer Incidence by Sex and Ethnicity, United States, 2006–2010

Non- Hispanic

White African

American

Asian American or Pacific Islander

American Indian or Alaska Native

Hispanic/ Latino

Male 82.9 94.7 48.8 70.2 45.9

Female 59.9 50.4 28.0 52.1 26.6

Total 138.6 220.0 75.0 104.1 124.2

*Rates are per 100,000 population. Source: American Cancer Society, Surveillance Research, 2014.

One pharmacy company is taking a stand against smoking and its negative health effects. In 2007, CVS merged with Caremark to become CVS Caremark and undertook a repositioning campaign. Beyond being a chain of drug stores, CVS Caremark is a pharmacy ben- efit manager that works with insurance companies and employers to control drug costs. The CVS Caremark website refers to the company as “a pharmacy innova- tion company helping people on their pathway to bet- ter health.” In mid-September, ahead of its October 1, 2014, deadline, CVS Caremark discontinued the sale of tobacco products in an effort to better serve their cus- tomers and society. According to the CVS Caremark CEO and president, Larry Merlo:

Ending the sale of cigarettes and tobacco products at CVS/pharmacy is simply the right thing to do for the good of our customers and our company. The sale of tobacco products is inconsistent with our purpose— helping people on their path to better health. As the delivery of health care evolves with an emphasis on bet- ter health outcomes, reducing chronic disease and con- trolling costs, CVS Caremark is playing an expanded role through our 26,000 pharmacists and nurse practi- tioners. By removing tobacco products from our retail shelves, we will better serve our patients, clients and health care providers while positioning CVS Caremark for future growth as a health care company. Cigarettes and tobacco products have no place in a setting where health care is delivered. This is the right thing to do.

An essential part of this repositioning is the intro- duction of a variety of basic health care services within the retail locations, from flu shots to strep throat tests. The shortage of primary care doctors and provisions in the Affordable Care Act has created an opportunity for pharmacies to play a larger role in the nation’s health care. The stage is set for retail clinics to grow at a rate of 25 to 30 percent over the next few years, reaching to 2,800 in 2015, up from 1,400 in 2012. CVS Caremark

already has 800 “MinuteClinics” and plans to grow that number to 1,500 by 2017. According to Larry Merlo:

We have about 26,000 pharmacists and nurse practi- tioners helping patients manage chronic problems like high cholesterol, high blood pressure and heart disease, all of which are linked to smoking. We came to the decision that cigarettes and providing health care just don’t go together in the same setting.

There is much speculation over how this change will affect CVS Caremark, both financially and in the public perception. In order to make this change, CVS Caremark will lose $2 billion in annual revenue from tobacco products. This amount translates into 17 cents less earnings annually per share of stock. The company is planning ways to offset the impact on profits such as a smoking cessation program with the goal of helping half of a million Americans quit smoking.

Aside from the financial impact, CVS Caremark is reaping benefits. In the public eye, this move is largely seen favorably. Results of a Gallup Poll of 5,550 Americans over the age of 18 show that the discontinu- ance of tobacco sales has enhanced the image of CVS Caremark in the perceptions of many consumers. The following tables provide a sample of the Gallup Poll results. The first displays general reactions to CVS Caremark’s decision, while the second breaks the respondents into groups based on their level of engage- ment with CVS Caremark. According to Larry Merlo, “The feedback has been overwhelmingly positive.”

Reaction to CVS’s Decision to Stop Selling Tobacco Products in Its Stores

Strongly Disagree

(1) (2) (3) (4)

Strongly Agree

(5)

Don’t Know/

Refused

This decision helps me better understand CVS’s mission and purpose.

7% 8% 19% 31% 27% 8%

This decision helps me better understand what makes CVS different from its competitors.

8% 8% 23% 29% 24% 9%

Note: Percentages may not add to 100 percent due to rounding. Source: Gallup Poll 2014.

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Part Two Cases 257

Perceptions of Consumers by Level of Engagement with CVS

Fully Engaged Indifferent

Actively Disengaged

Are you aware of CVS’s recent decision to discontinue the sale of tobacco products (for example, cigarettes)? (% Yes)

96% 82% 80%

The decision helps me better understand CVS’s mission and purpose. (% Strongly Agree)

64% 24% 16%

This decision helps me better understand what makes CVS different from its competitors. (% Strongly Agree)

61% 26% 15%

Based on CVS’s decision to discontinue the sale of tobacco products, are you more or less likely to shop at CVS? (% More Likely to Shop at CVS)

47% 27% 23%

Note: Percentages may not add to 100 percent due to rounding. Source: Gallup Poll 2014.

Discussion Questions

1. What type of marketing strategy is CVS using? 2. Chapter 2 deals with global nonverbal communica-

tion, which can find application in specific regions and countries as well. Which nonverbal category does cigarette smoking fall under?

3. Chapter 3 discusses several American cultural values. Smoking can relate to individual values from each of the three categories. Decide which of the values in each of the following categories best relates to smoking and describe that relationship. a. Other-oriented values b. Environment-oriented values c. Self-oriented values

4. What impact do you think CVS’s decision to stop selling tobacco products will have on (a) its long- term sales and (b) smoking trends in America?

5. The case mentions that since the 1950s there has been a cultural trend away from smoking. Young people today may have different perceptions and levels of exposure to the shifts in cultural norms dealing with smoking than those in other genera- tions. Perform a brief interview with members

of different generational groups to find out how perceptions may differ for different age cohorts. Compare and contrast their perceptions and stories of how smoking was normally treated in different periods of American history. Interviewees should be drawn from at least three of the following generations: a. Pre-Depression generation b. Depression generation c. Baby boom generation d. Generation X e. Generation Y f. Generation Z

6. What type of reference group would best describe smokers today? How would your answer differ if you were referring to smokers in the early to mid-1900s?

The following questions are based on the tables pro- vided in the case.

7. Which groups have the highest incidence of lung/ bronchus cancer (in terms of ethnicity and sex)? Would this group be a good target market for CVS Caremark?

8. What effect has CVS Caremark’s decision had on public perceptions of the retailer?

9. Do you feel that the consumers who are fully engaged, indifferent, or actively disengaged rep- resent the best target market for CVS Caremark? Why?

10. Based on your answers for Questions 6 and 8, devise a marketing strategy for CVS Caremark to market their smoking cessation program to an ideal target market (as described by demograph- ics, ethnicity, and level of engagement). Make sure to consider the sections of Chapter 5 that discuss nuances of ethnic subcultures.

Source: L. Saad, “One in Five U.S. Adults Smoke, Tied for All-Time Low,” Gallup.com, August 22, 2012, www.gallup.com; Cancer Facts and Figures 2014 (Atlanta, GA: American Cancer Society, 2014), www.cancer.org/ acs/groups/content/@research/documents/webcontent/acspc-042151.pdf, accessed September 21, 2014; Tobacco: The True Cost of Smoking (Atlanta, GA: American Cancer Society, July 7, 2014), www.cancer.org; M. Herper, “Kicking the Habit: CVS to Stop Selling Tobacco, Sacrificing $2 Billion in Sales for Public Health and Future Growth,” Forbes.com, February 5, 2014, www.forbes.com; E. Landaum, “CVS Stores to Stop Selling Tobacco,” CNN .com, February 5, 2014, www.cnn.com; T. Martin and M. Esterl, “CVS to Stop Selling Cigarettes,” The Wall Street Journal, February 5, 2014, http://online. wsj.com; S. Strom, “CVS Vows to Quit Selling Tobacco Products,” New York Times, February 5, 2014, www.nytimes.com; CVS Caremark, “About Us,” July 20, 2014, http://info.cvscaremark.com; P. Corbett, “CVS Caremark Not Quite Quitting Tobacco,” USA Today, February 12, 2014, www.usatoday.com; and N. Devorak and D. Yu, “Why CVS May Not Get Burned by Its Tobacco Decision,” GALLUP Business Journal, March 18, 2014, http://businessjournal. gallup.com.

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In 2006, rapper Dr. Dre and music industry mogul James Iovine began an endeavor that would change the face of the premium headphones market. They saw an opportunity to increase the numbers of consumers who listened to music primarily on mobile devices. While listening to music on cell phones and tablets has con- venient mobility, most consumers were using cheap plastic earbuds that came with their devices. In addi- tion, digital music download piracy was increasing. Together, Dr. Dre and Mr. Iovine launched a company called Beats by Dre with the purpose of dramatically enhancing the listening experience for consumers using mobile devices for music delivery. Ultimately, the goal is for the listener to have an experience likened to the sound in the record studio. According to Mr. Iovine:

You’ve got to be lucky enough to identify a problem where you think you can help.  .  .  . Apple was selling $400 iPods with $1 earbuds. Dre told me, “Man, it’s one thing that people steal my music. It’s another thing to destroy the feeling of what I’ve worked on.”

After two years in development with consumer elec- tronics manufacturer Monster, Beats by Dre introduced Beats headphones. The headphones are priced from $99 to $450, well above many of its competitors. However, Beats headphones have a unique appeal. They carry the “cool fac- tor” of Dr. Dre and a heavy emphasis on bass. Beats head- phones have been wildly popular with consumers, carrying a 70 percent market share in the premium headphones cat- egory in 2014. It is also the highest-selling brand of head- phones for consumers between 17 and 35 years of age.

Consistent with the “cool factor,” marketing Beats headphones has taken a grass-roots approach. According to Mr. Iovine:

We aren’t buying a lot of ads. We market it our way. We’re from the music business where you never get a lot of money to market. . . . They’re making a beautiful white object with all the music in the world in it. I’m going to make a beautiful black object that will play it back. Dre and I decided to market this product just like it was Tupac or U2 or Guns N’ Roses. . . . We sold half a billion worth of product before we paid for one ad.

While in development, Mr. Iovine would keep vari- ous designs in his office and would ask celebrities, such as musicians Will.i.am, Gwen Stephani, and Pharrell Williams, to try them and give feedback, which spread early awareness. Co-marketing has been a favorite strategy

of Beats, having partnered many other brands, such as HP laptops, Chrysler 300s, and Radio Shack. Beats is also expanding into related product areas, including portable wireless speakers and automobile speaker systems.

Beats also sent complementary headphones to many influential celebrities in the music and sports industries, such as Lady Gaga, P. Diddy, Michael Phelps, Justin Beiber, and Ellen DeGeneres. When the public saw their favorite celebrities sporting Beats headphones, the popularity skyrocketed. Ad Age reports that celeb- rity endorsements have been shown to improve sales by as much as 20 percent. As part of an ambush mar- keting campaign, just before the 2008 Olympics, Beats sent customized headphones in the national colors to Lebron James. James immediately asked for 15 more and the entire U.S. Olympic basketball team arrived in Shanghai wearing Beats headphones. All this was despite the fact that Beats was not an official Olympic sponsor. As a result of these efforts, Beats headphones have become a fashion accessory in pop culture.

In early 2014, Beats began its own music streaming service called Beats Music. A streaming service helps to counteract the digital piracy issue. Not only do the musi- cians receive higher royalties from streaming, but they can also connect directly with the fans by controlling their profile, selling merchandise, and updating fans on upcom- ing events and releases. The music streaming industry is growing fast. In 2014, there were roughly 29 million subscribers of music streaming services, and many more using free streaming services like Pandora. By 2018, pre- dictions suggest there will be around 191 million subscrib- ers. Beats Music provides a free trial and is converting 70 percent of those consumers into subscribers. Roughly 1,000 consumers subscribed to Beats Music daily in 2014.

In the summer of 2014, Dr. Dre and Mr. Iovine sold both the electronics and music streaming businesses to Apple for $3 billion. Further, the paid agreed to work for Apple in an advisory role, while maintaining some equity. Analysts suggest that perhaps Dr. Dre will be able to bring the “cool” back to Apple. According to Apple CEO Tim Cook:

Music is such an important part of all of our lives and holds a special place within our hearts at Apple. That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and ser- vices in the world.

2–3 BEATS BY DRE RISE TO THE TOP

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Part Two Cases 259

Mr. Iovine mirrored that sentiment:

I’ve always known in my heart that Beats belonged with Apple. The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special.

This match has much promise; however, it remains to be seen how the corporate cultures of the two com- panies will align. Dr. Dre reportedly is a workaholic who disregards artificial deadlines, which might cause some friction with Apple. However, like Apple, Dr. Dre prides himself on a lack of marketing research. Apple has also historically had a market orientation, believing that consumers do not know what they want until some- one shows it to them. Only time will tell how fruitful Beats and Apple will be together. But the projections show that they are poised for success.

Discussion Questions

1. Please reference the other-oriented, environment- oriented, and self-oriented values in the text. Choose a few of these values and explain how they are rel- evant to Beats by Dre and Beats Music?

2. Refer to the generation groups and social classes in Chapter 4 and the ethnic subcultures in Chapter 5. With all of these concepts in mind, describe an ideal target market segment for Beats Music?

3. Refer to Table 5–2 in Chapter 5, entitled, “African- American Segments Identified by Yankelovich.” Imagine that Beats has decided to target African Americans. Which of these segments would be the best target market for Beats? Explain your answer.

4. Refer to the three categories of innovation in Chapter 7. Which category of innovation do the following products belong? Justify your answer.

a. Beats headphones b. Beats Music

5. Think in terms of family decision making from Chapter 6. What members of the household are likely to play each of the following roles in the purchase decision for Beats Music or Beats headphones? a. Initiators b. Information gatherers c. Influencers d. Decision makers e. Purchasers f. Users

6. Reference the section of Chapter 7 on reference group influence. a. Are Beats headphones a necessity or

non-necessity? b. Are Beats headphones visible or private? c. Given your answers for (a) and (b), how has

Beats by Dre capitalized on this in the past? d. Do you feel reference group influence will

play an important role in the success of Beats? Explain your answer.

7. Review the section of Chapter 7 on marketing strat- egy, WOM, and opinion leadership. Which strategy or strategies of those listed has Beats by Dre used to become so popular in its market?

Source: M. Bush, “Beats by Dr. Dre,” Advertising Age, November 15, 2010, www.adage.com; T. Fishburne, “The Power of Ambush Marketing,” Tom Fishburne: Marketoonist, August 12, 2012, www.tomfishburne.com; J. Sanburn, “How Dr. Dre Made $300 Headphones a Must-Have Accessory,” Time Magazine, January 16, 2013, www.business.time.com; J. Dorris, “Beats with a Billion Eyes,” Slate, September 11, 2013, www.slate.com; “Beliebing in Streaming,” The Economist, March 22, 2014, www.economist.com; A. Diallo, “Beats Music to take Streaming Mass Market,” Forbes, January 12, 2014, www.forbes.com; B. Helm, “How Dr. Dre’s Headphone Company Became a Billion-Dollar Business,” Inc., May 1, 2014, www.inc.com; L. Johnston, “Apple Buys Beats for $3B,” Twice, May 28, 2014, www.twice. com; H. Karp, “Apple’s New Beat: What Steve Jobs and Dr. Dre have in Common,” The Wall Street Journal, June 6, 2014, www.wsj.com; and J. Solsman, “Beat Music Turns 7 out of 10 Free Trial Users to Paying Ones,” CNet.com, March 20, 2014, www.cnet.com.

2–4 HOW SOCIAL MEDIA NEARLY BROUGHT DOWN UNITED AIRLINES

Online social media and social networking are growing at an exponential rate and provide a means for consumers to voice their opinions about products and services. As of 2011, the number of social media users was as follows:

�r� Twitter—175 million �r� Facebook—500 million �r� Facebook Mobile—200 million �r� YouTube—100 million views per day and 700 billion

playbacks annually

It is increasingly common for consumers to vent their dissatisfaction via one or more of these social media outlets, sometimes in the form of videos. Often these videos go viral, meaning that millions of consum- ers become aware of the product or service failure in a very short period of time. One iconic example is Dave Carroll, a traveling musician, whose guitar was ruined by United Airlines’ baggage handlers. United refused to take responsibility and Dave Carroll retaliated via

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social media. It all began when Carroll noticed his gui- tar being mishandled:

On that first leg of the flight we were seated at the rear of the aircraft and upon landing and waiting to deplane in order to make our connection a woman sitting behind me, not aware that we were musicians cried out: “My god they’re throwing guitars out there.” Our bass player Mike looked out the window in time to see his bass being heaved without regard by the United bag- gage handlers. My $3500 710 Taylor had been thrown before his.

When Carroll got his guitar back, the neck was broken (despite having been in a protective case). He immediately notified United Airlines. He found it very difficult to find anyone who was sympathetic or would take responsibility for his damaged guitar. He was passed from employee to employee, in person and via phone and e-mail, at several airports and call centers in various U.S. states, Canada, and India. After nine months of pursuing the issue, a United Airlines cus- tomer service representative sent him an e-mail that said the airline would not be taking responsibility for the guitar (other than a rejected offer of $1200 in flight vouchers) and would no longer communicate with him about the matter. As noted by Carroll:

The system is designed to frustrate affected customers into giving up their claims. . . . I told [the service rep- resentative] that I would be writing three songs about United Airlines and my experience in the whole mat- ter. I would then make videos for these songs and offer them for free download on YouTube and my own web- site, inviting viewers to vote on their favorite United song. My goal: to get one million hits in one year.

Carroll’s first video has had over 10 million views. Within four days of Carroll’s first video going online, United Airlines’ stock price fell 10 percent, equaling a loss of $180 million (the cost of approximately 51,000 replacement guitars). After his videos went viral, United Airlines attempted to smooth things over with a $3,000 donation to the Thelonious Monk Institute of Jazz. However, it was too late to stop Carroll from pro- ceeding with his video series. Since then, Carroll has been featured on Today, CNN, and Jimmy Kimmel and his “United Breaks Guitars” song has been number one on the Country Western download charts in iTunes in the United Kingdom.

Clearly social media can be a means for consumers to vent negative word-of-mouth (WOM). However, it may also be a very useful and positive way for com- panies to communicate with and learn from their con- sumers. Researchers at Forrester believe that social influence can be viewed as a pyramid containing three groups. As in any target marketing scenario, compa- nies must manage their relationships with each of these three types of influencers in unique ways to encour- age them to spread positive WOM through their social networks.

�r� Social broadcasters, the group at the top of the pyramid, are the few, most well-connected individu- als who have many other users who look to them for advice. However, the other users in their net- work may not know these individuals personally, so they may not have a high level of trust. Other users may consider the advice of social broadcasters about products and services as one part of a larger information search. Social broadcasters dislike tra- ditional PR and want to be respected by marketers because of their broad audience. The best way to reach social broadcasters is through offers uniquely customized for them that reflect an appreciation for their opinions.

�r� Mass influencers, the group in the middle of the pyr- amid, produce 80 percent of the influence impres- sions about products and services, while making up only 16 percent of the influencers. This group is less tech savvy and motivated than the social broadcast- ers, but they influence people they know in real life as well as others. The best way to reach mass influ- encers is to give them gossip fodder. Giving them content that they cannot resist sharing with others encourages them to spread the marketer’s message to a larger audience.

�r� Potential influencers, the group at the base of the pyramid, makes up the largest group, with some 80  percent of the influencers. These individuals have smaller networks that consist primarily of people they know and trust in offline. The poten- tial influencers group is not very tech savvy or as motivated as the other two groups. The best way to reach this group is to give them helpful content that is simple for them to spread to others.

Table  A provides demographic information on the users of three popular social network sites.

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Part Two Cases 261

YouTube Twitter Facebook

Gender

Male 101 92 91 Female 98 106 108

Age

3–12 79 62 67 13–17 173 112 186 18–34 123 153 144 35–49 79 87 71 501 67 58 49

Race/Ethnic Group Caucasian 83 88 96 African American 152 184 145 Asian 156 77 117 Hispanic 168 129 73 Other 98 91 98

Kids in Household No kids 0–17 93 90 87 Has kids 0–17 108 113 117

Household Income $0–$30K 102 95 75 $30–$60K 95 96 89 $60–$100K 96 98 108 $100K1 105 107 116

Education No college 112 108 105 College 90 94 98 Graduate school 88 89 88

Index 5 100, Population 5 Total Internet population. Source: Quantcast, June 2010.

TABLE ADemographics of Online Social Network Users

Discussion Questions

1. When Dave Carroll posted his video on YouTube, it went viral. What American value do you feel motivated consumers to pass along this “video complaint” to others?

2. Of the three groups of influencers identified by Forrester, which group or groups do you think were most likely responsible for Dave Carroll’s video going viral? Explain.

3. Based on your answers to 1 and 2, develop a market- ing strategy for United to “recover” from their ser- vice failure. Specifically, address the following: a. What “message” should United be sending to the

general public? b. What “media” outlets (traditional, online, or

social) should they be using? c. Develop a video or ad concept that United could

place on social media that could help offset con- sumer anger over their service failure.

d. Identify which of the three Forrester groups United should focus on with their recovery cam- paign and defend your answer.

4. Chapter 7 defines and discusses opinion leaders. Are the individuals who create viral complaint videos opinion leaders? Why or why not?

5. Chapter 7 also discusses guiding principles that mar- keters should use when engaging in social media. How should have United Airlines or other compa- nies who have had similar issues operate based on these principles?

6. Several companies are using crowdsourcing as a way for customers to help solve each other’s prob- lems. How might companies harness the power of crowdsourcing to combat instances of viral negative WOM?

7. Besides being a method of communication, online social networks are also innovations that are being dif- fused. Are online social networks continuous, dynami- cally continuous, or discontinuous innovations?

8. Describe the typical user of each of the three social networks described in Table A.

Source: D. Carroll, “United Breaks Guitars,” 2009, www.DaveCarrollMusic. com; C. Ayres, “Revenge Is Best Served Cold—on YouTube,” The Times, July 22, 2009, www.timesonline.co.uk; R. Sawhney, “Broken Guitar Has United Playing the Blues to the Tune of $180 Million,” Fast Company, July 28, 2009, www.fastcompany.com; D. Dybwad, “The State of Online Word-of-Mouth Marketing,” Mashable.com, April 24, 2010, http://mashable. com; “Facebook.com,” Quantcast.com, June 10, 2011, www.quantcast. com; “Twitter.com,” Quantcast.com, June 10, 2011, www.quantcast.com; “Youtube.com,” Quantcast.com, June 10, 2011, www.quantcast.com; J. Hird, “201 Mindblowing Social Media Statistics,” E-consultancy: Digital Marketers United, March 25, 2011, http://econsultancy.com; and P. Laya, “Statistics,” YouTube Pressroom, June 18, 2011, www.youtube.com.

2–5 RICH, ANGRY BIRDS

Angry Birds is a simple and extremely popular video game that has taken the world by storm. Angry Birds is a mobile app whose franchise is also expanding to video game consoles, board games, cookbooks, and

toys. In the game, the goal is to retrieve the stolen bird eggs from the enemy pigs and kill the pigs. Players use a slingshot to launch wingless birds through the air to destroy pigs and various structures that are housing the

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pigs. If the players complete their mission of killing all the pigs within the allotted time and number of birds, they pass to the next level, where different pigs and structures await to be killed and destroyed. As players progress through the stages of the game, new types of birds and features, such as explosives, become avail- able. Numerous free updates, additional content, and holiday promotions help keep consumers hooked on this game.

The global market for applications, or “apps,” is already huge and continues to grow at an exponential rate. In 2010 alone, the global app market accounted for $6.8 billion in sales. Analysts project that this market will see double-digit growth and be worth $25 billion by 2015. Currently over 2 million apps are available and North America produces the most revenue in the app market. However, Asia has the highest number of total app downloads. Of all the apps out there, Angry Birds may be one of the most popular of all time. Angry Birds is downloaded more than 1 million times a day and played for more than 200 million minutes a day.

An executive for the company is exuberant about the app, stating, “Angry Birds is going to be bigger than Mickey Mouse and Mario.” A combination of factors has helped lead to Angry Birds’ success.

�r� Angry Birds also received a boost from celebri- ties giving their endorsement by telling fans that they are hooked on the game (e.g., Anja Pärson, a Swedish skier).

�r� The company made Angry Birds very simple to use, increasing its “addictive power.”

�r� The unpredictability of the game also lures in consumers.

�r� The company engages in customer relationship management and maintains communication with its customers through social media.

However, above all, one company executive attri- butes Angry Birds’ initial success to the Apple plat- form, which is where Angry Birds started.

