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Consumer Behavior: How People