It [Apple] has opened up for innovation and given us a huge market. The game itself is made possible by the touch technology, which hit the market at the right time with the growth of smart phones and the launch of the App Store. The key is to offer it for free and reach vol- ume. You need to get the game out to the masses. . . . It is important to continue being number one in the app store. When you manage to do this, the challenge is to build an even greater audience.

The Angry Birds franchise continues to grow and engage consumers by partnering with other organi- zations and developing new innovations. Soon, they hope to allow users to get special game features as a function of their location. And the company is offering Angry Birds merchandise like speakers in the shape of the Angry Birds characters for assorted electronic devices.

In regard to cause-related marketing, the com- pany behind Angry Birds (Rovio) has joined BirdLife International in the fight to save threatened birds from extinction. Rovio is helping to raise awareness of bird extinction issues through the in-game that directs play- ers to visit BirdLife International’s web page to learn more about their programs. Likewise, BirdLife’s web page hosts a trivia question about bird extinction that produces a secret level of Angry Birds for those players who visit its site.

Discussion Questions

1. The Angry Birds game is a type of innovation. a. Identify whether it is a continuous, dynamically

continuous, or discontinuous innovation. b. Conduct an innovation analysis of Angry Birds

using Table 7–2 as the basis (for the purposes of analysis, focus on consumers who already use mobile apps).

2. Rovio is engaging in cause-related marketing by teaming up with BirdLife International, a nonprofit organization. How well does this cause “fit” Angry Birds? Discuss the impact that this cause-related marketing partnership could have for Angry Birds.

3. Examine the four cause-related marketing (CRM) consumer segments in Chapter 3. Detail each seg- ment’s likely response to the CRM partnership that Angry Birds has with BirdLife International.

4. Angry Birds and many other apps are available in numerous countries. What are some factors that app designers should consider when entering into a for- eign market?

5. Angry Birds is appealing to young children because of its simplicity and cartoonish quality. Clearly, chil- dren are one of the market segments that Angry Birds is targeting. It is involved in, or is planning, such initiatives as clothing, toys, and Angry Birds Happy Meals. Chapter 6 discusses marketing to children and the consumer socialization process. What ethical concerns should Rovio consider when marketing to children?

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6. Angry Birds has been widely popular among Americans. What American values discussed in Chapter 3 help explain why Angry Birds is appeal- ing to such a large audience. Defend your answer.

Source: World Mobile Applications Market—Advanced Technologies, Global Forecast (2010–2015), MarketsandMarkets.com, August 2010, www. marketsandmarkets.com; E. Ericksen and A. Abdymomunov, “Angry Birds

Will Be Bigger Than Mickey Mouse and Mario,” MIT Entrepreneurship Review, February 18, 2011, http://miter.mit.edu; “Help for the World’s Angriest Birds,” BirdLife.org, April 21, 2011, www.birdlife.org; C. Holt, “Angry Birds Review,” Macworld, 2011, www.macworld.com; G. Sin, “Angry Birds Speakers 1 Stand from Gear4 to Land in Stores in September,” ZDNet.com, June 13, 2011, www.zdnet.com; R. Kim and K. Tofel, “Angry Birds Seeks NFC in Location,” Bloomberg Businessweek, June 14, 2011, www.businessweek.com; and M. Silverman, “Angry Birds Hits 1 Million Downloads a Day,” Mashable.com, June 17, 2011, http://mashable.com.

2–6 AMERICAN BEAGLE OUTFITTERS: APRIL FOOL’S JOKE TURNED REALITY

American Eagle Outfitters is a well-established retailer that is often found in mainstream shopping malls. It tar- gets teens and young adults of both sexes with trendy clothing and accessories. American Eagle is actually one of the most popular clothing retailers in its market. A survey of teenagers revealed that American Eagle has higher “brand relevance” than its competitors, Aeropostale and Abercrombie & Fitch.

On March 24, 2014, American Eagle announced that it would be offering a new line, dog apparel to match the human clothing sold in its stores, called American Beagle Outfitters. The American Beagle website fea- tured pictures of pooches modeling fashions for small, medium, and large dogs. It even launched a “dogu- mentary” on social media explaining the new line and the idea behind its creation. The dogumentary features two American Eagle employees. One cannot stand the thought of her dog wearing Halloween costumes all year long and another who believes “he’s a pioneer as well as a prisoner of his own ambition.” According to American Eagle’s press release:

Designed to perfectly match their owner’s on-trend American Eagle wardrobe, the canine collection fea- tures must-haves such as slimming doggy jeggings, fur-friendly bikinis and statement accessories, creating head-to-tail looks that complement the unique style and personality of every pooch, big and small.

Following the announcement, consumers were urged to sign up on the waiting list for access to the dog apparel and receive a 20 percent discount. Further, for a certain period, American Eagle offered a $1 donation to the ASPCA with each order. American Eagle ultimately donated $100,000.

However, with April Fool’s Day just around the cor- ner, many people speculated that the new dog apparel line was merely an April Fool’s joke. This idea was supported by the fact that the company would not say

when the products would be available or how they would be priced. Further, the American Eagle spokes- person refused to answer when directly asked whether this promotion was an April Fool’s joke, citing a non- disclosure agreement.

When April Fool’s Day arrived, American Eagle admitted that American Beagle was an April Fool’s joke. But, since it was so popular among consumers, American Eagle decided to go ahead and produce the doggie fashion line. According to Michael Leedy, the chief marketing officer:

We originally felt that April Fool’s Day was the perfect opportunity for us to engage with our consumers in a fun, lighthearted way, all while supporting the ASPCA. Due to the tremendous positive response and excite- ment from our customers for the American Beagle Outfitters line, we decided to make a limited-edition collection for Holiday 2014.

This campaign created a fair amount of publicity in many news outlets, in no small part due to the April Fool’s aspect. The company also encouraged consum- ers to submit photos of their own dogs’ style with the hashtag #AEOStyle for a chance to be featured on the American Beagle website. This helped to build engage- ment with both the American Eagle and American Beagle brands.

Pet ownership has been increasing over the last two decades. According to the National Pet Owners Survey, from the American Pet Products Association (APPA), a record 82.5 million American households owned at least one pet in 2012, which amounts to 68 percent of the households. The IBISWorld report estimates the pet ownership rate to increase by 2.2 percent each year through at least 2018.

This increase in pet ownership is due to a number of factors. While there was still growth in the pet prod- ucts industry during the recession, now that there is a

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slow recovery taking place, consumers have more dis- posable income to care for pets. Refer to Table  A for examples of modification of consumption habits that dog owners made during a time of recession (2008) in order to provide the best care for their pets. More importantly, there is a cultural shift taking place such that consumers increasingly view dogs as members of the family, rather than companion animals or outdoor protectors. Many consumers now view themselves as “pet parents” and their dogs as “fur babies.” In a sur- vey of women, 90 percent of respondents indicated that they think of their pets as family members. According to a Consumer Products and Trends Survey, pet owner- ship is highest among empty-nesters, single profession- als, and couples without children. These groups have more disposable income due to not having (human) children, and many are looking to their dogs to fill the role of someone to care for and nurture. See Table  B for information on activities that pet owners engage in

Holiday Gifts r������PG�SFTQPOEFOUT�QVSDIBTF�HJGUT�GPS�UIFJS�QVQT�EVSJOH�UIF�

holidays r������TQFOE�VQ�UP����������TQFOE����m������POMZ����TQFOE�

more than $150 r������FYQFDU�UP�TQFOE�UIF�TBNF�BNPVOU�PO�HJGUT�GPS�UIFJS�EPH�BT�

they did last year

Trading Personal Services for Dog Services r������XPVME�DBODFM�UIFJS�USBWFM�QMBOT�JG�UIFZ�DPVME�OPU�BGGPSE�UP�QBZ�

to board their dog r������XPVME�SFHVMBSMZ�FBU�3BNFO�OPPEMFT�CFGPSF�UIFZ�XPVME�TLJNQ�

on their dogs’ high quality food r������XPVME�DPMPS�UIFJS�PXO�IBJS�JO�UIF�LJUDIFO�TJOL�JO�PSEFS�UP�LFFQ�

groomer appointments

Cutbacks Owners Are Willing to Make for Their Dog r��&BU�NPSF�NFBMT�BU�IPNF� ��� r��$BODFM�HZN�NFNCFSTIJQ� ��� r��$BODFM�DBCMF�PS�TBUFMMJUF�TFSWJDF� ��� r��$VSC�TQFOEJOH�PO�OFX�DMPUIFT� ��� r��1VTI�CBDL�QMBOT�GPS�IPNF�SFNPEFMJOH� ��� r��'PSHP�CVZJOH�OFX�DBS�PS�CVZ�B�MFTT�FYQFOTJWF�NPEFM� ���

Money-Saving Techniques r������MPPL�GPS�TBMFT�BOE�PS�DMJQ�DPVQPOT�CFGPSF�TIPQQJOH�GPS�QFU�

products r������BSF�QVSDIBTJOH�GFXFS�UPZT�USFBUT�BOE�PUIFS�OPOFTTFOUJBM�EPH�

supplies r������IBWF�CFHVO�CVZJOH�EPH�GPPE�JO�CVML

Source: American Kennel Club, 2008.

Dog Owners Cat Owners

Fed the pet human food 63% 41%

Taught it tricks 57 14

Let it sleep with you 55 75

(BWF�JU�IPMJEBZ�HJGUT 55 43

5PPL�JU�PO�WBDBUJPO 45 7

Signed a card with its name or photo 40 29

1VU�QIPUPT�PG�JU�PO�TPDJBM�NFEJB�TJUFT 32 23

Dressed it in outfits 18 5

Source: Consumer Reports, 2012.

TABLE APet Owners’ Behavior during Recession (2008)

with dogs and cats. According to Bob Vetere, president of the APPA:

Pets are acquiring a more significant role in the family, and with that, they are tending to be treated more in human terms. . . . People are pampering their pets more than ever .  .  . from interactive and innovative toys to dog walking, doggy day-care and pet-friendly hotels, restaurants and airlines.

American Eagle is not the first human apparel retailer to get into pet apparel. Americans are spending more than $1 billion on dog apparel and many retailers want a piece of the pie. High-end fashion retailers such as Ralph Lauren, Burberry, Juicy Couture, and Kiehl’s also offer dog apparel. There is even a Pet Fashion Week in New York City. According to Angie McKaig, CEO of PamperedPuppy.com:

As more designers come into the marketplace with really unique designs, they catch the eye of someone who might not have bought dog clothes before, people who say to me, “I think this stuff is dumb normally.”

A survey of visitors to the dog apparel and acces- sories site PamperedPuppy.com revealed that more than 60 percent of the visitors owned at least four pieces of clothing, four collars, and ten toys per dog. The APPA has been tracking spending on pets for two decades. In 2013 alone, Americans spent $55.7 billion on their pets. The APPA 2013/2014 National Pet Owners Survey projects spending on pets to increase in the coming years. The booming pet industry is presenting a growing

TABLE BSurvey of Consumer Reports Readers

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Part Two Cases 265

area of opportunity for American (B)Eagle Outfitters, as well as many other retailers. According to Mr. Vetere:

The pet industry continues to see unprecedented growth. The survey reveals pet owners are willing to spend money on their pets despite a downturn in the economy.

Discussion Questions

1. Given the unusual circumstances of American Eagle’s launch of its American Beagle line, do you feel that this April Fool’s prank was genuinely a prank-turned reality or do you think that it was actually a planned launch and American Eagle was testing the waters in a way that created consumer engagement and buzz in the marketplace? Or perhaps you have another opinion? Explain your answer.

2. As part of the launch, American Beagle allowed consumers to sign up for early sales before the dog apparel were released. a. What category of adopters discussed in the section

of Chapter 7 on diffusion of innovations would the consumers that signed up early fall into?

b. What are some possible reasons behind Ameri- can Beagle offering early sign-ups?

3. Chapter 3 describes four consumer types with respect to their responses to cause-related marketing. Describe how each of the following groups would have a different perspective on cause-related mar- keting and how they would react to the American Beagle campaign partnering with ASPCA. a. Skeptics b. Balancers c. Attribution-oriented consumers d. Socially concerned consumers

4. Referring to Question 3, to which of those groups of perspectives on cause-related marketing do you

personally belong? Why? Explain your answer thoroughly.

5. Chapter 4 discusses several generational groups. Which generational group do you think would serve as the best target market for American Beagle dog apparel? Would more than one be viable? Explain your answer.

6. Chapter 6 describes various stages in the household life cycle. Which of these stages would serve as the best target market for American Beagle dog apparel? Would more than one be viable? Explain your answer.

7. Refer to Table A, which shows results of a survey in the midst of the recession in 2008. Now that there has been some economic recovery, the results may differ. a. Perform a survey of modern-day pet owners ask-

ing the same questions. Compare and contrast your results with those from 2008.

b. Record the generation for your respondents and perform a cross-tab analysis based on those data.

c. Record household life cycle stage and perform a cross-tab analysis based on those data.

Source: S. Thompson, “What’s Next? Pup Tents in Bryant Park?,” Advertising Age, January 29, 2007, www.adage.com; P. Kennedy and M. McGarvey, “Animal-Companion Depictions in Women’s Magazine Advertising,” Journal of Business Research, 61, no. 5 (May 2008), pp. 424–30; “Current Economic Woes No Competition for Americans’ Dedication to Their Dogs,” American Kennel Club, December 8, 2008, www.akc.org; “American Eagle Outfitters’ Canine Collection, American Beagle Outfitters, Goes from April Fool’s Joke to Real-Life Dog Fashion Line,” PR Newswire, April 1, 2014, www.prnewswire.com; C. Brough, “Pet Businesses Will Prosper: Industry Trends for 2014 and Beyond,” Multi Briefs, 2014, www.multibriefs.com; D. Hirschhorn, “Holy Shih Tzu! Americans Spend $56 Billion on Pets Last Year,” Time Magazine, March 13, 2014, www.time.com; “How We Dote on Dogs and Cats,” Consumer Reports, October 2012, www.consumerreports. com; L. Lowe, “See American Eagles’ New Line for Dogs: ‘American Beagle Outfitters’,” Parade, March 26, 2014, www.parade.condenast.com; S. Maheshwari, “American Eagle Says It’s Starting a Dog Brand Called American Beagle Outfitters,” Buzzfeed, March 24, 2014, www.buzzfeed. com; S. Maheshwari, “American Eagle May Shine Brightest in the ‘Post- Apocalyptic Future of Teen Retail,’ Analysts Say,” Buzzfeed, February 21, 2014, www.buzzfeed.com; N. Ogunnaike, “This is Not a Joke: American Beagle, a Dog Clothing Line for American Eagle, to Launch in Fall,” Glamour Magazine, April 1, 2014, www.glamour.com; and “The Pet Services Industry Today,” Zoom Room, 2014, www.zoomroomonline.com.

2–7 TIDE GOES AFTER GREEN WITH NEW PODS

Green household cleaners are gaining popularity, despite an ongoing recession and decline in the over- all laundry category. In particular, the green laundry category has seen 50 percent annual growth, which, if sustained, would put sales in this category at $700 mil- lion by 2014. Despite a growing interest in the environ- ment, consumers often use too much detergent, which has numerous negative effects on the environment,

including faster equipment failure and the need to dis- pose of it, wasted detergent, and potential contamina- tion of the water supply.

P&G (Procter and Gamble) has responded to the problem of excess detergent usage per load with new Tide Pods liquid detergent tabs for the U.S. market. Premeasured tablets and sachets are popular in Europe but have not yet gained popularity in the United States.

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Consumers usually learn their laundry habits from their parents during their adolescence, and such habits are often difficult to change. However, P&G is spending $150 million in marketing for new Tide Pods with the goal of this innovation bringing sales growth back to a declining laundry category. Bob McDonald, P&G chairman-CEO, said, “I think you’re going to see [Tide Pods] will return market growth to the laundry cat- egory. P&G projects that liquid-filled tabs could ulti- mately take 30% share of the U.S. laundry market.”

However, Tide Pods are quite different from what American consumers have become accustomed to in their appearance, patented design, and usage. They have a swirl pattern of orange and blue in two chambers on top of a larger white chamber within a fishbowl-style container with a flip top lid. The film that packages the detergent is water soluble. Tide Pods are twice as con- centrated as Liquid Tide, but consumers do not have to worry about using too much detergent. Tide Pods use a reduced amount of water and packaging, as well as help prevent the problems associated with detergent overdosing.

In consumer tests, Tide Pods perform very well, with up to 40 percentage-point increases from pre- to post- use satisfaction. Consumers feel that Tide Pods sim- plify laundry by allowing consumers to spend as little time and effort as possible, while providing excellent cleansing and stain-fighting qualities. However, some consumers dislike Tide Pods, especially those who pre- fer to mix their own solutions of detergent, fabric soft- ener, and/or oxy-cleaners. According to Alex Keith, VP of North American Laundry at P&G:

There are always going to be doers of laundry who want to be that master chemist. But we know over 70% of women out there are asking for a solution that pro- vides excellent results with minimal time and effort. So some of them are chemists because they want to be, and some of them are chemists because they think they have to be.

In addition to quantitative tests, qualitative tests of Tide Pods are also showing promise. In product tests, women who use Tide Pods show very positive reac- tions, and some even ask for free samples. Tide Pods will likely attract green consumers as well as consum- ers who were previously using Tide liquid and powder detergents. This is because Tide Pods possess envi- ronmentally friendly qualities while carrying the Tide brand name, which is known for strength and quality.

Understanding the traits of green laundry users is important in developing marketing strategies for Tide Pods. One study found the following demographic traits of mass-market green household cleaner brands:

�r� Families with children. �r� Those who work full time. �r� Hispanics and African Americans.

Discussion Questions

1. Table 3–1 describes a green segmentation scheme of consumers that includes psychographic and demographic information. Choose four of the eight segments and describe the likely reaction that each segment will have to the introduction of Tide Pods.

2. Chapter 7 discusses diffusion of innovations. a. Identify whether Tide Pods is a continuous,

dynamically continuous, or discontinuous innovation.

b. Then, evaluate Tide Pods as an innovation based on Table 7–2 (use college students as the group of consumers for this example).

3. Consumer tests show that some people are reluctant to use premeasured laundry tablets because they learned from their parents to do laundry differently. a. How does this apprehensive attitude toward Tide

Pods relate to the consumer socialization process discussed in Chapter 6?

b. Recall and discuss examples of how your family has influenced your own consumer behaviors.

4. Chapter 7 discusses influencers. a. Who are likely to be the influencers for Tide

Pods? b. How can P&G best target and utilize them?

5. How could P&G build buzz or WOM for Tide Pods? 6. Using the demographic characteristics of green

cleaners listed in the case, develop a marketing campaign including (a) a core theme, (b) body copy, (c) key visual aspects, and (d) media considerations for one or more target groups.

Source: “The Proctor & Gamble Company,” International Directory of Company Histories, vol. 67 (New York, NY: Saint James Press, 2005); Green Household Cleaning Products in the U.S. (Rockville, MD: Packaged Facts, June 2010); E. Byron, “The Great American Soap Overdose,” The Wall Street Journal, January 25, 2010, http://online.wsj.com; J. Neff, “P&G Reinvents Laundry with $150 Million Tide Pods Launch,” Advertising Age, April 26, 2011, http://adage.com; “Tide Is Betting $150 Million That You’ll Like Laundry Pods,” GoGreenZine.com, April 27, 2011, http://gogreenezine.com; J. Neff, “Can P&G Laundry Pod Breathe Life into the Category?,” Advertising Age, May 2, 2011, p. 5; M. Murphy, “Church & Dwight CEO Praises, Then Zings, Competitor P&G,” FoxBusiness.com, May 12, 2011, www.foxbusiness. com; and “P&G Delays Tide Pods to ’12, Too Much Demand,” Business Courier, May 27, 2011, http://assets.bizjournals.com.

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The Hispanic market is the fastest-growing ethnic segment and bears considerable economic importance. It is being heralded as the last true growth opportunity. From 2010 to 2050, the Hispanic population in the United States is expected to grow by 167 percent, compared to 42 percent for the total population. For many consumer packaged goods, Hispanics are expected to be the sole driver of sales growth. According to the vice president of advertising and sales of Univision, all of the growth in beverage sales will come from Hispanics and the growth in automotive sales for Hispanics is expected to be double that of non- Hispanics. According to Monica Gill, senior vice president of public affairs and government relations at Nielson:

Latinos are emerging as a powerhouse of economic influence, presenting marketers an increasingly influ- ential consumer group that can translate into business impact. The key is to recognize that today’s modern Latino is “ambicultural” with the ability to seamlessly pivot between English and Spanish languages and to embrace two distinct cultures. Understanding how to connect with this unique consumer profile will be key to successful engagement.

Each year, Advertising Age publishes its Hispanic Fact Pack, which provides valuable information about the sought-after demographic to marketers in many industries. The following five tables provide insights from the report as they relate to Hispanic use of social media, mobile marketing, and online purchasing.

HISPANICS AND SOCIAL NETWORKING Tables  A and B provide information about Hispanics’ use of various social networking websites and how those websites affect the segment’s attitudes. Table  B details additional information about Hispanic attitudes relative to those of non-Hispanics.

HISPANICS AND MOBILE MARKETING Tables  C and D display information about the mobile platform preferences of Hispanics and the activities in which this segment engages. The activities in Table D are further broken down into generational groups.

2–8 HISPANIC MARKETING IN ONLINE AND MOBILE FORMATS

Hispanic Composition

Rank Properties Unique Visitors in

Thousands Percent Reach (%) Percent (%) Index

1 Facebook 31,463 82.1 15.9 104

2 Twitter 18,892 49.3 16.3 106

3 LinkedIn 8,577 22.4 12.5 81

4 1JOUFSFTU 7,394 19.3 12.6 82

5 Tumblr 6,480 16.9 16.5 108

6 AddThis 3,476 9.1 14.4 94

7 :BIPP�1SPGJMF 2,475 6.5 14.7 96

8 Goodreads 2,149 5.6 13.7 89

9 Quizlet 1,813 4.7 17.6 115

10 Ask.fm 1,504 3.9 27.9 182

Total Internet: Hispanic all 38,332 100 15.3 100

4PDJBM�NFEJB�TPDJBM� networking

34,429 89.8 15.5 101

Note: Percent reach here is the percent of all Hispanic Internet users (38.3 million). Multiplatform data include both desktop and mobile platforms and are inclusive of website, video, and app content. Source: ComScore, May 2014, http://comscore.com.

TABLE ASocial Networking: Largest Multiplatform Web Properties among U.S. Hispanics by Unique Visitors

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People Who Agree

Percent Hispanic

(%)

Percent Non-

Hispanic (%)

Percent of All (%)

I am more likely to purchase QSPEVDUT�*�TFF�BEWFSUJTFE�PO�B� TPDJBM�TIBSJOH�OFUXPSLJOH�XFCTJUF�

10.9 8.3 8.6

I am more likely to purchase products I see used or recommended by friends on social TIBSJOH�OFUXPSLJOH�XFCTJUFT�

18.3 17.8 17.8

*�MJLF�UP�GPMMPX�NZ�GBWPSJUF�CSBOE� PS�DPNQBOJFT�PO�TPDJBM�TIBSJOH� networking websites.

23.5 20.2 20.6

4PDJBM�TIBSJOH�OFUXPSLJOH�XFCTJUFT� are a way for me to tell people about companies and products that I like.

23.9 20.2 20.8

*�TPNFUJNFT�QPTU�SBUJOHT�PS�SFWJFXT� online for other consumers to read.

18.2 17.8 17.9

I pay attention to ratings and SFWJFXT�QPTUFE�POMJOF�CZ�PUIFS� consumers.

27.1 29.3 28.9

I often click on links or items posted by other people on social TIBSJOH�OFUXPSLJOH�XFCTJUFT�

29.0 33.8 33.1

*�PGUFO�BDDFTT�TPDJBM�TIBSJOH� networking websites from EJGGFSFOU�EFWJDFT�

29.8 33.1 32.6

TABLE BAttitudes Toward Social Media

Smartphones

Rank Platform Share (%) Audience

1 Google (Android) 55.9 16,995

2 Apple (iOS) 38.1 11,582

3 Microsoft (Windows) 3.2 986

4 Blackberry 2.5 773

5 Symbian 0.1 38

6 Other 0.1 20

Total 100.0 30,405

Tablets

Rank Platform Share (%) Audience

1 Google (Android) 56.4 8,414

2 Apple (iOS) 47.0 7,011

3 Microsoft (Windows) 2.8 423

4 Blackberry 0.7 101

5 )1 0.6 87

Total 100.0 14,925

Note: Share based on three-month averages ended May 2014. Audience is in thousands. Source: ComScore, 2014, http://comscore.com.

TABLE CMobile Platform Share among Hispanics

Percent Who Used This Function in the Last Week (%)

Category Hispanic Non-

Hispanic Hispanic

Millennials Non-Hispanic

Millennials Hispanic 351 Non-

Hispanic 351 All Users

Camera 51.5 51.6 54.2 53.4 48.4 50.5 51.5

Download app 66.4 61.3 66.8 62.1 65.9 60.8 62.1

&�NBJM 79.4 82.2 78.7 83.3 80.1 81.6 81.8

(14 41.3 38.8 42.5 43.2 40.0 36.2 39.2

*.�DIBU 38.1 23.1 39.4 24.3 36.6 22.4 25.4

Listen to music 37.9 30.2 41.4 33.9 34.0 28.0 31.4

1MBZ�HBNFT 52.0 50.1 54.5 50.8 49.1 49.8 50.4

3FBE�OFXTQBQFST�QFSJPEJDBMT 17.3 16.6 19.0 17.5 15.3 16.0 16.7

4PDJBM�OFUXPSL�CMPH 74.1 69.3 77.1 73.2 70.8 67.0 70.0

Talk 91.6 92.0 91.4 92.0 91.8 92.0 91.9

Messaging 93.4 91.5 93.8 90.6 93.0 92.1 91.8

Visit websites 91.6 88.0 91.0 89.0 92.2 87.5 88.6

8BUDI�EPXOMPBE�TUSFBN�WJEFP 52.2 37.2 58.0 42.6 45.7 34.1 39.5

Source: Experian Marketing Services, 2014, http://experian.com/marketing-services. Data based on Experian Marketing Services’ Simmons Connect Study, Fall 2013, for the dates of October 2013 through January 2014.

TABLE DSmartphone User Activities in the Last Seven Days

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Part Two Cases 269

HISPANICS AND ONLINE PURCHASES Finally, Table  E illustrates the purchase behavior of Hispanic consumers relative to that of all American adults. This purchase behavior is further subdivided into the particular type of device.

Discussion Questions

1. What are the opportunities and challenges facing marketers that are targeting the lucrative Hispanic market through online and mobile marketing?

2. Based on the information in Tables A, B, C, D, and E, develop an overall marketing strategy for target- ing the Hispanic market.

3. Based on the information in Tables A, B, C, D, and E, develop an advertising campaign including (i) overall positioning strategy and core theme, (ii) key advertising copy points, (iii) visual elements, and (iv) key media outlets.

4. Based on the information in Tables A, B, C, D, and E, develop training materials for entry-level mar- keting professionals (specifically those working for a company whose target segment is or includes Hispanic consumers) to enhance their interactions with consumers and to enhance their selection of media outlets when communicating with consumers.

Source: G. Llopis, “5 Steps to Capturing the Hispanic Market—The Last True Growth Opportunity,” Forbes, September 3, 2013, www.forbes.com; and Crain Communications, Inc., “Advertising Age, 11th Annual Hispanic Fact Pack,” Advertising Age, July 28, 2014.

Percent Who Have Purchased Using a . . . (%)

Personal Computer Tablet Cell Phone

Category Hispanic All Adults Hispanic All Adults Hispanic All Adults

"QQBSFM�BDDFTTPSJFT 54.0 59.4 52.3 47.4 36.8 29.4

&MFDUSPOJDT 50.9 51.6 51.8 41.5 31.5 20.8

Food 22.3 22.7 32.7 23.1 15.1 11.8

4UPDLT�CPOET�NVUVBM�GVOET 12.9 14.0 19.7 15.1 6.5 6.2

5JDLFUT�UP�NPWJFT�FWFOUT 45.5 45.1 40.8 34.1 19.4 15.4

5PZT�HBNFT 38.1 33.4 43.7 34.9 17.6 11.7

5SBWFM�TFSWJDFT�SFTFSWBUJPOT 52.4 58.5 40.2 32.6 17.2 10.7

Auction items 24.0 24.5 26.9 25.6 21.2 13.9

Charitable donations 17.4 16.7 18.5 16.3 16.8 11.0

Books 41.9 43.0 43.7 45.8 14.6 13.9

Music 36.3 37.5 48.0 41.6 23.8 17.0

Source: Experian Marketing Services, 2014, http://experian.com/marketing-services. Data based on Experian Marketing Services’ Simmons New Media Study, for the dates of January 26, 2014, through February 2, 2014. Base of device owners for each device (e.g., 54 percent of Hispanics who own a computer have purchased apparel/accessories using their computer vs. 59 percent of all computer owners).

TABLE EPurchases via Device by Category:

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270

INTERNAL INFLUENCESIII

part

Self-Concept and

Lifestyle

Expe riences

and Acq uisitions

External Influences

Culture Subculture

Demographics Social Status

Reference Groups Family

Marketing Activities

Experiences and Acquisitions

Internal Influences

Perception Learning Memory Motives

Personality Emotions Attitudes

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271

The highlighted areas of our model, internal

influences and self-concept and lifestyle, are

the focal points of this part of the text. Our

attention shifts from forces that are basically

outside the individual to processes that occur

primarily within the individual.

Part III begins in Chapter 8 with a

discussion of perception, the process by

which individuals access and assign mean-

ing to environmental stimuli. In Chapter 9, we

consider learning and memory. Chapter 10

covers motivation, personality, and emotion.

Chapter 11 focuses on the critical concept of

attitudes and the various ways attitudes are

formed and changed.

As a result of the interaction of the external

influences described in the previous part of

the text and the internal processes examined

in this part, individuals form self-concepts and

desired lifestyles, as discussed in Chapter 12.

These are the hub of our model of consumer

behavior. Self-concept refers to the way indi-

viduals think and feel about themselves as

well as how they would like to think and feel

about themselves. Their actual and desired

lifestyles are the way they translate their self-

concepts into daily behaviors, including con-

sumption behaviors.

Needs

Desires

Decision Process

Situations

Problem Recognition

Information Search

Alternative Evaluation

and Selection

Outlet Selection and Purchase

Postpurchase Processes

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272

8 Perception chapter

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273

Describe the nature of perception and its rela- tionship to consumer memory and decisions.

Explain exposure, the types of exposure, and the resulting marketing implications.

Explain attention, the factors that affect it, and the resulting marketing implications.

LO1

LO2

LO3

Explain interpretation, the factors that affect it, and the resulting marketing implications.

Discuss how perception can enhance strate- gies for retailing, branding, advertising, and packaging.

LO4

LO5

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

You may have noticed that brands are showing up more and more in your favorite TV shows, movies, music videos, and video games. This is not by accident. The technique is called product placement, and spending on product placements in the United States is $4  billion and growing at an annualized rate of over 30 percent. There is now a whole area of the media and PR business devoted to matching brands and shows to hit the right demograph- ics with the right branded message. One com- pany that has devoted substantial resources to product placement is General Motors through its Chevy brand. Examples include:1

�r� Glee. This break-out hit TV show has an audience that trends younger female. Chevy aired one episode where Mr. Schuester, a teacher on the show, is shown driving a yellow convertible Corvette. Such place- ments will continue according to Chevy, who is also a sponsor and advertiser for the show.

�r� Men of a Certain Age. This show targets older men and centers heavily around Chevy since one of the main characters helps run a Chevrolet dealership and another main character also works there. This goes well beyond typical product placement because so much of the show happens at the

dealership. This may account for the fact that their placements here generate 75  percent more recall and 65 percent higher purchase consideration than other placement venues. However, GM also notes that it is much more work intensive than other placements, with folks from GM, the show, and the ad agency all playing a role.

�r� Hawaii Five-O. This TV show hits a broad demographic and Chevy brands are well integrated into the show. The main char- acter, Steve McGarrett, drives a Chevy Silverado and his partner, Danny “Danno” Williams, drives a Camaro. The automo- biles are featured extensively in the epi- sodes, as the detectives move around the Island fighting crime.

There are a number of reasons for the increase in product placements. A major factor is the rise of the digital video recorder (DVR), which allows consumers to avoid advertising by fast-forwarding through it. At their best, product placements put brands into the natural flow of the storyline and thus create positive branded messages that are virtually impossible for con- sumers to avoid. According to Nielson, product placements work best when there is a good “fit” between the brand and the show (think sports cars and crime fighting on Hawaii Five-O), when

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Part Three Internal Influences274

the characters praise the features of the brand (dia- logue of this sort happens often on Men of a Certain Age, but notice that a character’s use of the brand

is an implied endorsement), and when an ad for the product appears during the commercial break (Chevy does this as well).

Perception is a process that begins with consumer exposure and attention to marketing stimuli and ends with consumer interpretation. As the opening examples suggest, exposure and attention are highly selective—meaning that consumers process only a small fraction of the available information. And as we will see, interpretation can be a highly subjective process. Thus reality and consumer perceptions of that reality are often quite different. Marketers wishing to communicate their brand message effectively to consumers must understand the nature of perception and the many factors influencing it.

THE NATURE OF PERCEPTION Information processing is a series of activities by which stimuli are perceived, trans- formed into information, and stored. Figure 8–1 illustrates a useful information-processing model having four major steps or stages: exposure, attention, interpretation, and memory. The first three of these constitute perception.

LO1

P er

ce p

tio n

Exposure

Deliberate

Attention

MemoryShort-term Long-term

Active problem solving

Stored experiences, values, decisions, rules, feelings

Interpretation

Random

Low- involvement

Low- involvement

High- involvement

High- involvement

Purchase and consumption decisions

8-1 Information Processing for Consumer Decision MakingFIGURE

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Chapter Eight Perception 275

Exposure occurs when a stimulus such as a banner ad comes within range of a person’s sensory receptor nerves—vision, in this example. Attention occurs when the stimulus (banner ad) is “seen” (the receptor nerves pass the sensations on to the brain for process- ing). Interpretation is the assignment of meaning to the received sensations. Memory is the short-term use of the meaning for immediate decision making or the longer-term retention of the meaning.

Figure 8–1 and the above discussion suggest a linear flow from exposure to memory. However, these processes occur virtually simultaneously and are clearly interactive. For example, a person’s memory influences the information he or she is exposed to and attends to and the interpretations the person assigns to that information. At the same time, memory itself is being shaped by the information it is receiving.

Both perception and memory are extremely selective. Of the massive amount of infor- mation available, individuals can be exposed and attend to only a limited amount. The meaning assigned to a stimulus is as much or more a function of the individual as it is the stimulus itself. Further, much of the interpreted information will not be available to active memory when the individual makes a purchase decision.

This selectivity, sometimes referred to as perceptual defenses, means that individu- als are not passive recipients of marketing messages. Rather, consumers largely deter- mine the messages they will encounter and notice as well as the meaning they will assign them. Clearly, the marketing manager faces a challenging task when communicating with consumers.

EXPOSURE Exposure occurs when a stimulus is placed within a person’s relevant environment and comes within range of his or her sensory receptor nerves. Exposure provides consumers with the opportunity to pay attention to available information but in no way guarantees it. For example, have you ever been watching television and realized that you were not paying attention to the commercials being aired? In this case, exposure occurred, but the commercials will probably have little influence due to your lack of attention.

An individual can be exposed to only a minuscule fraction of the available stimuli. There are now hundreds of television channels, thousands of radio stations, and innumer- able magazines and websites. In-store environments are also cluttered with tens of thou- sands of individual items and in-store advertising. Even in today’s multitasking society there are limits.2

So what determines exposure? Is it a random process, or is it purposeful? Most of the stimuli to which individuals are exposed are “self-selected.” That is, people deliberately seek out exposure to certain stimuli and avoid others. Generally, people seek information that they think will help them achieve their goals. An individual’s goals and the types of information needed to achieve those goals are a function of that person’s existing and desired lifestyle and such short-term motives as hunger or curiosity.

Of course, people are also exposed to a large number of stimuli on a more or less ran- dom basis during their daily activities. While driving, they may hear commercials, see billboards and display ads, and so on that they did not purposefully seek out.

Selective Exposure The highly selective nature of consumer exposure is a major concern for marketers because failure to gain exposure results in lost communication and sales opportunities. For exam- ple, consumers are highly selective in the way they shop once they enter a store. One study found that only 21 percent of U.S. shoppers visited each aisle in the store. The remainder

LO2

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Part Three Internal Influences276

avoided exposure to products in aisles they didn’t shop. Consumers in France, Belgium, and Holland are also highly selective shoppers, while consumers in Brazil and the United Kingdom are more likely to shop all the aisles.3

Media exposure is also of great concern to marketers. Media are where marketers put their commercial messages and include television, radio, magazines, direct mail, bill- boards, and the Internet. The impact of the active, self-selecting nature of media expo- sure can be seen in the zipping, zapping, and muting of television commercials. Zipping occurs when one fast-forwards through a commercial on a prerecorded program. Zapping involves switching channels when a commercial appears. Muting is turning the sound off during commercial breaks. Zipping, zapping, and muting are simply mechanical ways for consumers to selectively avoid exposure to advertising messages, often referred to as ad avoidance.

The nearly universal presence of remote controls makes zipping, zapping, and muting very simple. Indeed, existing and emerging technologies give consumers more and more control over exposure to television commercials. One such technology is the digital video recorder (DVR) offered by companies such as TiVo. Consumer Insight 8–1 explores how the DVR is reshaping the media landscape and how marketers are responding.

Avoidance of commercials is a global phenomenon that extends beyond TV to include radio, the Internet, magazines, and newspapers. Ad avoidance depends on numerous psy- chological and demographic factors. A study by Initiative examined ad avoidance glob- ally and across various media. The study found that ad avoidance is increased by lifestyle (busy and hectic lifestyle), social class (higher social class), and demographics (men and younger consumers).4

In addition, ad avoidance appears to increase as advertising clutter increases and as consumer attitudes toward advertising become more negative. Consumers tend to dislike (and actively avoid) advertising when it is perceived to be boring, uninformative, and intrusive.5 In China, for example, where the novelty of advertising and product variety is wearing off, ad avoidance is on the rise and feelings about advertising are becoming more negative.6 In online settings, marketers have devised “pop-up” ads that are difficult or impossible for viewers to eliminate. At the extreme, movie theaters now air ads prior to the movie because the theater provides a captive audience and enhances ad recall beyond that of TV.7 Such techniques should be used with care, however, because consumers may react very negatively to such forced exposure.8 In fact, one study found that many online users are so turned off by pop-up ads that they use software or settings to avoid them completely!9

As seen in the opening example, in response to ad avoidance, marketers increas- ingly seek to gain exposure by placing their brands within entertainment media, such as in movies and television programs, in exchange for payment or promotional or other consideration. Such product placement provides exposure that consumers don’t try to avoid—it shows how and when to use the product and enhances the product’s image. Product placement agents read scripts and meet with set designers to identify optimal placement opportunities.10 While product placement is commonplace in the United States, it is not universally accepted. In the United Kingdom, for example, product placement was illegal until just recently. Moreover, while product placements are now allowed, they must be accompanied by a “P” logo at the beginning, end, and after ad breaks, when there are “paid-for-references.” The logic behind the disclosure is that it will alert consumers that the placements are essentially advertisements.11 What effect do you think such disclosure will have on product placement effectiveness? Do you believe that such a requirement should be enforced in the United States? What are the ethical issues involved?

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277

CONSUMER INSIGHT 8-1 Living in a DVR World

DVRs allow for digital recording of programs and “time- shifted” viewing. Currently some 40 percent of U.S. households have a DVR and that number is expected to grow.12 A major concern for marketers is increased ad avoidance. DVR viewers of prerecorded content skip ads at more than twice the rate of those who view the same content live. And 50 to 90 percent of DVR users fast-forward through at least some commercials.13

Other research is more optimistic. Several studies point out that most viewers who zip through DVR com- mercials still “notice” the ads and, in fact, will stop and view commercials they are interested in.14 And Inner- scope Research recently found that DVR users who fast-forwarded through TV ads were more “engaged” with the ads than those who did not.15

Clearly, marketers need to think beyond traditional models as DVR technology transforms how consumers watch TV. One strategy being tested is compressing ads so consumers see a shortened version of the ad, which plays in real time during fast-forwarding.16 With such a strategy, research suggests that the key is simplicity and having key brand information in the center of the screen, where it is most likely to be noticed.17 Other strategies now in use include the following:18

�t� Still-frame ads. This strategy keeps the visual relatively static for 30 seconds, giving marketers a chance to present their package, brand, and logo and have it visible even during fast-forwarding. Brotherhood, a show set in Providence, Rhode Island, used the cityscape focal visual. When fast-forwarded, the clouds move and the audio is made to be quite dramatic.

�t� Hybrid ads. Hybrid ads mimic the show the audi- ence is watching. These tie-ins to shows seem to be particularly effective at staving off ad skipping. Guinness used a hybrid to mimic Mythbusters, the show in which the ad aired. This ad yielded 41 percent higher recall than a regular Guinness ad!

�t� Interactive ads. TiVo recently added an interactive “tag” icon that appears while the ad is playing,

which takes consumers to more detailed brand information and additional ads. Sony has created ads with multiple endings that viewers select with their remote. Interactivity provides marketers with more freedom in a DVR context to deliver relevant brand information and content to consumers who want it.

�t� Dynamic ad placement. DirecTV is now using technology that allows “seamless insertion of household addressable ads into both live and recorded video content from the DVR hard drive.” Such micro-targeting can offer consumers ads that are much more relevant to their needs and goals, a critical factor in attitudes toward advertising in general and attention to specific ads in particular.19

Beyond such adaptations, networks are also eyeing alternative delivery platforms that would not involve the DVR. The goal would be to have such platforms replace the DVR. CBS did research that showed that many consumers would be willing to accept commercials in return for not having to pay $10 per month for their DVR. This would appear to be dependent on the availability of “anytime” viewing of popular shows and that is just the type of strategy being examined. According to a CBS representative:

I call DVRs a transitional technology. The DVR will be supplanted by streaming and VOD [video on demand] that will give the consumer the ability to watch the shows any way they want to and to do so in a way that is much more advertiser-friendly.

Critical Thinking Questions 1. Do you think that later adopters of DVRs will be less

interested in “ad avoidance” capabilities? Will this change as they “learn” to use their DVR?

2. Can you think of other strategies beyond those dis- cussed that could be used to reduce consumers’ tendency to skip ads even with a DVR?

3. Do you agree with CBS that the DVR is a transitional technology?

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Part Three Internal Influences278

Movies and television are just some of the avenues being used. Marketers increas- ingly seek exposure by placing their messages in ever more unique media, such as on the side of trucks and taxis, in airplanes, at events, and in video games. Outdoor and video games are major growth areas for advertisers in this regard. Outdoor is branch- ing out in many new ways beyond traditional billboards. Adidas created an outdoor display to launch a new store in Amsterdam that mimicked a shoe box, except that it was 6 feet tall, 6 feet deep, and 24 feet wide! And for the World Cup in Germany, Adidas used a 215-foot-long cutout image of Oliver Kahn (a goalkeeper for one of the German teams) diving for a soccer ball that spanned across the autobahn (see Illustra- tion 8–1).20 Such outdoor efforts provide eye-catching visuals that are virtually impos- sible to ignore.

Video game advertising is perhaps the fastest-growing alternative media. It allows for exposure to younger males, who tend to be the gamers and avoid traditional media. As one expert notes:

Advertisers have seen that young males, specifically 18- to 24-year-olds, are increasingly turn- ing their backs on TV and multiplexes in favor of video games and the Internet. Making the area [ads in video games] even more attractive [is] a recent study from Nielson and game publisher Activision [which] shows that gamers not only accept brands embedded into games but can be persuaded to buy the products if the integration is relevant and authentic.21

As a result, the Yankee Group estimates that while ad spending in some media is grow- ing in the 4 to 5 percent range (TV and magazines) and some is even shrinking (newspa- pers), ad spending in video games is growing by over 30 percent per year and is nearing the $1 billion mark.22

Marketers increas-

ingly use non-

traditional media

approaches to gain

exposure for their

messages.

ILLUSTRATION 8-1

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Chapter Eight Perception 279

Voluntary Exposure Although consumers often avoid commercials and other marketing stimuli, sometimes they actively seek them out for various reasons, including purchase goals, entertainment, and information. As we saw earlier, consumers actively seek out aisles containing items they want to buy.23 And many viewers look forward to the commercials developed for the Super Bowl. Perhaps more impressive is the positive response consumers have to infomercials—program-length television commercials with a toll-free number and/or web address through which to order or request additional information. These positively affect brand attitudes and purchase intentions.24 And they are more likely to be viewed by early adopters and opinion leaders.25 This latter effect implicates a critical indirect influence of infomercials through word-of-mouth communications. It also highlights the role that information and relevance play in driving voluntary exposure to marketing messages.

Exposure to online messages and advertising can also be voluntary or involuntary. As we saw earlier, exposure to banner ads and pop-ups is generally involuntary, as consumers encounter them while seeking other information or entertainment. However, a consumer who clicks on the banner or pop-up (click through) is now voluntarily being exposed to the target site and its marketing message.

Consumers also voluntarily expose themselves to marketing messages by deliberately visiting firms’ homepages and other marketer sites. For example, if you are buying a new car, you might visit manufacturer sites such as www.toyota.com and independent sites such as www.edmunds.com. You might also register online to receive coupons or regular updates or newsletters about a company’s products and services. The voluntary and self- selected nature of such online offerings, where consumers “opt in” to receive e-mail-based promotions, is often referred to as permission-based marketing.26 Consumers control the messages they are exposed to and, consequently, are more receptive and responsive to those messages. Permission-based marketing concepts are also being used to enhance the effectiveness of mobile marketing on cell phones.27 Finally, note that online viral and buzz marketing (Chapter 7) rely heavily on consumer voluntary exposure and distribution of marketing messages.

ATTENTION Attention occurs when the stimulus activates one or more sensory receptor nerves, and the resulting sensations go to the brain for processing. Attention requires consumers to allocate limited mental resources toward the processing of incoming stimuli, such as pack- ages seen on store shelves or banner ads on the web. As we discussed earlier, the market- ing environment is highly cluttered and consumers are constantly bombarded by thousands of times more stimuli than they can process. Therefore, consumer attention is selective. As one advertising agency director stated,

Every year it gets more and more important to stand out and be noticed, to be loud but simple, and to say something relevant and compelling because there is less and less opportunity to talk to consumers and you can’t waste any chances.28

The ad in Illustration 8–2 is very likely to attract attention. What factors determine and influence attention? Perhaps you are in the market for a DVD player. Once in the DVD

LO3

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Part Three Internal Influences280

aisle, you focus your attention on the various brands to make a purchase. However, a loud announcement briefly pulls your attention away from the display. Later, you lose concen- tration and begin focusing on nearby products you hadn’t noticed before. These products were available all the time but were not processed until a deliberate effort was made to do so. As this example demonstrates, attention always occurs within the context of a situation. The same individual may devote different levels of attention to the same stimulus in differ- ent situations. Attention is determined by these three factors: the stimulus, the individual, and the situation.

Stimulus Factors Stimulus factors are physical characteristics of the stimulus itself. Stimulus characteris- tics such as ad size and color are under the marketer’s control and can attract attention independent of individual or situational characteristics. The attention garnered by stimulus factors tends to be relatively automatic. So even if you think you are not interested in a car (individual characteristic), a large and colorful car ad (stimulus characteristics) may be hard to ignore.

Size Larger stimuli are more likely to be noticed than smaller ones. This is certainly the case on store shelves where shelf space is at a premium and more shelf space can translate into greater attention and sales.29 As a consequence, consumer-products compa- nies often pay what are called slotting allowances to retailers to secure shelf space. The Federal Trade Commission estimates that companies spend $9 billion annually on such slotting fees.30

This ad uses stimu-

lus factors including

color and interest-

ingness to capture

attention.

ILLUSTRATION 8-2

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Chapter Eight Perception 281

Size also affects attention to advertising. Figure  8–2 indicates the relative attention- attracting ability of various sizes of magazine ads, with larger ads garnering more attention than smaller ads. Larger banner ads also attract more attention, which might help explain why banner and online ads continue to increase in size.31 And larger Yellow Pages ads get more attention and have higher call rates. In one study, consumers seeking a business from the Yel- low Pages attended to more than 90 percent of the quarter-page ads but only a quarter of the small listings.32

Intensity The intensity (e.g., loudness, brightness, length) of a stimulus can increase attention. For instance, the longer a scene in an advertisement is held on-screen, the more likely it is to be noticed and recalled.33 In online contexts, one aspect of intensity is intrusiveness, or the degree to which one is forced to see or interact with a banner ad or pop-up in order to see the desired content. A study in which the banner ad was the only thing on the screen for a brief period before the consumer was connected to the sought-after site produced over three times the level of noticing the ad compared with a standard banner format, and almost 25 times the click-through rate.34 As we saw earlier, however, caution is advised in using intrusiveness because of negative attitudes and ad avoidance.

Repetition is related to intensity. It is the number of times an individual is exposed to a given stimulus, such as an ad or brand logo, over time. Attention generally decreases across repeated exposures, particularly when those exposures occur in a short period of time (intensity is high). For example, attention to multiple inserts of the same print ad within the same magazine issue has been found to drop by 50 percent from the first to the third exposure.35

A ve

ra g

e n o

te d

s co

re s

Two-page ads

One-page ads

Three+ page ads

Fractional ads

70

60

50

40

30

20

10

0

40

51

58 62

8-2The Impact of Size on Advertising Readership FIGURE

Source: © D. L. Mothersbaugh, G. R. Franke, and B. A. Huhmann 2015.

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Part Three Internal Influences282

However, the decrease in overall attention caused by repetition needs to be interpreted in view of two factors. First, consumers may shift the focus of their attention from one part of the ad to another across repetitions. Have you ever noticed something new about an ad after you’ve seen it a couple of times? This is a result of a shift in your attention as you become more familiar with the ad. One study suggests that consumers shift their attention away from the brand component of the ad (name, logo, etc.) and toward the text compo- nent.36 This attention reallocation is important because many of a brand’s features can be communicated through the ad’s text, but convincing consumers to read is difficult. The second factor is that repetition often increases recall.37 As we will discuss in Chapter  9, subsequent exposures, while generating less attention, appear to reinforce the learning that occurred on the first exposure.

Attractive Visuals Individuals tend to be attracted to pleasant stimuli and repelled by unpleasant stimuli. This explains the ability of attractive visuals, such as mountain scenes and attractive models, to draw consumer attention to an advertisement. In fact, an ad’s visual or pictorial component can have a strong influence on attention independent of other characteristics. One study found that greater graphics content increased how much time consumers spent at an online retailer’s website.38 Another study of over 1,300 print ads found that the ad’s picture garnered more attention than any other ad element (e.g., brand and text elements) regardless of its size. This picture superiority effect on attention demonstrates the importance of an ad’s visual component and suggests why the heavy use of pictures in contemporary print advertising may be justified. However, since attention is limited, drawing attention to one element of an ad can detract from others. For example, increasing picture size in a print ad reduces the amount of attention con- sumers pay to the brand.39

Any factor that draws attention to itself and away from the brand and its selling points has to be used with caution. An ad’s visual component represents one such factor. Attrac- tive models represent another. One company found that putting a provocatively dressed model in its print ad drew attention away from their product and toward the model. As a consequence, consumer recall of their brand name 72 hours after exposure to the ad was reduced by 27 percent!40

Color and Movement Both color and movement serve to attract attention, with brightly colored and moving items being more noticeable. Certain colors and color charac- teristics create feelings of excitement and arousal, which are related to attention. Brighter colors are more arousing than dull. And warm colors, such as reds and yellows, are more arousing than cool colors, such as blues and grays.41

In-store, a brightly colored package or display is more apt to receive attention. Retail- ers interested in encouraging impulse purchases may utilize red in their displays given its ability to attract attention and generate feelings of excitement.42 Also, point-of-purchase displays with moving parts and signage are more likely to draw attention and increase sales. Thus, companies like Eddie Bauer are choosing dynamic digital signage over static displays.43

Color and movement are also important in advertising. Thus, banner ads with dynamic animation attract more attention than similar ads without dynamic animation.44 In a study of Yellow Pages advertising, color ads were attended to sooner, more frequently, and lon- ger than noncolor ads.45 Figure 8–3 shows the relative attention-attracting ability of black- and-white and of four-color magazine ads of different sizes.

Illustration 8–3 shows two Konica Copier ads that are identical except for the use of color. The ad with the color was noticed by significantly more readers than was the black-and-white ad.

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Position Position refers to the placement of an object in physical space or time. In retail stores, items that are easy to find or that stand out are more likely to attract attention. End caps and kiosks are used for this reason. In addition, because items near the center of a consumer’s visual field are more likely to be noticed than those on the periphery, consumer goods manufacturers compete fiercely for eye-level space in grocery stores.46

Position effects in advertising often depend on the medium and how consumers nor- mally interact with that medium. In print contexts, ads on the right-hand page receive more

Color can attract

attention to an ad. In

this case, the color

Konica ad had a

noted score of 62

percent, compared

with 44 percent for

the identical Konica

black-and-white ad.

ILLUSTRATION 8-3

180

160

140

120

100

80

60

40

20

0 One-page

B&W Two-page

B&W One-page

Color Two-page

Color

179

145

100 117

8-3Color and Size Impact on Attention* FIGURE

*Readership of a one-page black-and-white ad was set at 100. Source: “How Important Is Color to an Ad?,” Starch Tested Copy, February 1989, p. 1, Roper Starch Worldwide, Inc.

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attention than those on the left based on how we peruse magazines and newspapers. Atten- tion within an ad is also affected by the positioning of elements47 and how we read. U.S. readers tend to scan print ads from top left to bottom right, much the same way we read. As a consequence, so-called high-impact zones in print ads and other print documents tend to be more toward the top and left of the ad. In online contexts, vertical banners attract more attention than horizontal banners, perhaps because they stand out from the typically horizontal orientation of most print communications.48 In television, the probability of a commercial being viewed and remembered drops sharply as it moves from being the first to air during a break to the last to air because consumers often engage in other activities during commercial breaks.49

Isolation Isolation is separating a stimulus object from other objects. In-store, the use of stand-alone kiosks is based on this principle. In advertising, the use of “white space” (placing a brief message in the center of an otherwise blank or white advertisement) is based on this principle, as is surrounding a key part of a radio commercial with a brief moment of silence.50 Teh Volkswagen ad in Illustration 8–4 shows an effective print ad that uses isolation.

Format Catalog merchants wishing to display multiple items per page often create an environment in which the competition for attention across items reduces attention to all the items. However, with proper arrangement and formatting, this competition for atten- tion can be reduced and sales improved.51 Format refers to the manner in which the mes- sage is presented. In general, simple, straightforward presentations receive more attention than complex presentations. Elements in the message that increase the effort required to process the message tend to decrease attention. Advertisements that lack a clear visual point of reference or have inappropriate movement (too fast, slow, or “jumpy”) increase the processing effort and decrease attention. Likewise, audio messages that are difficult to understand because of foreign accents, inadequate volume, or a speech rate that is too fast52 also reduce attention.

Contrast and Expectations Consumers pay more attention to stimuli that contrast with their background than to stimuli that blend with it. Nissan’s use of color ads in news- papers demonstrates an effective use of contrast.53

Contrast is related to the idea of expectations. Expectations drive our perceptions of contrast. Packaging, in-store displays, and ads that differ from our expectations tend to get noticed. For example, ads that differ from the type of ad consumers expect for a prod- uct category often motivate more attention than ads that are more typical for the product category.54

This Volkswagen

print ad makes

effective use of

isolation to capture

and hold attention.

ILLUSTRATION 8-4

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One concern of marketers is that once a promotion becomes familiar to consumers, it will lose its ability to attract attention. Adaptation level theory suggests that if a stimulus doesn’t change, over time we adapt or habituate to it and begin to notice it less. Thus, an ad that we initially notice when it’s new may lose its ability to capture our attention as we become familiar with it. This familiarity effect is not uncommon. However, one study finds that by being original (that is, unexpected, surprising, unique), an advertisement can continue to attract attention even after consumers are familiar with it.55 Illustration  8–5 shows a print ad that is unique and original, when compared with the typical ad for this product.

Interestingness What one is interested in is generally an individual characteristic. Snowboarders would be likely to attend to ads or shop in stores related to that activity, whereas nonboarders would not. However, there are characteristics of the message, store, and in-store display themselves that cause them to be of interest to a large percentage of the population. For example, in-store displays that use “tie-ins” to sporting events and movies appear to generate considerably more interest, attention, and sales than simple brand signs.56

In advertising, factors that increase curiosity, such as a plot, the possibility of a surprise ending, and uncertainty as to the point of the message until the end, can increase interest and the attention paid to the ad. In fact, while many DVR users skip commercials, one study found that more than 90 percent watched certain ads because they found them inter- esting.57 Another study found that consumers were more likely to continue watching TV ads that were highly entertaining.58

This print ad will

likely generate con-

siderable attention

because of its original

approach.

ILLUSTRATION 8-5

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Information Quantity Finally, information quantity represents the number of cues in the stimulus field. Cues can relate to the features of the brand itself, typical users of the brand, typical usage situations, and so on. This information can be provided on packaging, in displays, on websites, and in ads.

Information helps consumers make decisions. But is more information better? In adver- tising, the answer is that it depends on a number of factors, including the media used. In print advertising, information appears to attract attention, while in TV advertising, infor- mation appears to reduce attention. One explanation is that increases in information quan- tity in TV ads quickly lead to information overload because (unlike the situation with print ads) consumers have no control over the pace of exposure.59 Information overload occurs when consumers are confronted with so much information that they cannot or will not attend to all of it. The result can be suboptimal decisions.60

Individual Factors Individual factors are characteristics that distinguish one individual from another. Gener- ally speaking, consumer motivation and ability are the major individual factors affecting attention.

Motivation Motivation is a drive state created by consumer interests and needs. Inter- ests are a reflection of overall lifestyle as well as a result of goals (e.g., becoming an accomplished guitar player) and needs (e.g., hunger). Product involvement indicates moti- vation or interest in a specific product category. Product involvement can be temporary or enduring. You might be temporarily involved with dishwashers if yours stops working, but involved with guitars and music your entire life. Either way, product involvement moti- vates attention. For example, several studies show that product involvement increases the amount of attention paid to print ads and, in particular, to the ad’s body copy rather than picture.61 So the picture superiority effect we discussed earlier may play less of a role when consumers are highly involved with the product being advertised. Another study found that consumers were more likely to click on banners for products they were involved with. External stimulus characteristics like animation had less influence on these consum- ers because they were already internally motivated.62

One way marketers have responded to consumer interests and involvement is by devel- oping smart banners for the Internet. Smart banners are banner ads that are activated based on terms used in search engines.63 Such behavioral targeting strategies are available for general websites as well, and they appear to be quite effective. For example, during one ad campaign, surfers on www.wsj.com who visited travel-related columns were targeted as potential travelers and “were ‘followed’ around the site and served American Airlines ads, no matter what section of wsj.com they were reading.”64 Attention was higher for these targeted ads, as was brand and message recall.

Ability Ability refers to the capacity of individuals to attend to and process informa- tion. Ability is related to knowledge and familiarity with the product, brand, or promo- tion. An audiophile, for example, is more capable of attending to highly detailed product information about stereo equipment than a novice. As a consequence, experts can attend to more information, more quickly and more effectively, than novices can and tend to be less plagued by information overload. One study found that consumers with higher educa- tion and greater health-related experience were more likely to pay attention to the highly detailed technical information in “direct-to-consumer” pharmaceutical ads.65

Brand familiarity is an ability factor related to attention. Those with high brand familiarity may require less attention to the brand’s ads because of their high existing

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Chapter Eight Perception 287

knowledge. For example, one exposure appears to be all that is needed to capture attention and generate click-through with banner ads when brand familiarity is high. In contrast, the click-through rate is very low on the first exposure when brand familiarity is low, but increases dramatically on the fifth exposure.66 Consumers with low brand familiarity appear to require more banner attention to yield the knowledge and trust needed to drive further attention via click-through to the site.

Situational Factors Situational factors include stimuli in the environment other than the focal stimulus (i.e., the ad or package) and temporary characteristics of the individual that are induced by the environment, such as time pressures or a crowded store. Clutter and program involvement are two major situational factors affecting attention.

Clutter Clutter represents the density of stimuli in the environment. In-store research suggests that cluttering the environment with too many point-of-purchase displays decreases the attention consumers pay to a given display. This explains why companies such as Walmart have made a concerted effort to reduce the number of displays in their stores.67 In advertising, consumers pay less attention to a commercial in a large cluster of commercials than they do to one in a smaller set.68 You may have noticed cable channels moving more to a single-sponsor format and actually promoting the fact that their pro- grams will have fewer commercials!

Program Involvement Program involvement refers to how interested viewers are in the program or editorial content surrounding the ads (as opposed to involvement with the ad or brand). In general, the audience is attending to the medium because of the program or editorial content, not the advertisement. So the question remains: Does involvement with the program or editorial content influence attention to the ad? The answer is clearly yes, in a positive direction, as demonstrated by Figure 8–4.

However, research shows that even when program involvement is low, marketers can increase attention by enhancing the quality of the ad itself. Ad quality represents how well a message is constructed in terms of being believable and appealing, and in communicat- ing the core message effectively.69

Nonfocused Attention Thus far we have been discussing a fairly high-involvement attention process in which the consumer focuses attention on some aspect of the environment as a result of stimulus, individual, or situational factors. However, stimuli may be attended to without deliberate or conscious focusing of attention. A classic example is the cocktail party effect, whereby an individual engaged in a conversation with a friend isn’t consciously aware of other conversations at a crowded party until someone in another group says something relevant such as mentioning her name. This example suggests we are processing a host of stimuli at a subconscious level, and mechanisms in our brain evaluate this information to decide what warrants deliberate and conscious attention.70 In fact, the idea behind hemispheric lateralization is that different parts of our brain are better suited for focused versus non- focused attention.

Hemispheric Lateralization Hemispheric lateralization is a term applied to activi- ties that take place on each side of the brain. The left side of the brain is primarily respon- sible for verbal information, symbolic representation, sequential analysis, and the ability

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Part Three Internal Influences288

to be conscious and report what is happening. It controls those activities we typically call rational thought. The right side of the brain deals with pictorial, geometric, timeless, and nonverbal information without the individual being able to verbally report it. It works with images and impressions.

The left brain needs fairly frequent rest. However, the right brain can easily scan large amounts of information over an extended time period. This led Krugman to suggest that “it is the right brain’s picture-taking ability that permits the rapid screening of the environment—to select what it is the left brain should focus on.”71 One study of banner ads found evidence of preconscious screening. Web surfers seem able to spot a banner ad without actually looking directly at it. As a consequence, direct attention to banner ads occurred only 49 percent of the time. It seems that experience with the web allows con- sumers to build up knowledge about banner characteristics (typical size and location) that is used to avoid direct attention.72

However, just because consumers don’t pay direct attention to an advertisement doesn’t mean it can’t influence them. For example, brands contained in ads to which subjects are exposed but pay little or no attention (incidental exposure) nonetheless are more likely to be considered for purchase.73

Subliminal Stimuli A message presented so fast or so softly or so masked by other messages that one is not aware of seeing or hearing it is called a subliminal stimulus. A subliminal ad is different from a “normal” ad in that it “hides” key persuasive information within the ad by making it so weak that it is difficult or impossible for an individual to physically detect. Normal ads present key persuasive information to consumers so that it is easily perceived.

60%

34%

50%

40%

30%

20%

10%

0%

45%

52%

21%

31%

43%

14%

30% 32%

38%

51%

59%

Low involvement

Medium involvement

High involvement

Rated ad as effective

Bought advertised

product

Rated ad as believable

Recall reading ad

8-4 Involvement with a Magazine and Advertising EffectivenessFIGURE

Source: Cahners Advertising Research Report 120.1 and 120.12 (Boston: Cahners Publishing, undated).

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Subliminal advertising has been the focus of intense study and public concern. It’s one thing for consumers to decide not to pay attention to an ad. It’s quite another for advertis- ers to try to bypass consumers’ perceptual defenses by using subliminal stimuli.

Two books triggered public interest in masked subliminal advertising.74 The author “documents” numerous advertisements that, once you are told where to look and what to look for, appear to contain the word sex in ice cubes, phalli in mixed drinks, and nude bodies in the shadows. Such masked symbols, deliberate or accidental, do not appear to affect standard measures of advertising effectiveness or influence consumption behavior. Likewise, research on messages presented too rapidly to elicit awareness indicates that such messages have little or no effect.75 In addition, there is no evidence marketers are using subliminal messages.76

INTERPRETATION Interpretation is the assignment of meaning to sensations. Interpretation is related to how we comprehend and make sense of incoming information based on characteristics of the stimulus, the individual, and the situation.

Several aspects of interpretation are important to consider. First, it is generally a rela- tive process rather than absolute, often referred to as perceptual relativity. It is often dif- ficult for people to make interpretations in the absence of some reference point. Consider the following actual scenario:

An episode of QVC Network’s Extreme Shopping program offers Muhammad Ali’s boxing robe (priced at over $12,000), followed by Jane Mansfield’s former mansion (almost $3.5 million), and a Volkswagen Beetle painted by Peter Max ($100,000). Then, signed and personalized Peter Max prints were offered for about $200.

In line with the notion of relativity, consumers interpreted the print price as lower when it followed the higher-priced items.77

A second aspect of interpretation is that it tends to be subjective and open to a host of psychological biases. The subjective nature of interpretation can be seen in the distinction between semantic meaning, the conventional meaning assigned to a word such as found in the dictionary, and psychological meaning, the specific meaning assigned a word by a given individual or group of individuals based on their experiences, their expectations, and the context in which the term is used.

Marketers must be concerned with psychological meaning as it is the subjective experi- ence, not objective reality, that drives consumer behavior. A firm may introduce a high- quality new brand at a lower price than competitors because the firm is more efficient. However, if consumers interpret the lower price to mean lower quality (and they often do), the new brand will not be successful regardless of the objective reality.78

A final aspect of interpretation is that it can be a cognitive “thinking” process or an affective “emotional” process. Cognitive interpretation is a process whereby stimuli are placed into existing categories of meaning.79 As we saw earlier, ads are categorized as expected or unexpected, a process that can vary by culture and individual.80 In countries like France where ads are more sexually explicit, nudity may be seen as more appropri- ate than in the United States. Products are also categorized. When DVD players were first introduced, most consumers probably grouped them in the same category as VCRs, but with further experience put them in separate categories. Radically “new” products (discontinuous innovation) are the most difficult to categorize, and marketers need to pro- vide consumers with assistance to gain understanding and acceptance.81

LO4

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Affective interpretation is the emotional or feeling response triggered by a stimu- lus such as an ad. Emotional responses can range from positive (upbeat, exciting, warm) to neutral (disinterested) to negative (anger, fear, frustration). Like cognitive interpreta- tion, there are “normal” (within-culture) emotional responses to many stimuli (e.g., most Americans experience a feeling of warmth when seeing pictures of young children with kittens). Likewise, there are also individual variations to this response (a person allergic to cats might have a negative emotional response to such a picture). Consumers confronting new products or brands often assign them to emotional as well as cognitive categories.82 The ad shown in Illustration 8–6 is likely to trigger an emotional interpretation as well as a cognitive one.

Consumer Insight 8–2 deals with the issue of how consumers deal with multiple cues simultaneously in interpreting a brand, service, or experience, and how marketers are tap- ping into the skills of specialists called synners to help them design appropriate multifac- eted “cue sets.”

Individual Characteristics Marketing stimuli have meaning only as individuals interpret them.83 Individuals are not passive interpreters of marketing and other messages but actively assign meaning based on their needs, desires, experiences, and expectations.

Traits Inherent physiological and psychological traits, which drive our needs and desires, influence how a stimulus is interpreted. From a physiological standpoint, consumers differ in their sensitivity to stimuli. Some children are more sensitive to the bitter taste of certain chemicals found in green, leafy vegetables such as spinach.84 Tab (a diet cola containing

Consumers have

emotional responses

to or interpretations

of ads as well as

cognitive ones. This

ad is likely to produce

an emotional or feel-

ing response in many

members of its target

audience.

ILLUSTRATION 8-6

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291

CONSUMER INSIGHT 8-2 I Smell Orange, I Taste Blue, I Feel Silver, I Hear Squiggles

The critical importance of cues—brand name, logo, sound, packaging, color, font, smell, feel, taste—to product perception, and particularly interpretation, is widely accepted by marketers. Companies spend heav- ily to develop the right brand names and design the right logos to communicate who they are, what they stand for, what they promise—in some cases, cleverly so, with special messages—the arrow in FedEx, the kiss in Hershey’s kisses, the 31 in Baskin Robbins 31 flavors.85

Microsoft’s understanding of the importance of sound to its brand led it to use many musicians from around the world to compose the “inspiring, universal, optimis- tic, futuristic, sentimental, sexy, emotional . . .” musical notes for a new system launch. Intel’s use of the four note “Intel bong” is so well known that consumers can sing it on request. Harley-Davidson deemed the sound of its HOG engine to be so important to its identity that it sought, although unsuccessfully, to trademark it.

Each cue is a part that together creates the per- ception of the whole product. Marketers know that the whole is more than the sum of its parts, but under- standing how all the parts fit together is challenging. This is where synners, as people with synesthesia call themselves, come in. Synners have a neurological condition that crosses two or more senses—letters have colors, sounds have tastes—and puts them in a particularly good position to evaluate how the parts interact and contribute to the whole. An estimated one out of 27 people is a synner, including musician John Mayer, Nobel laureate physicist Richard Feynman, and rapper Kanye West. As a group, synners appear to have better memories and score higher on tests of creativity.

Marketers have come to appreciate synners’ unique potential and have begun to incorporate their input into product planning and design. Ford Motor Co., for example, recently created the custom position specialist

in cross-sensory harmonization for one of its engineers who is a synner. As his job title implies, he is responsible for working with the designers and engineers to coordi- nate the parts of the car—sound, look, feel, smell—into a harmonizing whole that Ford wants consumers to have of its cars.

Marketing attention afforded to synners reflects the increased usage of multisensory marketing to carve out brand image in a world of ever greater competition for consumer attention. This is one reason, for example, that organizations such as Zappos (e-tailer of clothing and shoes renowned for its customer care) are con- ducting workshops to expose their employees to an appreciation of consumer experiences with a multisen- sory consideration. Of course, there have been previous instances of multisensory marketing—Skittles’ tagline “Taste the Rainbow”—but these were scattered. What we are witnessing now is a more focused, defined, and formal strategy that recognizes the potential of syn- ners. Some synners are not waiting for incumbent firms to recognize their potential and have formed their own businesses such as 12.29, an olfactory branding firm founded by two synners that helps hotels, banks, and fashion runways choose the right scent.

Critical Thinking Questions 1. Did you know about the insider messages in the

FedEx, Hershey’s and Baskin-Robbins logos? Do you know of any others?

2. What sensory cues do you strongly associate with brands? Stores?

3. When the cues are at odds with one another, consumers get mixed messages that can lead to confusion and declines in sales (e.g., Pepsi Crystal’s taste was cola, but its color was like water). What are other products that flopped because of the mismatch of cues?

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saccharine) maintains a small but fiercely loyal customer base, most likely among those who (unlike most of us) don’t physiologically perceive saccharine as bitter.

From a psychological standpoint, consumers have natural cognitive, emotional, and behavioral predispositions. As just one example, some people experience emotions more strongly than others, a trait known as affect intensity. A number of studies have found that consumers who are higher in affect intensity experience stronger emotional reactions to any given advertisement.86 We discuss other personality differences in Chapter 10.

Learning and Knowledge The meanings attached to such “natural” things as time, space, relationships, and colors are learned and vary widely across cultures, as we saw in Chapter 2. Consumers also learn about marketer-created stimuli like brands and promo- tions through their experiences with them. This experience and knowledge affect inter- pretations. One general finding is that consumers tend to interpret information in ways that favor their preferred brands. In one study, those higher in loyalty to a firm tended to discredit negative publicity about the firm and thus were less affected by it.87 Similarly, another study found that consumers infer more positive motives from a company’s price increase if the company has a strong reputation.88

The ad in Illustration 8–7 uses color to reinforce an interpretation that consumers have learned. What meanings are associated with the colors in Illustration 8–7?

Expectations Individuals’ interpretations of stimuli tend to be consistent with their expectations, an effect referred to as the expectation bias. Most consumers expect dark brown pudding to taste like chocolate, not vanilla, because dark pudding is generally choc- olate flavored and vanilla pudding is generally cream colored. In a taste test, 100 percent of a sample of college students accepted dark brown vanilla pudding as chocolate.89 Thus, their expectations, cued by color, led to an interpretation that was inconsistent with objec- tive reality.

Colors often have

learned associations

that are used in ads

to convey product

characteristics and

meanings.

ILLUSTRATION 8-7

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Consumers’ expectations are the result of learning and can be formed very quickly, as the old saying “first impressions matter” suggests. Once established, these expectations can wield enormous influence90 and can be hard to change. Many consumers expect, for exam- ple, that well-known brands are higher quality. As a consequence, consumers frequently evaluate the performance of a well-known brand as higher than that of an identical product with an unknown brand name. Many consumers have also come to expect that brands with some sort of in-store signage are on sale. As a consequence, one study found that brands with promotional signs on them in retail stores are interpreted as having reduced prices even though the signs don’t indicate a price reduction and the prices aren’t actually reduced.91

Situational Characteristics A variety of situational characteristics have an impact on interpretation, including tem- porary characteristics of the individual, such as time pressure and mood,92 and physical characteristics of the situation, such as the number and characteristics of other individuals present and the nature of the material surrounding the message in question.

Basically, the situation provides a context within which the focal stimulus is inter- preted. The contextual cues present in the situation play a role in consumer interpretation independent of the actual stimulus. There are innumerable contextual cues in any given marketing context—here we examine just a few examples. Color can be a contextual cue. A recent study of online advertising examined various aspects of background color present during web page loads. Certain color characteristics were found to elicit feelings of relax- ation (blue was more relaxing than red) and these feelings increased perceptions of faster web page loading even when actual speeds were identical.93

The nature of the programming surrounding a brand’s advertisements can also be a contextual cue. Both Coca-Cola and General Foods have refused to advertise some prod- ucts during news broadcasts because they believe that “bad” news might affect the inter- pretation of their products. According to a Coca-Cola spokesperson:

It’s a Coca-Cola corporate policy not to advertise on TV news because there’s going to be some bad news in there, and Coke is an upbeat, fun product.94

The previous example expresses a concern about the impact that the content of the material surrounding an ad will have on the interpretation of the ad. As Coca-Cola suspects, it appears that ads are evaluated in a more positive light when surrounded with positive programming.95 In addition, effects can be even more specific and have implications for marketing globally. Research finds that death-related content, which is prevalent in news programming, cues consumer thoughts of patriotism and thus increases consumer preferences for domestic ver- sus foreign brands. Foreign brands can overcome this, however, with pro-domestic claims.96

Stimulus Characteristics The stimulus is the basic entity to which an individual responds and includes the product, package, advertisement, in-store display, and so on. Consumers react to and interpret basic traits of the stimulus (size, shape, color), the way the stimulus is organized, and changes in the stimulus. As we have seen, all these processes are likely to be heavily influenced by the individual and the situation.

Traits Specific traits of the stimulus, such as size, shape, and color, affect interpreta- tion. The meaning of many stimulus traits is learned. Color is one trait in which learning

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affects meaning. Canada Dry’s sugar-free ginger ale sales increased dramatically when the can was changed to green and white from red. Red is interpreted as a “cola” color and thus conflicted with the taste of ginger ale.97 White space in ads is another trait involving learned meaning. That is, over time consumers have come to believe that white space in an ad means prestige, high price, and quality. As a consequence, marketers can positively influence product perceptions by what they don’t say in an ad!98

Another general trait is the extent to which the stimulus is unexpected, a trait sometimes referred to as incongruity. Incongruity increases attention, as we saw earlier. However, it also increases liking, in part because of the pleasure consumers derive from “solving the puzzle” presented by the incongruity. As a consequence, products and ads that deviate somewhat from established norms (without going too far) are often better liked. Incongru- ity often requires that consumers go beyond what is directly stated or presented in order to make sense of the stimulus. These inferences, which we discuss later in the chapter, are an important part of interpretation. Rhetorical figures such as rhymes, puns, and metaphors have been shown to increase consumer attention and influence their feelings and perceptions of the brand. Rhetorical figures involve the use of an unexpected twist or artful deviation in how a message is communicated either visually in the ad’s picture or verbally in the ad’s text or headline.99 Illustration 8–8 provides an example of how Jack Link’s® uses Rhetorical Figures in their promotions to grab attention.

Organization Stimulus organization refers to the physical arrangement of the stimu- lus objects. Organization affects consumer interpretation and categorization. For example, you likely perceive the letters that make up the words you are reading as words rather than as individual letters. This effect is enhanced by the fact that each word has letters that are close together and is separated by larger spaces, a principle called proximity. We discuss this and other principles next.

Proximity refers to the fact that stimuli positioned close together are perceived as belonging to the same category. Sometimes proximity comes from the stimulus itself. For example, when consumers read the headline “Have a safe winter. Drive Bridgestone Tires,” they tend to infer from the proximity of the two statements that the ad means Bridgestone Tires will help them have a safe winter. However, the headline does not explicitly make that claim. What ethical implications exist?

Consumers are

exposed to many

more ads than they

can read or even

notice. Marketers

often use rhetorical

figures to capture the

audience’s attention.

ILLUSTRATION 8-8

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Sometimes proximity results from the relationship of the stimulus to its context, as in ambush marketing. Ambush marketing involves any communication or activity that implies, or from which one could reasonably infer, that an organization is associated with an event, when in fact it is not. A common form of ambush marketing is to advertise heavily during the event. Proximity would lead many to believe that the company was a sponsor of the event even if it was not.100

Closure involves presenting an incom- plete stimulus with the goal of getting con- sumers to complete it and thus become more engaged and involved. Advertisers will often use incomplete stimuli in this manner because closure is often an automatic response engaged in by consumers in order to interpret message meaning. Not surprisingly, increas- ing consumer ad involvement also increases recall, as we will discuss more in Chapter 9.101

Figure–ground involves presenting the stimulus in such a way that it is perceived as the focal object to be attended to and all other stimuli are perceived as the background. This strategy is often used in advertising, where the goal is to make the brand stand out as the prominent focal object to which consumers will attend. Absolut, a Swedish vodka, uses figure–ground very effectively. Each ad uses the natural elements in the ad to “form” the figure of a bottle, as with Absolut Mandarin where the bottle is formed by pieces of orange peel. The Puma ad in Illustration 8–9 provides another example.

Changes In order to interpret stimulus change, consumers must be able to categorize and interpret the new stimulus relative to the old. Interpreting change requires the ability to both detect change and then assign meaning to that change. Sometimes consumers won’t be able to detect a change. Sometimes they can detect a change but interpret it as unimportant.

The physiological ability of an individual to distinguish between similar stimuli is called sensory discrimination. This involves such variables as the sound of stereo systems, the taste of food products, or the clarity of display screens. The minimum amount that one brand can differ from another (or from its previous version) with the difference still being noticed is referred to as the just noticeable difference (j.n.d.). The higher the initial level of an attribute, the greater that attribute must be changed before the change will be noticed. Thus, a small addition of salt to a pretzel would not likely be noticed unless that pretzel contained only a small amount of salt to begin with.

As a general rule, individuals typically do not notice relatively small differences between brands or changes in brand attributes. Makers of candy bars have used this principle for years. Since the price of cocoa fluctuates widely, they simply make small adjustments in the size of the candy bar rather than altering price. Since marketers want some product changes, such as reductions in the size, to go unnoticed, they may attempt to make changes that fall below the j.n.d. This strategy, sometimes referred to as weighting out, appears to be on the increase. However, if and when consumers do notice, the potential backlash may be quite severe.102 What is your evaluation of the ethics of this practice?

This Puma Body

Train ad draws on

figure–ground to

make the focal image

stand out from the

background.

ILLUSTRATION 8-9

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Part Three Internal Influences296

After noticing a change or difference, consumers must interpret it. Some changes are meaningful and some are not. The relationship between change and consumers’ valuation of that change tends to follow the pattern discussed for j.n.d. The higher the initial level of an attribute, the greater the attribute must change before it is seen as meaningful. For example, consumers underestimate the calories in a meal more as the portion size of the meal increases. This misinterpretation has important individual and societal consequences for obesity and portion control.103

Change is often interpreted with respect to some referent state. The referent state might be a brand’s prior model or a competitor’s model. Reference price is also a referent state. Con- sumers can bring internal reference prices with them based on prior experience. Also, mar- keters can provide a reference in the form of manufacturer’s suggested retail price (MSRP). Consumers then are more likely to interpret the sale price with respect to the MSRP, which, if favorable, should increase perceived value of the offer and likelihood of purchase.104

Consumer Inferences When it comes to marketing, “what you see is not what you get.” That’s because inter- pretation often requires consumers to make inferences. An inference goes beyond what is directly stated or presented. Consumers use available data and their own ideas to draw conclusions about information that is not provided.

Quality Signals Inferences are as numerous and divergent as consumers themselves. However, some inferences related to product quality are relatively consistent across con- sumers. Here consumers use their own experiences and knowledge to draw inferences about product quality based on a nonquality cue.

Price-perceived quality is an inference based on the popular adage “you get what you pay for.” Consumers often infer that higher-priced brands possess higher quality than do lower-priced brands.105 Consumers sometimes take price discounts as a signal of lower quality, which is a major concern for companies such as General Motors that rely heavily on such tactics.106

Advertising intensity is also a quality signal. Consumers tend to infer that more heavily advertised brands are of higher quality.107 One reason is that effort is believed to predict success, and ad spending is seen as an indicator of effort. Any factor related to advertising expense such as medium, use of color, and repetition can increase quality perceptions and choice.108

Warranties are another quality signal, with longer warranties generally signaling higher quality. Consumers infer that a firm wouldn’t offer a longer warranty if it weren’t confi- dent in the quality of its products because honoring the warranty would be expensive.109

Price, advertising, and warranties are just a few quality cues. Others include country of origin (COO), in which consumers interpret products more positively when they are manufactured in a country they perceive positively,110 as well as brand effects, where well-known brands are perceived as higher quality than are unknown brands.

In general, quality signals operate more strongly when consumers lack the expertise to make informed judgments on their own, when consumer motivation or interest in the deci- sion is low, and when other quality-related information is lacking.

Interpreting Images Consumer inferences from visual images are becoming increas- ingly important as advertisers increase their use of visual imagery.111 Note how visuals dominate many print ads. For example, Clinique ran an ad that pictured a tall, clear glass of mineral water and ice cubes. A large slice of lime was positioned on the lip of the glass. In the glass with the ice cubes and mineral water were a tube of Clinique lipstick and a container of cheek base. Nothing else appeared in the ad. What does this mean?

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Chapter Eight Perception 297

Obviously, in order to interpret the Clinique ad, consumers must infer meaning. Until recently, pictures in ads were thought to convey reality. If so, the Clinique ad is nonsensical. Is Clinique guilty of ineffective advertising? No. All of us intuitively recognize that pictures do more than represent reality; they supply meaning. Thus, one interpretation of the Clinique ad is “Clinique’s new summer line of makeup is as refreshing as a tall glass of soda with a twist.”

The verbal translation of the meaning conveyed by images is generally incomplete and inadequate. A picture is worth a thousand words not just because it may convey real- ity more efficiently than words but because it may convey meanings that words cannot adequately express.

Marketers must understand the meanings their audiences assign to various images and words, and use them in combination to construct messages that will convey the desired meaning. They must be sensitive to cultural differences since interpretation is highly con- tingent on shared cultural experience. For example, consumers in some cultures (termed high-context cultures) tend to “read between the lines.” These consumers are very sensi- tive to cues in the communications setting such as tone of voice. On the other hand, con- sumers in low-context cultures tend to ignore such cues and focus more on the message’s literal or explicit meaning. One study has found that consumers in high-context cultures such as the Philippines are more likely to infer implicit meanings from ad visuals than are those in low-context cultures such as the United States.112 Illustration 8–10 is an example of an ad based heavily on imagery. What does this ad mean to you? Would it mean the same to older consumers? Consumers from other cultures?

Missing Information and Ethical Concerns When data about an attribute are missing, consumers may assign it a value based on a presumed relationship between that attribute and one for which data are available; they may assign it the average of their assessments of the available attributes; they may assume it to be weaker than the attributes for which data are supplied; or any of a large number of other strategies may be used.113

Pictures and imagery

do more than merely

represent reality.

They convey feel-

ings and meanings

that often cannot be

expressed in words.

ILLUSTRATION 8-10

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Part Three Internal Influences298

Consider the following hypothetical ad copy:

�r� The Subaru Outback gets better gas mileage than the Toyota Camry. �r� It has more cargo space than the Chevy Volt. �r� It has more power than the Toyota RAV4.

Some consumers would infer from this that the Subaru gets better gas mileage than the Volt and the RAV4; has more cargo space than the Camry and the RAV4; and has more power than the Volt and the Camry.114 These claims are not stated in the ad, making it clear that certain types of information portrayal may lead to incorrect inferences and sub- optimal consumer decisions. Thus, a factually correct ad could still mislead some consum- ers. Are such ads ethical?

Consumers can be misled in a number of different ways. One way is that companies can make direct claims that are false. Claiming that a food or food ingredient is “mushroom in origin” when it is really a fungus or mold appears to fall into this category. This is the easiest form of deception to detect and prosecute under the law. However, other types of deception are more subtle. These fall under the broad category of claim-belief discrepancies, whereby a communication leads consumers to believe something about the product that is not true even though it doesn’t present a direct false claim. For example, the Federal Trade Commission (FTC) felt that Kraft Foods’ early ads for Kraft Cheese Singles might be misleading based on claim-belief discrepancy. That’s because their ads focused on the importance of calcium and the fact that each slice was made from five ounces of milk. The FTC’s concern was that reasonable consumers would infer that Kraft Cheese Singles contained the same amount of calcium as five ounces of milk even though this was not directly stated in their ads. This infer- ence is wrong because processing milk into cheese reduces calcium content. Since parents might use Kraft Cheese Singles as a calcium source for their kids, this was of particular con- cern. Although more difficult from a legal standpoint, the FTC can and does hold companies responsible for claim-belief discrepancies as we see with Kraft.115 Our understanding and regulation of deception continue to evolve as we gain a better understanding of consumer information processing. This is discussed in more detail in Chapter 20.

PERCEPTION AND MARKETING STRATEGY Perception holds critical implications for marketing strategy in a number of areas. We turn to these next.

Retail Strategy Retailers often use exposure very effectively. Store interiors are designed with frequently purchased items (canned goods, fresh fruits and vegetables, meats) separated so that the average consumer will travel through more of the store. This increases total expo- sure. High-margin items are often placed in high-traffic areas to capitalize on increased exposure.

Shelf position and amount of shelf space influence which items and brands are allo- cated attention. Point-of-purchase displays also attract attention and boost sales.116 And cross-promotions, whereby signage in one area of the store promotes complementary products in another (milk signage in the cookie aisle), can also be effective. Recently, retailers have begun to reduce clutter by cutting out marginal, unimportant, and redundant SKUs (stock-keeping units—individual items such as brands, sizes, and versions) within a category. Consumer perceptions and sales tend to go up when the reduction in clutter does not reduce variety and choice.117

LO5

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Chapter Eight Perception 299

Another important aspect of the retail environment is ambient scent. Pleasant smells in a retail store can increase product evaluations by boosting emotions. In some cases this occurs even when the scent is inconsistent with the product being evaluated (e.g., pine scent and orange juice).

Brand Name and Logo Development Shakespeare notwithstanding, marketers do not believe that “a rose by any other name would smell as sweet.” Mountain Dew’s marketing director ascribes part of the success of Code Red to its name: “Had it been called ‘Mountain Dew Cherry’ it would’ve done very differently.”118 Brand names can influence anything from color preference to food taste. One study found that people preferred avocado to light green even though the actual color was exactly the same. Another found that young kids liked the taste of foods such as carrots, milk, and apple juice more when they came in a McDonald’s package!119 Effects such as this can be related back to expectation biases. That is, the name sets up an expec- tation that, in turn, biases people’s perceptions of the actual experience. Given the ten- dency toward global brands, it is easy to imagine how complex creating an appropriate name can be.120

Linguistic Considerations Sometimes brand names start out having no inherent meaning but gain associations over time as consumers gain experience with them. Ford and Toyota are examples. However, marketers increasingly tap into linguistic characteris- tics of words to create brand names with inherent meaning right from the start. One aspect is inherent semantic meaning or morpheme. NutraSweet took advantage of morphemes to imply nutritious and sweet. And Dodge has brought back its “Hemi” engine, a name associated with high performance.121 A second aspect is sound or phonemes. Sounds of letters and words can symbolize product attributes. For example, heavier sounding vowels (Frosh) might be better used to suggest richer, creamier ice cream than lighter sounding vowels (Frish).122

Lexicon and other naming companies such as NameLab use these concepts to cre- ate names that convey appropriate meanings. Lexicon selected the Blackberry name for Research in Motion’s handheld device because berry suggests small, the “b” sound is associated strongly with relaxation, and the two “b” sounds at the beginning of black and berry are light and crisp, suggesting speed. Thus, a name that suggests a handheld that is small, easy to use, and fast—every consumer’s dream!123

Branding Strategies Marketers engage in numerous strategies to leverage strong existing brand names. One is brand extension, where an existing brand extends to a new category with the same name such as Levi Strauss putting its Levi name on a line of upscale men’s suits. Another is co-branding, an alliance in which two brands are put together on a  single product. An example is “Intel Inside” Compaq computers. Brand extensions and co-branding can be positive or negative, as we’ll discuss in Chapter 9. A key issue is perceived fit between the core brand and the extension or the two co-brands. Really poor fit (too much incongruity) is bad, as people find it hard to categorize and make sense of the new brand. For example, the Levi men’s suit was a flop because the core Levi image of relaxed and casual did not fit a formal, upscale suit.124

Logo Design and Typographics How a product or service name is presented—its logo—is also important.125 Figure 8–5 shows a number of brands that have changed their logos over time. Do you think the new logos are better or worse? In what ways are they better or worse?

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Part Three Internal Influences300

Perhaps in trying to answer these questions, you realized that you don’t have any crite- ria for making suggestions. Such criteria are hard to come by and we are just now begin- ning to understand why some logos work better than others. One study provides guidance, finding that logo symbols (such as Prudential’s Rock) that are natural, moderately elabo- rate, and symmetrically balanced lead to higher levels of logo liking. Natural logos depict commonly experienced objects; elaborate logos entail complexity; symmetrical logos are visually balanced.

Beyond the logo symbol is also the shape and form of the letters in their name, which relates to typeface and type font. Intuitively, for example, you might think that a fancy scripted font signals elegance and is better suited for a fountain pen than for a moun- tain bike. Turns out you would be right! Different fonts do evoke different meanings and an appropriate fit between the font and product can increase choice of the brand, independent of the name.126 Given these various criteria, can you now assess the logo redesigns?127

Brand

Pepsi

Reebok

BP

Belk

Original Update

8-5 Recent Logo RedesignsFIGURE

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Chapter Eight Perception 301

Media Strategy The explosion of media alternatives makes it difficult and expensive to gain exposure to key target audiences.128 However, the fact that the exposure process is often selective rather than random is the underlying basis for effective media strategies. Specifically, firms must determine to which media the consumers in the target market are most fre- quently exposed and place ad messages in those media. As one executive stated:

We must look increasingly for matching media that will enable us best to reach carefully targeted, emerging markets. The rifle approach rather than the old shotgun.129

Consumer involvement can drive media exposure and strategy. For high-involvement products, ads should be placed in media outlets with content relevant to the product. Specialized media such as Runner’s World or Vogue tend to attract readers who are inter- ested in and receptive to ads for related products. In contrast, ads for low-involvement products should be placed in reputable media independent of content, as long as they are frequented by the target market.130 In a situation such as this, the marketer must find media that the target market is interested in and place the advertising message in those media. Target markets as defined by age, ethnic group, social class, or stage in the family life cycle have differing media preferences, which can then be used to select media out- lets. Table 8–1 illustrates selective exposure to several magazines based on demographic characteristics.

As we saw earlier, video game player demographics skew toward young males (for console games, average age is 26 and 68 percent are male). Companies like Burger King,

Demographic Characteristics

Better Homes & Gardens Cosmopolitan Maxim

National Geographic

Family Circle

Gender Male 26 29 151 120 17 Female 169 166 52 85 177

Age 18–24 33 263 169 64 17 25–34 50 143 195 56 39 35–44 78 112 132 86 93 45–54 108 76 76 89 87 55–64 131 41 43 132 126 651 174 23 14 161 207

Education College graduate 107 109 123 126 99 High school graduate 108 90 105 75 118

Household income Less than $25,000 95 74 60 106 119 $25,000–49,999 105 98 84 91 123 $50,000–59,999 104 120 113 107 93 $60,000–74,999 99 113 105 103 89 $75,000 or more 99 106 126 100 80

Note: 100 5 Average level of use, purchase, or consumption. Source: Simmons National Consumer Study 2010, Experian Information Solutions (Costa Mesa, CA 2014).

8-1Selective Exposure to Magazines Based on Demographic Characteristics TABLE

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Part Three Internal Influences302

who are desperate to obtain media exposure among this demographic, are moving ad dol- lars to in-game video ads and product placements.131

Technology continues to radically alter media targeting choices. Consider the impact of GPS technology on outdoor mobile ads:

While a cab travels from one end of a city to the other, an electronic billboard on top changes according to location and time of day. Thanks to a satellite feed and global positioning system, the bright, attention-getting ads on the taxi roof keep changing. As the cab passes by a college, an ad for a bookstore appears. While the cab moves through the business district at noon, an ad for a local deli fills the screen. As the cab travels through a Hispanic neighborhood, a Spanish- language ad for a snack food is shown.132

Advertisements Advertisements must perform two critical tasks: capture attention and convey meaning. Unfortunately, the techniques appropriate for accomplishing one task are often counter- productive for the other.

What if you had to design a campaign to increase users for your firm’s toilet bowl fresh- ener, but research shows your target market has little inherent interest in the product. What do you do? Two strategies seem reasonable. One is to utilize stimulus characteristics such as bright colors or surrealism to attract attention. The second is to tie the message to a topic in which the target market is interested.

However, using factors unrelated to the product category to attract attention must be done with caution. First, it may detract attention away from the core brand message because stimuli compete for limited attention. That’s why companies often try to use humor, sex appeal, and celebrities in ways that are relevant to the product or message. Second, it may negatively affect interpretation. For example, humor in an insurance ad may result in the brand’s being interpreted as unreliable.

Package Design and Labeling Packages must attract attention and convey information, and various aspects from color to shape to typography can interact in complex ways in affecting consumer perceptions.133 Packaging has functional and perceptual components. Consider the candy coating of M&M’s. It is functional because it keeps the chocolate from melting in your hands. But it is also perceptual. The bright colors are interesting and unique even though they don’t taste different. One study varied the color variety (7 versus 10 colors) in a bowl of M&M’s and found that as variety went up, consumers ate more!134 M&M’s has refocused on color by introducing bolder colors and emphasizing color in its ads. As one executive states, “We’ve always had color as a unique point of difference, but we wanted to reinforce that message in a fresh, contemporary way.”135

Bright colors, tall packages, and unusual shapes can be used to attract attention, con- vey meaning, and influence consumption.136 For example, consumers tend to believe that taller, more elongated packages contain more than shorter packages of the same volume (e.g., a can of soda). As a consequence, a recent study shows that consumers of beverages buy fewer bottles than cans but perceive that the volume they buy is the same. Notice how package options such as an elongated bottle can influence perceived consumption in ways that reduce product sales and revenues.137 Look at Illustration  8–11. Which appears to contain more? If you said Acqua Panna, you were influenced by the elongation bias (they all contain exactly the same amount of liquid: one liter).

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Chapter Eight Perception 303

Packages also contain product information and warnings. Ethical and legal consider- ations require marketers to place warning labels on a wide array of products such as ciga- rettes, alcoholic beverages, and many over-the-counter drugs. On the one hand, there is the desire to effectively alert users to potential risks. On the other hand, there is a desire to avoid detracting unduly from product image. The key from an ethical and legal standpoint is to not err on the side of image at the expense of the consumer. Well-designed warn- ings appear to be at least somewhat effective. Factors reducing their effectiveness include overly technical or complex language and a failure to indicate the positive consequences of compliance.138

Package design can

strongly influence

perceived volume

and consumption

levels. Which

package do you

think contains more

beverage?

ILLUSTRATION 8-11

LO1: Describe the nature of perception and its relationship to consumer memory and decisions Perception consists of those activities by which an individual acquires and assigns meaning to stimuli. Perception occurs in three stages, namely, exposure, attention, and interpretation. If and when perception occurs, the meaning derived from a stimulus is typi- cally transferred to memory, where it is stored and can be later retrieved when consumers are making pur- chase decisions.

LO2: Explain exposure, the types of exposure, and the resulting marketing implications Exposure occurs when a stimulus comes within range of one of an individual’s primary sensory receptors. People are exposed to only a small fraction of the available stimuli. And when consumers actively avoid certain marketing stimuli, this is referred to as selective exposure. Selective exposure in the advertising area is termed ad avoidance. Marketers try to overcome avoidance by using tactics such as product place- ment and hybrid ads. It should be noted, however,

SUMMARY

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that consumers seek out some marketing stimuli voluntarily. Examples include Super Bowl ads, ads that go viral online, and company-based e-mails that consumers choose to receive through permission-based marketing.

LO3: Explain attention, the factors that affect it, and the resulting marketing implications Attention occurs when the stimulus activates one or more of the sensory receptors and the resulting sensations go into the brain for processing. People selectively attend to stimuli as a function of stimulus, individual, and situational factors. Stimulus factors are physical characteristics of the stimulus itself, such as contrast, size, intensity, attractiveness, color, movement, position, isolation, format, and informa- tion quantity. Individual factors are characteristics of the individual, such as motivation and ability. Situa- tional factors include stimuli in the environment other than the focal stimulus and temporary characteristics of the individual that are induced by the environment. Clutter and program involvement are situational fac- tors of particular interest to marketers. Marketers can utilize all these factors to better develop stimuli that attract consumer attention in today’s cluttered environment.

Nonfocused attention occurs when a person takes in information without deliberate effort. Hemispheric lateralization is a term applied to activities that take place on each side of the brain. The left side of the brain is concerned primarily with those activities typi- cally called rational thought and the ability to be con- scious and report what is happening. The right side of the brain deals with pictorial, geometric, timeless, and nonverbal information without the individual’s being able to verbally report it.

A message presented so fast or so softly or so masked by other messages that one is not aware of seeing or hearing it is called a subliminal message. Subliminal messages have generated a great deal of interest but are not generally thought to affect brand choice or other aspects of consumer behavior in a meaningful way.

LO4: Explain interpretation, the factors that affect it, and the resulting marketing implications Interpretation is the assignment of meaning to stimuli that have been attended to. Interpretation

tends to be relative rather than absolute (perceptual relativity) and subjective rather than objective. Two general forms of interpretation are cognitive and affective. Cognitive interpretation appears to involve a process whereby new stimuli are placed into exist- ing categories of meaning. Affective interpretation is the emotional or feeling response triggered by the stimulus.

Interpretation is largely a function of individual traits, learning, and expectations that are triggered by the stimulus and moderated by the situation. Stimulus characteristics are critical. Stimulus organization is the physical arrangement of the stimulus objects and relates to the perceptual principles of proximity, closure, and figure–ground. Marketers can use these principles to design effec- tive communication strategies. Stimulus change and consumer reactions to it are also of concern and have consequences in relation to such strategies as “weight- ing out,” whereby marketers attempt to reduce the quantity offered in increments that consumers won’t detect.

Interpretation often involves consumer inferences. Inferences go beyond what is directly stated or presented and help explain consumer use of quality signals (e.g., higher price means higher quality), their interpretation of images, and how they deal with missing information. Inferences also help explain how consumers can be misled by marketing messages even when those messages are literally true.

LO5: Discuss how perception can enhance strategies for retailing, branding, advertising, and packaging Marketers use their knowledge of perception to enhance strategies in a number of areas including retailing, branding, advertising, and packaging. For retailing, issues surrounding store and shelf location are important determinants of perception. For branding, issues surrounding the selection of brand names, extensions, and appropriate logos have important implications for perception. Advertising strategies and media selection are heavily influenced by considering factors that enhance exposure and attention. Packaging is a functional aspect of products, but also perceptual in that it can cap- ture consumer attention and influence their brand interpretations.

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1. What is information processing? How does it differ from perception?

2. What is meant by exposure? What determines which stimuli an individual will be exposed to? How do marketers utilize this knowledge?

3. What are zipping, zapping, and muting? Why are they a concern to marketers?

4. What are infomercials? How effective are they? 5. What is ad avoidance? How is DVR technology

affecting it? How are marketers dealing with this phenomenon?

6. What is meant by attention? What determines which stimuli an individual will attend to? How do marketers utilize this?

7. What stimulus factors can be used to attract attention? What problems can arise when stimulus factors are used to attract attention?

8. What is adaptation level theory? 9. What is information overload? How should

marketers deal with information overload? 10. What impact does program involvement have on

the attention paid to commercials embedded in the program?

11. What is a contextual cue? Why is it of interest to marketers?

12. What is meant by nonfocused attention? 13. What is meant by hemispheric lateralization? 14. What is meant by subliminal perception? Is it a

real phenomenon? Is it effective?

15. What is meant by interpretation? 16. What determines how an individual will interpret a

given stimulus? 17. What is the difference between cognitive and

affective interpretation? 18. What is the difference between semantic and

psychological meaning? 19. What is sensory discrimination? What is a just

noticeable difference (j.n.d.)? 20. What is a consumer inference? Why is this of

interest to marketers? 21. How does a knowledge of information processing

assist the manager in the following?

a. Formulating retail strategy b. Developing brand names and logos c. Formulating media strategy d. Designing advertisements e. Designing packages and labels

22. What is co-branding? Is it effective? 23. What is a cross-promotion retail strategy? Provide

two examples. 24. How can rhetorical figures enhance attention? 25. What is a smart banner? How does this relate to

selective attention? 26. What is figure–ground? 27. What ethical concerns arise in applying

knowledge of the perceptual process? 28. What is ambush marketing?

REVIEW QUESTIONS

Ad avoidance 276 Adaptation level theory 285 Affective interpretation 290 Ambush marketing 295 Attention 279 Brand extension 299 Brand familiarity 286 Closure 295 Co-branding 299 Cognitive interpretation 289 Contextual cues 293 Cross-promotions 298

Exposure 275 Figure–ground 295 Hemispheric lateralization 287 Inference 296 Infomercials 279 Information overload 286 Information processing 274 Interpretation 289 Just noticeable difference

( j.n.d.) 295 Muting 276 Perception 274

Perceptual defenses 275 Perceptual relativity 289 Permission-based marketing 279 Product placement 276 Proximity 294 Rhetorical figures 294 Sensory discrimination 295 Smart banners 286 Stimulus organization 294 Subliminal stimulus 288 Zapping 276 Zipping 276

KEY TERMS

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39. Find and copy or describe examples of advertisements that specifically use stimulus factors to attract attention. Look for examples of each of the various factors discussed earlier in the chapter and try to find their use in a variety of promotions. For each example, evaluate the effectiveness of the stimulus factors used.

40. Repeat Question 40, but this time look for advertisements using individual factors.

41. Complete Question 34 and test your names on a sample of students. Justify your testing procedure and report your results.

42. Complete Question 35 and test your logos on a sample of students. Justify your testing procedure and report your results.

43. Find two brand names that you feel are particularly appropriate and two that you feel are not

very appropriate. Explain your reasoning for each name.

44. Find and describe a logo that you feel is particularly appropriate and one that you feel is not very appropriate. Explain your reasoning.

45. Interview three students with a DVR about their behavior during television breaks when watching prerecorded programming. Do they watch any ads? Why? What do you conclude?

46. Interview three students about how they respond to banner ads and the extent to which they attend to various commercial messages on the Internet.

47. Go to a health food or alternative medicines store or section of a store. Find three products that make health claims. Evaluate the likely effectiveness of any disclaimers that they contain.

APPLICATION ACTIVITIES

29. Given that smoking scenes in movies increase the positive image and intention to smoke among youth, what regulations, if any, should apply to this?

30. How could a marketing manager for the following use the material in this chapter to guide the development of a national advertising campaign (choose one)? To assist local retailers or organizations in developing their promotional activities? Would the usefulness of this material be limited to advertising decisions?

a. The Salvation Army b. Smartphones c. Qdoba Mexican Grill d. Lucky Jeans e. Belkin WiFi equipment 31. Respond to the questions in Consumer Insight 8–1. 32. Hershey recently created a line of upscale chocolates

called “Cacao Reserve by Hershey’s.” The company created fancy packaging, priced the product at the high end, and did little mass marketing for its new product. Initial sales were disappointingly slow even though the premium chocolate market is growing nicely, with brands like Ghirardelli faring well. As a consequence, Hershey almost immediately (within six months) dropped its prices and started mass advertising. Using concepts in this chapter, why do you think Hershey failed in its move into the premium chocolate market? Do you think the

adjustments were the most appropriate, or could Hershey have taken other steps?

33. Pick three brand names that utilize a morphemic approach and three that utilize a phonemic approach. Are the morphemes and phonemes consistent with the overall positioning of these brands?

34. Develop a brand name for (a) an MP3 player, (b) an R&B music store, (c) an Internet grocery shopping service, (d) a mobile app, or (e) a pet- walking service. Justify your name.

35. Develop a logo for (a) an MP3 player, (b) an R&B music store, (c) an Internet grocery shopping service, (d) a mobile app, or (e) a pet-walking service. Justify your design.

36. Evaluate the in-text ads in Illustrations 8–1 through 8–10. Analyze the attention-attracting characteristics and the meaning they convey. Are they good ads? What risks are associated with each?

37. Develop three co-branded products: one that would be beneficial to both individual brands, one that would benefit one brand but not the other, and one that would benefit neither brand. Explain your logic.

38. Find an ad that you feel might mislead consumers through a claim-belief discrepancy. What inference processes are you assuming?

DISCUSSION QUESTIONS

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48. Find and copy or describe an ad or other marketing message that you think makes unethical use of the perceptual process. Justify your selection.

49. Develop an ad but omit information about some key product attributes. Show the ad to five students. After they have looked at the ad, give

them a questionnaire that asks about the attributes featured in the ad and about the missing attributes. If they provide answers concerning the missing attributes, ask them how they arrived at these answers. What do you conclude?

1. This insight is based on E. Nussbaum, “Product Integration, 30 Rock, and the Trouble with Using Brands to Write TV,” New York, October 13, 2008, pp. 32–37 and 90; J. Plambeck, “Product Placement Grows in Music Videos,” New York Times, July 5, 2010; “Corvette Placement on ‘Glee’ Hits Right Note for Chevy,” Los Angeles Times, September 30, 2010; B. Steinberg, “Chevy Takes on Ambitious Role in TNT’s ‘Men’ Program,” Advertising Age, January 17, 2011, p. 3.

2. For an interesting discussion, see J. J. Pilotta and D. Schultz, “Simultaneous Media Experience and Synesthesia,” Journal of Advertising Research, March 2005, pp. 19–26.

3. R. Liljenwall, “Global Trends in Point-of-Purchase Advertising,” in The Power of Point-of-Purchase Advertising, ed. R. Liljenwall (Washington, DC: Point-of-Purchase Advertising International, 2004), ch. 10.

4. “Ad Avoidance Highest among Key Target Groups, Says Study,” Businessline, October 21, 2004, p. 1. See also J. Rojas- Mendez, G. Davies, and C. Madran, “Universal Differences in Advertising Avoidance Behavior,” Journal of Business Research, 62 (2009), pp. 947–54.

5. S. M. Edwards, H. Li, and J.-H. Lee, “Forced Exposure and Psychological Reactance,” Journal of Advertising, Fall 2002, pp. 83–95; H. Li, S. M. Edwards, and J.-H. Lee, “Measuring the Intrusiveness of Advertisements,” Journal of Advertising, Summer 2002, pp. 37–47; S. Shavitt, P. Vargas, and P. Lowrey, “Exploring the Pole of Memory for Self-Selected Ad Experiences,” Psychology & Marketing, December 2004, pp. 1011–32; and C. H. Cho and H. J. Cheon, “Why Do People Avoid Advertising on the Internet?,” Journal of Advertising, Winter 2004, pp. 89–97.

6. A. C. B. Tse and R. P. W. Lee, “Zapping Behavior during Commercial Breaks,” Journal of Advertising Research, May 2001, pp. 25–28; and M. Savage, “China Turning On, but Tuning Out,” Media, May 7, 2004, p. 19.

7. P. Paul, “Coming Soon: More Ads Tailored to Your Tastes,” American Demographics, August 2001, pp. 28–31.

8. Edwards, Li, and Lee, “Forced Exposure and Psychological Reactance.”

9. “Pop-Ups—End of an Era?,” NOP World United Business Media, September 29, 2003, www.unitedbusinessmedia.com.

10. C. A. Russell, “Investigating the Effectiveness of Product Placements in Television Shows,” Journal of Consumer Research, December 2002, pp. 306–18; S. A. McKechnie and J. Zhou, “Product Placement in Movies,” International Journal of Advertising, 22, no. 3 (2003), pp. 349–74; M. Wiles and A. Danielova, “The Worth of Product Placement in Successful Films,” Journal of Marketing, July 2009, pp. 44–63; and

P. M. Homer, “Product Placements,” Journal of Advertising, Fall 2009, pp. 21–31. For examples when negative effects can occur, see E. Cowley and C. Barron, “When Product Placement Goes Wrong,” Journal of Advertising, Spring 2008, pp. 89–98.

11. E. Hall, “Nestle Breaks First Product-Placement TV Buy in U.K.,” Advertising Age, March 3, 2011.

12. “No More Skipping Ads?,” Los Angeles Times, October 11, 2010.

13. R. Greenspan, “DVRs Not Necessarily Ad-Killers,” ClickZ.com, May 24, 2004; “Jupiter: DVR Ad Skipping Threatens $8B in Advertising,” MarketingVOX.com, May 4, 2006; “Ad Spots in the DVD Era,” Broadcast Engineering, August 2007, p. 106; and R. Dana and S. Kang, “Answer to Vexing Question: Who’s Not Watching Ads,” The Wall Street Journal, October 17, 2007, p. B2.

14. J. Mandese, “Study: DVRs ‘Recapture’ 96% of TV Ad Zap- ping,” MediaPost’s Media Daily News, May 25, 2004, www. mediapost.com; “New Age for Ads,” Cablefax Daily, December 6, 2007, www.cablefax.com; and H. Dawley, “As to Worries Over Ad-Skipping, Skip It,” Media Life Research, www. medialifemagazine.com, May 18, 2006.

15. A. Ambruster, “Don’t Give Up on TV Ads Just Yet,” Television- Week, July 23–30, 2007, p. 16.

16. B. A. S. Martin, V. T. L. Nguyen, and J.-Y. Wi, “Remote Control Marketing,” Marketing Intelligence and Planning, 20, no. 1 (2002), pp. 44–48.

17. S. A. Brasel and J. Gips, “Breaking Through Fast-Forwarding,” Journal of Marketing, November 2008, pp. 31–48.

18. See D. Kiley, “Learning to Love the Dreaded TiVo,” BusinessWeek, April 17, 2006, p. 88; C. Limbardi, “TV Advertising’s DVR Challenge,” News.com, May 23, 2006; K Ritchi, “Fast-Forwarding Is So Passe Advertisers Want in on DVR and Providers Are Finally Listening,” Boards, January 2007, p. 13; B. Steinberg, “In the End, It’s the Last Ad in a Pod They Recall,” Television Week, June 11, 2007, p. 13; and S. Vranica, “New Ads Take on TiVo,” The Wall Street Journal, October 5, 2007, p. B4.

19. NDS Ltd., “DirecTV Chooses NDS Dynamic to Support Addressable Advertising,” press release, March 22, 2011, www. nds.com, accessed May 27, 2011.

20. The Adidas outdoor efforts found in the following: “Adidas and Guerrilla Marketing,” Outdoor Advertising Blog, 1outdooradvertising. blogspot.com, August 13, 2007; and “Giant Adidas Ad,” Advertising Age, June 5, 2006, p. 15.

21. T. L. Stanley, “Advergames, Content Role Juice up Marketer’s Game,” Advertising Age, February 6, 2006, p. S-3; see also L. Schneider and T. B. Cornwell, “Cashing in on Crashes via Brand Placement in Computer Games,” International Journal of Advertising, 24, no. 3 (2005), pp. 321–43.

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22. P. Lehman, “Mad Ave Clicks with the Gamers,” IN, November 2007, p. 28; and “Interactive Marketing and Media Fact Pack,” Advertising Age, 2006, p. 46.

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48. Drèze and Hussherr, “Internet Advertising.”

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50. See G. D. Olsen, “Creating the Contrast,” Journal of Advertising, Winter 1995, pp. 29–44.

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55. R. Pieters, L. Warlop, and M. Wedel, “Breaking through the Clutter,” Management Science, June 2002, pp. 765–81.

56. “Signposts,” Advertising Age, May 21, 2001, p. 3.

57. T. Elkin, “PVR Not Yet a Big Threat,” Advertising Age, May 6, 2002, p. 55. See also L. F. Allwitt, “Effects of Interestingness on Evaluations of TV Commercials,” Journal of Current Issues and Research in Advertising, Spring 2000, pp. 41–53; and W. Friedman, “72.3% of PVR Viewers Skip Commercials,” AdAge.com, July 2, 2002, www.adage.com.

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58. J. W. Elpers, M. Wedel, and R. Pieters, “Why Do Consumers Stop Viewing Television Commercials?,” Journal of Marketing Research, November 2003, pp. 437–53.

59. Pieters, Warlop, and Wedel, “Breaking through the Clutter”; and Elpers, Wedel, and Pieters, “Why Do Consumers Stop Viewing Television Commercials?”

60. B. Lee and W. Lee, “The Effect of Information Overload on Consumer Choice Quality in an On-Line Environment,” Psychology & Marketing, March 2004, pp. 159–83.

61. Pieters and Wedel, “Attention Capture and Transfer in Advertising”; and R. Pieters and M. Wedel, “Goal Control of Attention to Advertising,” Journal of Consumer Research, August 2007, pp. 224–33.

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63. See W. Dou, R. Linn, and S. Yang, “How Smart Are ‘Smart Banners’?,” Journal of Advertising Research, July 2001, pp. 31–43.

64. K. Oser, “Targeting Web Behavior Pays, American Airlines Study Says,” Advertising Age, May 17, 2004, p. 8; see also L. Sherman and J. Deighton, “Banner Advertising,” Journal of Interactive Marketing, Spring 2001, pp. 60–64.

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67. J. Spaeth, “Post-Promotion Evaluation,” in The Power of Point- of-Purchase Advertising, ch. 6; and Liljenwall, “Global Trends in Point-of-Purchase Advertising.”

68. R. G. M. Pieters and T. H. A. Bijmolt, “Consumer Memory for Television Advertising,” Journal of Consumer Research, March 1997, pp. 362–72; see also E. Riebe and J. Dawes, “Recall of Radio Advertising in Low and High Advertising Clutter Formats,” International Journal of Advertising, 25, no. 1 (2006), pp. 71–86.

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70. For more detail, see T. L. Chartrand, “The Role of Conscious Awareness in Consumer Behavior,” Journal of Consumer Psychology, 15, no. 3 (2005), pp. 203–10; A. Dijksterhuis and P. K. Smith, “What Do We Do Unconsciously?,” Journal of Consumer Psychology, 15, no. 3 (2005), pp. 225–29; L. A. Peracchio and D. Luna, “The Role of Thin-Slice Judgments in Consumer Psychology,” Journal of Consumer Psychology, 16, no. 1 (2006), pp. 25–32; and T. L. Chartrand et al., “Nonconscious Goals and Consumer Choice,” Journal of Consumer Research, August 2008, pp. 189–201.

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72. Drèze and Hussherr, “Internet Advertising.”

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74. W. B. Key, Subliminal Seduction (Englewood Cliffs, NJ: Prentice Hall, 1973); and W. B. Key, Media Sexploitation (Englewood Cliffs, NJ: Prentice Hall, 1976).

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76. M. Rogers and C. A. Seiler, “The Answer Is No,” Journal of Advertising Research, March 1994, pp. 36–45.

77. T. F. Stafford, “Alert or Oblivious?,” Psychology & Marketing, September 2000, pp. 745–60.

78. See D. Grewal, K. B. Monroe, and R. Krishnan, “The Effects of Price-Comparison Advertising,” Journal of Marketing, April 1998, pp. 46–59; and D. Grewal, R. Krishnan, J. Baker, and N. Borin, “The Effects of Store Name, Brand Name, and Price Discounts,” Journal of Retailing, 3 (1998), pp. 331–52.

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80. Goodstein, “Category-Based Applications and Extensions in Advertising.”

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health-and-fitness/health/synesthesia-can-be-a-blessing-just- ask-kanye-west/article8414660/, accessed September 1, 2014; and L. Spinney, “Synesthesia Sells,” NewScientist, www.slate.com/ articles/health_and_science/new_scientist/2013/09/cultural_ synesthesia_in_marketing_tiffany_cadbury_and_corona_use_ multiple.html, accessed September 1, 2014.

86. For a discussion, see J. E. Escalas, M. C. Moore, and J. E. Britton, “Fishing for Feelings?,” Journal of Consumer Psychology, 14, nos. 1 & 2 (2004), pp. 105–14.

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89. G. Tom et al., “Cueing the Consumer,” Journal of Consumer Marketing, Spring 1987, pp. 23–27. See also D. S. Kempf and R. N. Laczniak, “Advertising’s Influence on Subsequent Product Trial Processing,” Journal of Advertising, Fall 2001, pp. 27–40.

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100. T. Meenaghan, ed., “Ambush Marketing,” special issue, Psychology & Marketing, July 1998.

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103. R. Bryant and L. Dundes, “Portion Distortion,” Journal of Consumer Affairs, Winter 2005, pp. 399–408; and P. Chandon and B. Wansink, “Is Obesity Caused by Calorie Underestimation?,” Journal of Marketing Research, February 2007, pp. 84–99.

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111. B. J. Phillips and E. F. McQuarrie, “The Development, Change, and Transformation of Rhetorical Style in Magazine Advertisements 1954–1999,” Journal of Advertising, 31, no. 4 (2003), pp. 1–13; L. A. Peracchio and J. Meyers-Levy, “Using Stylistic Properties of Ad Pictures to Communicate with Consumers,” Journal of Consumer Research, June 2005, pp. 29–40; and J. Z. Sojka and J. L. Giese, “Communicating through Pictures and Words,” Psychology & Marketing, December 2006, pp. 995–1014.

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112. B. J. Phillips, “The Impact of Verbal Anchoring on Consumer Response to Image Ads,” Journal of Advertising, Spring 2000, pp. 15–24; E. F. McQuarrie and D. G. Mick, “Visual Rhetoric in Advertising,” Journal of Consumer Research, June 1999, pp. 37–54; and M. Callow and L. Schiffman, “Implicit Meaning in Visual Print Advertisements,” International Journal of Advertising, 21 (2002), pp. 259–77.

113. See R. Kivetz and I. Simonson, “The Effects of Incomplete Information on Consumer Choice,” Journal of Marketing Research, November 2000, pp. 427–48.

114. M. J. Barone and P. J. Miniard, “How and When Factual Ad Claims Mislead Consumers,” Journal of Marketing Research, February 1999, pp. 58–74; M. J. Barone, K. M. Palan, and P. W. Miniard, “Brand Usage and Gender as Moderators of the Potential Deception Associated with Partial Comparative Advertising,” Journal of Advertising, Spring 2004, pp. 19–28; and M. J. Barone, K. C. Manning, and P. W. Miniard, “Consumer Response to Retailers’ Use of Partially Comparative Pricing,” Journal of Marketing, July 2004, pp. 37–47.

115. For an excellent discussion, see I. L. Preston, The Tangled Web They Weave (Madison, WI: University of Madison Press, 1994).

116. L. Petrak, “Capturing Consumer Attention,” National Provisioner, October 2003, pp. 52–53.

117. P. Boatwright and J. C. Nunes, “Reducing Assortment,” Journal of Marketing, July 2001, pp. 50–63. See also E. van Herpen and R. Pieters, “The Variety of an Assortment,” Marketing Science, Summer 2002, pp. 331–41; S. J. Hoch, E. T. Bradlow, and B. Wansink, “Rejoinder to ‘The Variety of an Assortment,’” Marketing Science, Summer 2002, pp. 342–46; A. Chernev, “When More Is Less and Less Is More,” Journal of Consumer Research, September 2003, pp. 170–83; and S. Thompson, “Kraft Vows to Kick Addiction to Extensions,” Advertising Age, August 23, 2004, p. 1.

118. H. Chura, “Pepsi-Cola’s Code Red Is White Hot,” Advertising Age, August 27, 2001, p. 24.

119. “What’s in a Name?,” Global Cosmetics Industry, August 2002, p. 42. See also E. G. Miller and B. E. Kahn, “Shades of Meaning,” Journal of Consumer Research, June 2005, pp. 86–92; J. L. Skorinko et al., “A Rose by Any Other Name . . . ,” Psychology and Marketing, December 2006, pp. 975–93; and “Study: Food in McDonald’s Wrapper Tastes Better to Kids,” CNN.com, accessed August 7, 2007. See also R. Raghunathan, R. W. Naylor, and W. D. Hoyer, “The Unhealthy  5  Tasty Intuition,” Journal of Marketing, October 2006, pp. 170–84.

120. S. Zhang and B. H. Schmitt, “Creating Local Brands in Multi- lingual International Markets,” Journal of Marketing Research, August 2001, pp. 313–25.

121. S. Freeman, “Revived ‘Hemi’ Engine Helps Chrysler Juice Up Its Sales,” The Wall Street Journal, April 30, 2004, p. B1.

122. R. R. Klink, “Creating Brand Names with Meaning,” Marketing Letters 11, no. 1 (2000), pp. 5–20; and E. Yorkston and G. Menon, “A Sound Idea,” Journal of Consumer Research, June 2004, pp. 43–51.

123. S. Begley, “New ABCs of Branding,” The Wall Street Journal, August 26, 2002, p. B1.

124. I. P. Levin and A. M. Levin, “Modeling the Role of Brand Alliances in the Assimilation of Product Evaluations,” Journal of Consumer Psychology 9, no. 1 (2000), pp. 43–52; and K. K.

Desai and K. I. Keller, “The Effects of Ingredient Branding Strategies on Host Brand Extendibility,” Journal of Marketing, January 2002, pp. 73–93.

125. See J. Tantillo, J. D. Lorenzo-Aiss, and R. E. Mathisen, “Quantifying Perceived Differences in Type Styles,” Psychology & Marketing, August 1995, pp. 447–57; and C. Janiszewski and T. Meyvis, “Effects of Brand Logo Complexity, Repetition, and Spacing on Processing Fluency and Judgment,” Journal of Marketing Research, June 2001, pp. 18–32.

126. T. L. Childers and J. Jass, “All Dressed Up with Something to Say,” Journal of Consumer Psychology 12, no. 2 (2002), pp. 93–106; J. R. Doyle and P. A. Bottomley, “Font Appropriateness and Brand Choice,” Journal of Business Research, 57 (2004), pp. 873–80; and J. R. Doyle and P. A. Bottomley, “Dressed for the Occasion,” Journal of Consumer Psychology, 16, no. 2 (2006), pp. 112–23. See also P. W. Henderson, J. L. Giese, and J. A. Cote, “Impression Management Using Typeface Design,” Journal of Marketing, October 2004, pp. 60–72.

127. P. W. Henderson and J. A. Cote, “Guidelines for Selecting or Modifying Logos,” Journal of Marketing, April 1998, pp. 14–30; and J. T. Landry, “Making Logos Matter,” Harvard Business Review, March–April 1998, pp. 16–17.

128. M. Peers, “Buddy, Can You Spare Some Time?,” The Wall Street Journal, January 26, 2004, p. B1; and B. Frank, “‘Missing’ Men Prove Prescient,” Advertising Age, August 23, 2004, p. 16.

129. “Ford Boss Outlines Shift to ‘Rifle’ Media,” Advertising Age, October 26, 1981, p. 89. See also P. J. Danaher, “Wearout Effects in Target Marketing,” Marketing Letters, 3 (1996), pp. 275–87.

130. P. N. Shamdasani, A. J. S. Stanaland, and J. Tan, “Location, Location, Location,” Journal of Advertising Research, July 2001, pp. 7–20.

131. Lehman, “Mad Ave Clicks with the Gamers.”

132. J. Guterman, “Outdoor Interactive,” American Demographics, August 2001, p. 32.

133. O. Ampuero and N. Vila, “Consumer Perceptions of Product Packaging,” Journal of Consumer Marketing, 23, no. 2 (2006), pp. 100–112.

134. B. E. Kahn and B. Wansink, “The Influence of Assortment Structure on Perceived Variety and Consumption Quantities,” Journal of Consumer Research, March 2004, pp. 519–33.

135. S. Thompson, “M&M’s Wraps Up Promo with Color,” Advertising Age, March 8, 2004, p. 4.

136. B. Wansink and K. Van Ittersum, “Bottoms Up!,” Journal of Consumer Research, December 2003, pp. 455–63; V. Folkes and S. Matta, “The Effect of Package Shape on Consumers’ Judgments of Product Volume,” Journal of Consumer Research, September 2004, pp. 390–401; and J. Hoegg and J. W. Alba, “Taste Perception,” Journal of Consumer Research, March 2007, pp. 490–498.

137. S. Yang and P. Raghubir, “Can Bottles Speak Volumes?,” Journal of Retailing, 81, no. 4 (2005), pp. 269–81.

138. E. Lepkowska-White and A. L. Parsons, Journal of Consumer Affairs, Winter 2001, pp. 278–94; and V. A. Taylor and A. B. Bower, “Improving Product Instruction Compliance,” Psychology & Marketing, March 2004, pp. 229–45; see also J. J. Argo and K. J. Main, “Meta-Analyses of the Effectiveness of Warning Labels,” Journal of Public Policy and Marketing, Fall 2004, pp. 193–208.

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9 Learning, Memory, and Product Positioning chapter

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313

Describe the nature of learning and memory.

Explain the types of memory and memory’s role in learning.

Distinguish the different processes underlying high- and low-involvement learning.

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LO2

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Summarize the factors affecting information retrieval from memory.

Understand the application of learning to brand positioning, equity, and leverage.

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

Learning and memory can be tricky things for consumers and marketers. How we learn or “come to know” something is complex and multifaceted. Once we have learned some- thing, it is hard to “unlearn” it even when we are told or suspect that it is false. Marketers must deal with the challenge of understand- ing learning and memory and the implications this has for marketing messages and product design.

Some bizarre, funny, and not-so-funny examples of learning and the difficulty of unlearning include:1

�r� The flies etched in urinals in men’s rest- rooms apparently act as “targets,” result- ing in 80 percent less “spilling.” How men “learn” to aim for the target is not well understood.

�r� People given large-size buckets of five- day-old stale popcorn mindlessly eat 57 percent more popcorn than people given medium-size buckets of the same pop- corn. One source of such “mindless” eat- ing could be the “clean your plate” mantra “learned” at an early age by many children in the United States.

�r� We “learn” from an early age that but- tons get responses via video games, door bells, and so on. Interestingly, research suggests that most “cross walk” buttons are not hooked up to anything and yet people push them endlessly in expecta- tion of an effect.

�r� We have “learned” that certain noises signal successful action. Thus, while smartphones don’t need a “click” for but- ton action success (keyboard or cam- era), consumers often want the noise because they find it hard to “unlearn” the “noise 5 successful action” link.

�r� We have “learned” how cars should sound with combustion engines both as an operator and as pedestrians trying to stay safe. The Nissan Leaf hybrid car runs so quietly that drivers could not tell that their car was running. A synthesizer in the dashboard hooked up to speakers in the hood plays an engine sound to pro- vide drivers with the needed feedback. To warn other people of its approach, an arti- ficial roaring noise was added to the silent ENV hydrogen cell motorcycle.

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Part Three Internal Influences314

In this chapter, we discuss the nature of learning and memory, conditioning and cognitive theories of learning, and factors affecting retrieval. Implications for marketing manag- ers are discussed throughout, culminating with an examination of product positioning and brand equity in the final sections.

NATURE OF LEARNING AND MEMORY Learning is essential to the consumption process. In fact, consumer behavior is largely learned behavior. People acquire most of their attitudes, values, tastes, behaviors, pref- erences, symbolic meanings, and feelings through learning. Culture, family, friends, mass media, and advertising provide learning experiences that affect the type of lifestyle people seek and the products they consume. Consider, for example, how often your movie choices are influenced by what you read online and discussions you have with friends.

Learning is any change in the content or organization of long-term memory or behav- ior2 and is the result of information processing. In the previous chapter, we described information processing as a series of activities by which stimuli are perceived, transformed into information, and stored. The four activities in the series are exposure, attention, inter- pretation, and memory.

As Figure  9–1 indicates, different information processing systems handle different aspects of learning. The perceptual system deals with information intake through expo- sure and attention and, as we discussed in Chapter 8, may be conscious or unconscious. Short-term memory deals with holding information temporarily while it is interpreted and transferred into long-term memory. Long-term memory deals with storing and retrieving information to be used in decisions.

These processes are highly interrelated. For example, a consumer may notice his or her favorite brand of soda on the store shelf because of a purchase goal stored in long-term

LO1

9-1 Information Processing, Learning, and MemoryFIGURE Information processing

system

Learning process

Learning outcomes

Information processing phase

Exposure and attention

Interpretation and transfer

Storage and retrieval

Perceptual system

Short-term memory

Long-term memory

Purchase and use behavior

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Chapter Nine Learning, Memory, and Product Positioning 315

memory. The soda’s current price is brought into short-term memory through the percep- tual system for processing. But a reference price may also be retrieved from long-term memory as a comparison point. Finally, price perceptions associated with the consumer’s favorite brand may be updated and stored in long-term memory as a consequence of the comparison process.

MEMORY’S ROLE IN LEARNING Memory is the total accumulation of prior learning experiences. As Figure 9–1 suggests, memory is critical to learning. It consists of two interrelated components: short-term and long-term memory.3 These are not distinct physiological entities. Instead, short-term memory (STM), or working memory, is that portion of total memory that is currently activated or in use. Long-term memory (LTM) is that portion of total memory devoted to permanent information storage.

Short-Term Memory STM has a limited capacity to store information and sensations. In fact, it is not used for storage in the usual sense of that term. It is more like a computer file that is currently in use. Active files hold information while it is being processed. After processing is complete, the reconfigured information is printed or returned to more permanent storage such as the hard drive. A similar process occurs with STM. Individuals use STM to hold information while they analyze and interpret it. They may then transfer it to another system (write or type it), place it in LTM, or both. Thus, STM is closely analogous to what we normally call thinking. It is an active, dynamic process, not a static structure.

STM Is Short Lived Information in working memory decays quickly. The memory span for prices, for example, is about 3.7 seconds.4 The short-lived nature of STM means that consumers must constantly refresh information through maintenance rehearsal or it will be lost. Maintenance rehearsal is the continual repetition of a piece of information in order to hold it in current memory for use in problem solving or transferal to LTM. Repeat- ing the same formula or definition several times before taking an exam is an example. Mar- keters frequently simulate this by repeating the brand name or a key benefit in a prominent manner several times in an ad.

STM Has Limited Capacity The limited capacity of STM means that consumers can hold only so much information in current memory. The capacity of STM is thought to be in the range of five to nine bits of information. A bit can be an individual item or a related set of items. Organizing individual items into groups of related items that can be processed as a single unit is called chunking. Chunking can greatly aid in the transfer (and recall) of information from memory. A recent study of toll-free vanity numbers shows the power of chunking. Memory for completely numeric numbers was 8 percent, memory for combina- tions of numbers and words (800-555-HOME) was 44 percent, and memory for all words (800-NEW-HOME) was 58 percent! The number of bits goes down as the words become meaningful chunks replacing meaningless numbers.5

Marketers can help consumers chunk product information by organizing detailed attri- bute information in messages around the more general benefits that they create. Interest- ingly, consumers who are product experts are better able to chunk due to highly organized memory structures. As a consequence, experts are better able to learn information and avoid information overload.6

LO2

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Part Three Internal Influences316

Elaborative Activities Occur in STM STM is often termed working memory because that’s where information is analyzed, categorized, and interpreted—that is, STM is where elaborative activities take place. Elaborative activities are the use of previously stored experiences, values, attitudes, beliefs, and feelings to interpret and evaluate information in working memory as well as to add relevant previously stored information. Elaborative activities serve to redefine or add new elements to memory.

Suppose your firm has developed a new product for consumers who want to use their electronic devices safely while driving. The product is a voice-activated program that allows you to give commands to your MP3 player and to your cell phone, hands free. How will this product be categorized? The answer depends in large part on how it is presented. How it is presented will influence the nature of the elaborative activities that will occur, which in turn will determine how the product is remembered. Illustration 9–1 shows how the elements of an advertisement can work together to enhance elaborative activities.

Elaborative activities can involve both concepts and imagery. Concepts are abstractions of reality that capture the meaning of an item in terms of other concepts. They are similar to a dictionary definition of a word. Imagery involves concrete sensory representations of ideas, feelings, and objects. It permits a direct recovery of aspects of past experiences.

Successful brands

must enter into

memory in a favor-

able manner, and

they must be recalled

when required. The

brand name, visual,

and ad text will

enhance elaborative

activities appropriate

for the product.

ILLUSTRATION 9-1

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Chapter Nine Learning, Memory, and Product Positioning 317

Thus, imagery processing involves the recall and mental manipulation of sensory images, including sight, smell, taste, and tactile (touch) sensations.

Pictures can increase imagery, particularly when they are vivid, meaning they are rela- tively concrete representations of reality rather than an abstraction. Pictures are not the only factor to increase imagery, however. Words and phrases in an ad can also encourage con- sumers to conjure up their own images (e.g., “picture it . . .,” “feel it . . .,” “imagine . . .”).

Marketers need to make sure that the words and pictures work together. For example, if the ad text invites consumers to engage in imagery processing but provides them with a bor- ing picture, then consumers will be turned off to the message and less likely to buy the brand.7

Whether consumers are processing concepts or images, a key issue in learning and mem- ory is the extent of elaboration. A major determinant of elaboration is consumer motivation or involvement. Elaboration is enhanced when consumers are more involved or interested in the brand, product, or message at hand (as we saw earlier, it also is facilitated by consumer expertise). Elaboration increases the chances that information will be transferred to LTM and be retrieved at a later time by increasing the processing attention directed at that infor- mation and by establishing meaningful linkages between the new information and existing information. These linkages or associations are an important part of LTM, as discussed next.

Long-Term Memory LTM is viewed as an unlimited, permanent storage. It can store numerous types of infor- mation, such as concepts, decision rules, processes, and affective (emotional) states. Mar- keters are particularly interested in semantic memory, which is the basic knowledge and feelings an individual has about a concept. It represents the person’s understanding of an object or event at its simplest level. At this level, a brand such as Acura might be catego- rized as “a luxury car.”

Another type of memory of interest to marketers is episodic memory. This is the mem- ory of a sequence of events in which a person participated. These personal memories of events such as a first date, graduation, or learning to drive can be quite strong. They often elicit imagery and feelings. Marketers frequently attempt to evoke episodic memories either because their brand was involved in them or to associate the positive feelings they gener- ate with the brand. Flashbulb memories are a special type of episodic memory. Flashbulb memory is acute memory for the circumstances surrounding a surprising and novel event.8

Key aspects of flashbulb memories include the following:

�r� They are vividly detailed and therefore highly enduring over time. �r� They contain specific situational detail about location, people, activities, and felt

emotions. �r� They are held with a high degree of confidence. �r� They are perceived as special and different from memories of ordinary or mundane

experiences.

Marketers worry not only about what information is stored in LTM but also how this information is organized. Two important memory structures are schemas and scripts.

Schemas Both concepts and episodes acquire depth of meaning by becoming associ- ated with other concepts and episodes. A pattern of such associations around a particular concept is termed a schema or schematic memory, sometimes called a knowledge struc- ture. Schematic memory is a complex web of associations. Figure 9–2 provides a simpli- fied example of a schema by showing how one might associate various concepts with Mountain Dew to form a network of meaning for that brand. Notice that our hypothetical

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Part Three Internal Influences318

schema contains product characteristics, usage situations, episodes, and affective reac- tions. The source of some of the schema is personal experience, but other aspects may be completely or partially based on marketing activities.9 The schematic memory of a brand is the same as the brand image, which we discuss later in the chapter. It is what the consumer thinks of and feels when the brand name is mentioned.

In the partial schema shown in Figure  9–2, concepts, events, and feelings are stored in nodes within memory. Thus, the concept “cool” is stored in a node, as are “music,” “fun,” and “Halloween.” Each of these is associated either directly or indirectly with Mountain Dew. Associative links connect various concepts to form the complete meaning assigned to an item.

Associative links vary in terms of how strongly and how directly they are associ- ated with a node. In our example, crisp, fun, green, and cool are directly associated with Mountain Dew. However, one or two of these may be strongly associated with the brand, as crisp and cool are shown to be by the bold lines in our example. Other nodes, such as fun and green, may have weaker links. Without reinforcement, the weaker links may dis- appear or fade over time (e.g., the Halloween party linkage). Over the longer run, so will the stronger ones (e.g., the cool linkage). Marketers spend enormous effort attempting to develop strong, easily activated links between their brands and desirable product ben- efits.10 The various ways in which these linkages are established and strengthened (rein- forced) are discussed in the next section, on learning.

The memory activation shown in Figure 9–2 originated with the name of a particular brand. If the activation had begun with the concept “cool,” would Mountain Dew arise as a node directly linked to cool? It would depend on the total context in which the memory

9-2 A Partial Schematic Memory for Mountain DewFIGURE

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Mountain Dew

Fun Green CoolCrisp

Parties DifferentCarbonated YoungExtreme

Refreshing

Lemonade

Music

Halloween

Last party attended

Sean White

PumpkinsShowers

Kim

DatesColas

Rihanna

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Chapter Nine Learning, Memory, and Product Positioning 319

was being activated. In general, multiple memory nodes are activated simultaneously. Thus, a question like “What is a cool soft drink?” might quickly activate a memory schema that links Mountain Dew directly to cool. However, a more abstract question like “What is cool?” might not because of its relatively weak and indirect connection to beverages and sodas.11 Marketers expend substantial effort to influence the schema consumers have for their brands. We will discuss this process in detail later in the chapter.

Marketers also strive to influence the schema consumers have for consumption situa- tions. For example, consumers likely have very different beverage schemas for situations such as jogging, where thirst is a key component, than for a party, where socializing and relaxing are key components. The beverage schema for jogging might include products such as water and soda and brands such as Dasani and Pepsi. The beverage schema for a party might include products such as wine and beer and brands such as Yellow Tail and Budweiser. Brands in the schematic memory that come to mind (are recalled) for a specific problem or situation such as thirst are known as the evoked set.

The usage situation schema to which a brand attaches itself can have major ramifica- tions. For example, if Canada Dry Ginger Ale associated itself strongly with a “party” situ- ation as a mixer for cocktails, then it is much less likely to be retrieved as part of the evoked set when consumers are thinking of other usage situations, such as those involving thirst.12 We will discuss how the evoked set influences consumer decision making in Chapter 15.

Scripts Memory of how an action sequence should occur, such as purchasing and drink- ing a soft drink to relieve thirst, is a special type of schema known as a script. Scripts are necessary for consumers to shop effectively. One of the difficulties new forms of retailing have is teaching consumers the appropriate script for acquiring items in a new manner. This is the problem facing firms wanting to sell products via the Internet. Before these firms can succeed, their target markets must learn appropriate scripts for Internet shop- ping. Green marketing efforts relate in part to teaching consumers appropriate scripts for disposal that include recycling.

Retrieval from LTM The likelihood and ease with which information can be recalled from LTM is termed accessibility. Every time an informational node or a link between nodes is activated (accessed) in memory, it is strengthened. Thus, accessibility can be enhanced by rehearsal, repetition, and elaboration. For example, Coca-Cola might be one of the brands that always comes to mind (is retrieved) when you think of sodas because you have seen so many ads for that brand. This accessibility effect for brands is called top-of-mind awareness. In addition, accessibility is related to the strength and number of incoming linkages. In essence, when a concept is linked to other concepts in memory, its accessibility increases as a result of the multiple retrieval pathways. Thus, elaboration enhances retrieval by creating a rich associative network. Finally, accessibility is related to the strength and directness of links to nodes, with stronger and more direct linkages being more accessible. Thus, cool and crisp are highly accessible associations related to Mountain Dew, while parties and refreshing are less accessible. Clearly, marketers want strong and direct linkages between their brand and critical product features.

Retrieving information from LTM is not a completely objective or mechanical task. If asked to recall the sponsor of the last summer Olympics, some consumers will not remember instantly and certainly. These individuals may construct a memory based on limited recall and a series of judgments or inferences. For example, many might “recall” Nike because it is a dominant firm in sports equipment and apparel. Thus, it would “make sense” for Nike to be the sponsor, which could lead some consumers to believe that Nike was indeed a sponsor of the event even if it was not.13 Therefore, memory is sometimes shaped and changed as it is accessed.

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Part Three Internal Influences320

Finally, retrieval may involve explicit or implicit memories. Traditionally, we have thought of remembering, and thus memory, as the ability to recall specific items or events. If you read this chapter and then try to answer the review questions at the end without refer- ring back to the chapter, you are engaging in traditional memory recall. This is referred to as explicit memory, which is characterized by the conscious recollection of an expo- sure event. In contrast, implicit memory involves the nonconscious retrieval of previously encountered stimuli. It is a sense of familiarity, a feeling, or a set of beliefs about an item without conscious awareness of when and how they were acquired. An example of implicit memory relates to brand placements. One study found that over time, a brand’s image becomes increasingly similar to the TV show in which it appears, even when consumers don’t remember seeing the brand placements!14

LEARNING UNDER HIGH AND LOW INVOLVEMENT We have described learning as any change in the content or organization of long-term memory or behavior. In addition, we have described LTM in terms of schemas or asso- ciational networks. So how do people learn these associations? For example, how do con- sumers learn that Mountain Dew is cool or that Walmart has low prices?

A moment’s reflection will reveal that people learn things in different ways. For exam- ple, buying a car or stereo generally involves intense, focused attention and processing. The outcome of these efforts is rewarded by better choices. However, most learning is of a much different nature. Even if they don’t care for baseball, most people know who is playing in the World Series each year because they hear about it frequently. And people can identify clothes that are stylish even though they never really think much about clothing styles.

As just described, learning may occur in either a high-involvement or a low- involvement situation. Recall from Chapter 8 that information processing (and therefore learning) may be conscious and deliberate in high-involvement situations. Or it may be nonfocused and even nonconscious in low-involvement situations. A high-involvement learning situ- ation is one in which the consumer is motivated to process or learn the material. For example, an individual reading PC Magazine prior to purchasing a computer is probably highly motivated to learn relevant material dealing with the various computer brands. A low-involvement learning situation is one in which the consumer has little or no motiva- tion to process or learn the material. A consumer whose television program is interrupted by a commercial for a product he or she doesn’t currently use or feel a desire for generally has little motivation to learn the material presented in the commercial. Much, if not most, consumer learning occurs in relatively low-involvement contexts.15

As we will see in the following sections, the way a communication should be struc- tured differs depending on the level of involvement the audience is expected to have. Illustration 9–2 shows the FEL-PRO ad that assumes high-involvement learning and the Campbell’s Select ad based on low-involvement learning. Why does one ad assume a highly involved audience and the other a low-involvement audience? What differences do you notice between these two ads? Do those differences make sense?

Figure 9–3 shows the two general situations and the five specific learning theories that we are going to consider. Level of involvement is the primary determinant of how material is learned. The solid lines in the figure indicate that operant conditioning and analytical reasoning are common learning processes in high-involvement situations. Classical con- ditioning and iconic rote learning tend to occur in low-involvement situations. And vicari- ous learning/modeling is common in both low- and high-involvement situations. We will discuss each of these theories in the following pages.

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Chapter Nine Learning, Memory, and Product Positioning 321

Conditioning Conditioning is probably most appropriately described as a set of procedures that marketers can use to increase the chances that an association between two stimuli is formed or learned. The word conditioning has a negative connotation to many people and brings forth images of robot-like humans. However, the general procedure simply involves presenting two stimuli in close proximity so that eventually the two are perceived (consciously or unconsciously) to be related or associated. That is, consumers learn that the stimuli go (or do not go) together.

There are two basic forms of conditioned learning: classical and operant. Classical con- ditioning attempts to create an association between a stimulus (e.g., brand name) and some response (e.g., behavior or feeling). Operant conditioning attempts to create an association between a response (e.g., buying a brand) and some outcome (e.g., satisfaction) that serves to reinforce the response.

Classical Conditioning Imagine that you are marketing a new brand of pen and want consumers to feel positively about that pen. How might classical conditioning help you to associate positive feelings with your unfamiliar brand? The classical conditioning procedure would have you pair the unknown brand repeatedly together with some other stimulus that you know already automatically elicits positive feelings or emotions, such as popular music in an ad. The goal would be that, eventually, after repeatedly pairing the brand name and the music, the brand name alone will elicit the same positive feelings produced by the music.

The process of using an established relationship between one stimulus (music) and response (pleasant feelings) to bring about the learning of the same response (pleasant feelings) to a different stimulus (the brand) is called classical conditioning. Figure  9–4 illustrates this type of learning. Hearing popular music (unconditioned stimulus) auto- matically elicits a positive emotion (unconditioned response) in many individuals. If

An important judg-

ment in designing

an ad is the level

of involvement the

audience will have as

shown by the FEL-

PRO and Campbell’s

Select ads.

ILLUSTRATION 9-2

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Part Three Internal Influences322

this music is consistently paired with a particular brand of pen or other product (condi- tioned stimulus), the brand itself may come to elicit the same positive emotion (condi- tioned response).16 In addition, some features, such as the masculine/feminine qualities of the unconditioned stimulus, may also become associated with the conditioned stimulus.

Commonly used

Occasionally used

Situation Learning approach Situation

Learning approach

Specific learning theory

Low-involvement learning situation

High-involvement learning situation

Classical

Operant

Reasoning/ analogy

Iconic rote

Vicarious/ modeling

ConditioningConditioning

Cognitive Cognitive

9-3 Learning Theories in High- and Low-Involvement SituationsFIGURE

UCS = Unconditioned stimulus CS = Conditioned stimulus

UCR = Unconditioned response CR = Conditioned response

UCS (popular music)

UCR (positive emotion)

CR (positive emotion)

CS (pen)

9-4 Consumer Learning through Classical ConditioningFIGURE

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Chapter Nine Learning, Memory, and Product Positioning 323

That is, using a scene showing males or females in an activity that elicits positive emotions may not only cause a positive emotional response to a brand consistently paired with it, but also cause the brand to have a masculine or a feminine image.17 Thus, classical con- ditioning can lead to positive attitudes by influencing brand feelings and beliefs. This is important because, as we will see in later chapters, attitudes influence information search, trial, and brand choice.

Other marketing applications of classical conditioning include:

�r� Consistently advertising a product on exciting sports programs may result in the prod- uct itself generating an excitement response.

�r� An unknown political candidate may elicit patriotic feelings by consistently playing patriotic background music in his or her commercials and appearances.

�r� Christmas music played in stores may elicit emotional responses associated with giv- ing and sharing, which in turn may increase the propensity to purchase.

Learning via classical conditioning is most common in low-involvement situations, where relatively low levels of processing effort and awareness are involved.18 However, after a sufficient number of low-involvement “scannings” or “glances at” the advertise- ment, the association may be formed or learned.

Operant Conditioning Operant conditioning (or instrumental learning) involves rewarding desirable behaviors such as brand purchases with a positive outcome that serves to reinforce the behavior.19 The more often a response is reinforced, the more likely it will be repeated in the future as consumers learn that the response is associated with a positive outcome.

Imagine that you are marketing a snack called Pacific Snax’s Rice Popcorn. You believe your product has a light, crisp taste that consumers will like. But how can you influence them to learn to consume your brand? One option, based on the operant conditioning pro- cedure, would be to distribute a large number of free samples through the mail, at shopping malls, or in stores. Many consumers would try the free sample (desired response). To the extent that the taste of Rice Popcorn is indeed pleasant (a positive outcome that serves as a reinforcement), the probability of continued consumption is increased. This is shown graphically in Figure 9–5.

Unlike the relatively automatic associations created by classical conditioning, operant conditioning requires that consumers first engage in a deliberate behavior and come to understand its power in predicting positive outcomes that serve as reinforcement. As sug- gested in Figure 9–3, such learning is common under conditions of higher involvement.

Operant conditioning often involves influencing consumers to purchase a specific brand or product (desired response). Thus, a great deal of marketing strategy is aimed at securing an initial trial. Free samples (at home or in the store), special price discounts on

9-5Consumer Learning by Operant Conditioning FIGURE Reinforcement (pleasant taste)

Increases probability of response to stimulus

Stimulus (Rice Popcorn)

Desired response (consumption)

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Part Three Internal Influences324

new products, and contests all represent rewards offered to consumers to try a particular product or brand. If they try the brand under these conditions and like it (reinforcement), they are likely to take the next step and purchase it in the future. This process of encourag- ing partial responses leading to the final desired response (consume a free sample, buy at a discount, buy at full price) is known as shaping and is illustrated in Figure 9–6.

In one study, 84 percent of those given a free sample of a chocolate while in a candy store made a purchase, whereas only 59 percent of those not provided a sample made a purchase. Thus, shaping can be very effective. Illustration 9–3 shows an ad for Ciba Vision Dailies lenses. This ad is designed to induce trial, the first step in shaping.

While reinforcement increases the likelihood of behavior such as a purchase being repeated, a negative consequence (punishment) has exactly the opposite effect. Thus, the purchase of a brand that does not function properly greatly reduces the chances of future purchases of that brand. This underscores the critical importance of consistent product quality.

Operant conditioning is used widely by marketers. The most common application is to offer consistent-quality products so that the use of the product to meet a consumer need is reinforcing. Other applications include:

�r� Direct mail or personal contact after a sale that congratulates the purchaser for making a wise purchase.

�r� Giving extra reinforcement for purchasing a particular brand, such as rebates, toys in cereal boxes, or discount coupons.

�r� Giving free product samples or introductory coupons to encourage product trial (shaping).

�r� Making store interiors, shopping malls, or downtown areas pleasant places to shop (reinforcing) by providing entertainment, controlled temperature, exciting displays, and so forth.

The power of operant conditioning was demonstrated by an experiment conducted by an insurance company. More than 2,000 consumers who purchased life insurance over a one-month period were randomly divided into three groups. Two of the groups received reinforcement after each monthly payment in the form of a nice “thank-you” letter or tele- phone call. The third group received no such reinforcement. Six months later, 10 percent

Consume a free sample of Rice Popcorn that was sent to your home

Purchase a second package using the discount coupon that accompanied the free sample

Repurchase the product at full price

9-6 The Process of Shaping in Purchase BehaviorFIGURE

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Chapter Nine Learning, Memory, and Product Positioning 325

of the members of the two groups that received reinforcement had terminated their policies, while 23 percent of those who had not received reinforcement had done so! Reinforcement (being thanked) led to con- tinued behavior (sending in the monthly premium).20

Cognitive Learning Cognitive learning encompasses all the mental activities of humans as they work to solve problems or cope with situations. It involves learning ideas, concepts, attitudes, and facts that contribute to our ability to rea- son, solve problems, and learn relationships without direct experience or reinforcement. Cognitive learning can range from very simple information acquisition (as in iconic rote learning) to complex, creative problem solving (as in analytical reasoning). Three types of cognitive learning are important to marketers.

Iconic Rote Learning Learning a concept or the association between two or more concepts in the absence of conditioning is known as iconic rote learning. For example, one may see an ad that states “Ketoprofin is a headache remedy” and associate the new concept “ketoprofin” with the existing concept “headache remedy.” Notice the distinction from conditioning in that there is neither an unconditioned stimulus (classical) nor a direct reward or reinforcement (operant) involved.

Also, it is important to point out that unlike more complex forms of cognitive learning, iconic rote learning generally involves considerably less cognitive effort and elaboration.21 A substantial amount of low-involvement learning involves iconic rote learning. Numerous rep- etitions of a simple message that occur as the consumer scans the environment may result in the essence of the message being learned. Through iconic rote learning, consumers may form beliefs about the characteristics or attributes of products without being aware of the source of the information. When the need arises, a purchase may be made based on those beliefs.22

Vicarious Learning or Modeling It is not necessary for consumers to directly experi- ence a reward or punishment to learn. Instead, they can observe the outcomes of others’ behaviors and adjust their own accordingly.23 Similarly, they can use imagery to anticipate the outcome of various courses of action. This is known as vicarious learning or modeling.

This type of learning is common in both low- and high-involvement situations. In a high-involvement situation, such as purchasing a new suit shortly after taking a job, a consumer may deliberately observe the styles worn by others at work or by role models from other environments, including advertisements. Many ads encourage consumers to imagine the feelings and experience of using a product.24 Such images not only enhance learning about the product, but may even influence how the product is evaluated after an actual trial.

A substantial amount of modeling also occurs in low-involvement situations. Through- out the course of their lives, people observe others using products and behaving in a great variety of situations. Most of the time they pay little attention to these behaviors. However,

Marketers design

products that they

hope will meet con-

sumer needs. When

a need is met by a

product, the proba-

bility of its being pur-

chased in the future

increases. A critical

step in the process

is the initial purchase

or trial of the product.

This ad encourages

such a trial as shown

by the Ciba Vision

Dailies ad.

ILLUSTRATION 9-3

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Part Three Internal Influences326

over time they learn that certain behaviors, and products, are appropriate in some situa- tions and others are not.

Analytical Reasoning The most com- plex form of cognitive learning is analytical reasoning. In reasoning, individuals engage in creative thinking to restructure and recombine existing information as well as new information to form new associations and concepts. Information from a credible source that contradicts or challenges one’s existing beliefs will often trigger reason- ing.25 The ad in Illustration  9–4 challenges implicit consumer beliefs.

One form of analytical reasoning is the use of analogy. Analogical reasoning is an inference process that allows consumers to use an existing knowledge base to under- stand a new situation or object. That is, it allows consumers to use knowledge about

something they are familiar with to help them understand something they are not familiar with. For example, if you have not tried or adopted a digital reader such as the Kindle or nook, you may learn about it by

relating it to your laptop computer and Word documents. Your computer allows for digital stor- age and downloading of documents which you “open” and “read” on a screen. You might rea- son that this is much like downloading, opening, and reading any digital content on any digital device. Given the similarities, you might correctly infer that digital readers allow for convenient and mobile access to your online books and magazines. You may also incorrectly infer that flip- ping through pages and finding your place will be difficult and that reading in such a format will be “hard on your eyes.” Thus, from the analogical comparison you could come away with a relatively complete (though in some areas perhaps inaccurate) set of beliefs about the digital reader based on its similarity to your laptop computer and the Word documents you already use.26

Learning to Generalize and Differentiate Regardless of which approach to learning is applicable in a given situation, consumers’ ability to differentiate and generalize from one stimulus to another (for example, one brand to another) is critical to marketers.

Stimulus discrimination or differentiation refers to the process of learning to respond differently to similar but distinct stimuli. This process is critical for marketers who want consumers to perceive their brands as possessing unique and important features compared with other brands. For example, the management of Bayer aspirin feels that consumers should not see its aspirin as being the same as other brands. In order to obtain a premium price or a large market share, Bayer must teach consumers that its aspirin is distinct from other brands. Stimulus discrimination is an important consideration in brand image and product positioning, discussed later in the chapter.27

Stimulus discrimination is critical when brand scandals erupt. Scandals don’t always hurt just the scandalized brand but can damage competitors in that industry, an effect termed spillover. One of the best ways for competitors to protect against spillover from scandals is to be highly differentiated from the scandalized brand.28

Ads not only convey

information and elicit

feelings; they can

challenge existing

assumptions, even

implicit assumptions,

and cause readers to

think and reexamine

their beliefs.

ILLUSTRATION 9-4

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Chapter Nine Learning, Memory, and Product Positioning 327

Stimulus generalization, often referred to as the rub-off effect, occurs when a response to one stimulus is elicited by a similar but distinct stimulus.29 Thus, a consumer who learns that Nabisco’s Oreo cookies taste good and therefore assumes that the company’s new Oreo Chocolate Cones will also taste good has engaged in stimulus generalization. Stimu- lus generalization is common and provides a major source of brand equity and opportuni- ties for brand extensions, which are discussed later in the chapter.

Summary of Learning Theories Theories of learning help us understand how consumers learn across a variety of situations. We have examined five specific learning theories: classical conditioning, operant condi- tioning, iconic rote learning, vicarious learning/modeling, and analytical reasoning. Each of these learning theories can operate in a high- or a low-involvement situation, although some are more common in one type of situation than another. Table 9–1 summarizes these theories and provides examples from both high- and low-involvement contexts.

LEARNING, MEMORY, AND RETRIEVAL Chrysler’s growth slowed considerably in the late 2000s,30 as did Gillette’s in the early 2000s,31 Saturn’s in the early 1990s,32 and L&M cigarettes’ in the 1980s.33 In each case, at least some of the decline in growth was attributed to sharply reduced advertising. As one executive stated,

LO4

Theory Description High-Involvement Example Low-Involvement Example

Classical conditioning

A response elicited by one object is elicited by a second object if both objects frequently occur together.

The favorable emotional response elicited by the word America comes to be elicited by a car brand after repeated exposure to its Made in America campaign. This response is in addition to any cognitive learning that may have occurred.

The favorable emotional response elicited by a song in an ad for a new breath mint comes to be elicited by that brand after repeated pairing with the song even though the consumer pays little attention to the ad.

Operant conditioning

A response that is reinforced is more likely to be repeated when the same (or similar) situation arises in the future.

A suit is purchased after extensive thought and the consumer finds that it is comfortable and doesn’t wrinkle. A sport coat made by the same firm is later purchased because of the positive experience with their suits.

A familiar brand of peas is purchased without much thought due to the low importance of the decision. The peas taste “fresh,” so the consumer continues to purchase this brand.

Iconic rote learning

A concept or the association between two concepts is learned without conditioning.

A consumer with little expertise about Blu-ray players tries hard to learn brand information by examining it carefully several times. Learning is limited, however, because his or her lack of expertise inhibits elaboration.

A consumer learns a company’s most recent jingle because it is catchy and can’t stop replaying it in his or her head.

Vicarious learning or modeling

Behaviors are learned by watching the outcomes of others’ behaviors or by imagining the outcome of a potential behavior.

A consumer carefully watches the reactions that other co-workers have to her friend’s new briefcase before deciding to buy one.

A child learns that people dress up for special occasions without really ever thinking about it.

Analytical reasoning

Individuals use thinking to restructure and recombine existing and new information to form new associations and concepts.

A consumer buying a car carefully processes information about a new gas/ electric hybrid car by using the analogy of homes powered by solar energy.

When a store is out of black pepper, a consumer buys white pepper instead based on the quick reasoning that “pepper is pepper.”

9-1Summary of Learning Theories with Examples of Involvement Level TABLE

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Part Three Internal Influences328

Some time after the company moved away from advertising and marketing, it became clear that people would quickly forget about our products if we didn’t support them in the marketplace.34

These examples emphasize that marketers want consumers to learn and remember positive features, feelings, and behaviors associated with their brands. However, consumers forget. In conditioned learning, forgetting is often referred to as extinction because the desired response (e.g., pleasant feelings or brand purchase) decays or dies out if learning is not repeated and rein- forced. In cognitive learning, forgetting is often referred to as a retrieval failure because infor- mation that is available in LTM cannot be accessed, that is, retrieved from LTM into STM.

Two aspects of forgetting that are of concern to marketers are the likelihood of forgetting in any given situation and the rate of forgetting. Figure 9–7 illustrates a commonly found rate of forgetting for advertising. In this study, aided and unaided recall of four advertise- ments from American Machinist magazine were measured. As can be seen, the probability of ad recall (likelihood) dropped rapidly over the first five days and then stabilized (rate).

At times, marketers or regulatory groups desire to accelerate forgetting or extinc- tion. For example, the American Cancer Society and other organizations offer programs designed to help individuals “unlearn” smoking behavior. Manufacturers want consum- ers to forget unfavorable publicity or outdated product images. Corrective advertising, a

Source: LAP Report #5260.1 (New York: Weeks McGraw-Hill, undated). Reprinted with permission from McGraw-Hill Companies, Inc.

9-7 Forgetting over Time: Magazine AdvertisementFIGURE 100

80

60

40

20

0

Aided recall

Unaided recall

0 1 2 3

R ec

al l (

p er

ce n

t)

Weeks

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Chapter Nine Learning, Memory, and Product Positioning 329

government requirement that firms remove inaccurate learning caused by past advertising, is described in Chapter 20.

Consumers forget brands, brand associations, and other information for a variety of reasons. First, learning may be weak to begin with. Second, information from competing brands and ads may cause memory interference. Third, the response environment (e.g., the retail store) may not be set up to encourage retrieval of previously learned information (e.g., from advertising). We turn to these issues next.

Strength of Learning How can the HIV Alliance teach you to minimize your AIDS risk so that you will not forget? Or how can Neutrogena teach you about its line of sunless tanning products so you remember key features when shopping at CVS? That is, what is required to bring about a long-lasting learned response?

One factor is strength of learning. The stronger the original learning (e.g., of nodes and links between nodes), the more likely relevant information will be retrieved when required. Strength of learning is enhanced by six factors: importance, message involve- ment, mood, reinforcement, repetition, and dual coding.

Importance Importance refers to the value that consumers place on the information to be learned. Importance might be driven by inherent interest in the product or brand, or by the need to make a decision in the near future. The more important it is for the individual to learn a particular behavior or piece of information, the more effective and efficient he or she becomes in the learning process. This is largely due to the greater elaborative activities involved in fully processing and categorizing the material.

One emerging area of interest to marketers is how bilingual consumers process and recall second-language ads. For example, if Hispanic consumers process an ad in Eng- lish, will it still be as effective as when they process the same ad in Spanish? Generally speaking, processing an ad in a second language is more difficult. This tends to reduce learning and recall for ads in a consumer’s second language. Does this mean that second- language ads can never be effective? The answer appears to depend on importance. When importance is high, bilingual consumers expend more processing effort to understand the second-language ad, leading to greater learning and recall.35

Importance is one dimension that separates high-involvement learning situations from low-involvement situations. Therefore, high-involvement learning tends to be more com- plete than low-involvement learning.36 Unfortunately, marketers are most often confronted with consumers in low-involvement learning situations.

Message Involvement When a consumer is not motivated to learn the material, processing can be increased by causing the person to become involved with the message itself. For example, playing an instrumental version of a popular song with lyrics related to product attributes (“Like a rock” in Chevrolet pickup ads) may cause people to “sing along,” either out loud or mentally. This deepened involvement with the message, relative to merely listening to the lyrics being sung, increases the extent of processing of the mes- sage and memory of the associated features or theme.37

In Chapter 8 we discussed various strategies for increasing consumer attention includ- ing incongruity, rhetoric, incomplete messages, and interesting ads with plots and surprise endings. These strategies also tend to enhance message involvement and thus lead to stron- ger learning and memory.38

Several issues regarding message involvement are important to consider. First, there is evidence that scent may be important to memory. One study found that positive scents

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Part Three Internal Influences330

present during exposure to an ad increased attention to the ad and resulted in higher brand recall. Not surprisingly, marketers are currently developing technologies that will allow for “scent-emitting” technologies for Internet applications and in-store kiosks!39

A second issue is the role of suspense. Sometimes marketers wait until the very end of a message to reveal the brand name in an attempt to attract interest and attention. However, this strategy must be used with caution because waiting until the end of an ad to reveal the brand gives consumers little opportunity to integrate new information into their existing brand sche- mas. As a result, the associative linkages are weaker and memory is reduced. These results suggest that marketers should strongly consider mentioning the brand relatively early in any marketing message.40

A final issue regards message strategies that highlight a brand’s personal relevance to the consumer. One such strategy is self-referencing. Self-referencing indicates that con- sumers are relating brand information to themselves. The “self ” is a powerful memory schema, and integrating brand information into this schema enhances learning and memory. Self- referencing can be encouraged in ads by using nostalgia appeals, which encourage consumers to remember past personal experiences.41 It can also be encouraged by using language such as “you” and “your” (second-person pronoun).

Mood Get happy, learn more? Research indicates that this is indeed true. A positive mood during the presentation of information such as brand names enhances learning. A positive mood during the reception of information appears to enhance its relational elaboration—it is compared with and evaluated against more categories. This produces a more complete and stronger set of linkages among a variety of other brands and concepts, which in turn enhances retrieval (access to the information).42

Learning enhancement caused by a positive mood suggests the types of programs that marketers attempting to encourage consumer learning should advertise on. Likewise, it suggests that those commercials that enhance one’s mood would also increase learning.43

Reinforcement Anything that increases the likelihood that a given response will be repeated in the future is considered reinforcement. While learning frequently occurs in the absence of reinforcement, reinforcement has a significant impact on the speed at which

learning occurs and the duration of its effect. A positive reinforcement is a pleasant or

desired consequence. A couple who likes Mexican food sees an ad for a new Chipotle Mexican Grill in their area and decides to try it. They enjoy the food, service, and atmosphere. They are now more likely to select the Chipo- tle Mexican Grill the next time they dine out.

A negative reinforcement involves the removal or the avoidance of an unpleasant consequence. Vicks ads promise to relieve sinus pain and pressure. If they convince a consumer to try the sinus formula and it per- forms well, this consumer is likely to pur- chase and use it again in the future and, based on stimulus generalization, perhaps try other Vicks products as well.

Illustration  9–5 is an ad for KitchenAid which provides an additional example of reinforcement in that it suggests the positive outcomes of using their brand.

Reinforcement

is anything that

increases the proba-

bility that a response

will be repeated

in the future. This

KitchenAid ad

utilizes positive

reinforcement.

ILLUSTRATION 9-5

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331

Punishment is the opposite of reinforcement. It is any consequence that decreases the likelihood that a given response will be repeated in the future. If the couple who tried the Chipotle Mexican Grill described earlier thought that the service was bad or that the food was poorly prepared, they would be unlikely to patronize it in the future.

Obviously, it is critical for marketers to determine precisely what reinforces consumer purchases so they can design promotional messages and products that encourage initial and repeat purchases.

Repetition Repetition enhances learning and memory by increasing the accessibility of information in memory or by strengthening the associative linkages between concepts.45 Quite simply, the more times people are exposed to information or engage in a behavior, the more likely they are to learn and remember it. For example, compared with one show- ing of a Miller Lite beer commercial, three showings during a championship baseball game produced two-and-one-third times the recall.46 For reasons that are not completely clear, certain music “motivates” automatic self-repetition on the part of the consumer, which cre- ates stronger learning and brand associations, as discussed in Consumer Insight 9–1.

CONSUMER INSIGHT 9-1 Earworms—Music That Gets Stuck in Our Heads

Through repetitive exposure, consumers unintention- ally, inattentively, unknowingly learn the jingles, and songs, which lie dormant for days, months, years, even decades in the consumers’ memory that on occasion can be triggered and brought to awareness by a fra- grance, a few musical notes, a flash of a picture. Such recall may be accompanied by the feeling of surprise— the unearthing of buried information—and nostalgia— memories tied to the music. Soon, however, the tune returns to its state of dormancy.44

However, some jingles and songs in memory refuse to be “turned off” and play in an endless, repetitive loop in our heads for hours, days, and, for a small minority, even weeks or months. They pop up and demand to be sung or hummed repeatedly. They are called ear- worms. Some 98 percent of people have experienced this annoying condition. In a recent study, the top four earworms were

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Music most likely to cause an earworm is simple, upbeat, and repetitive and has an element of the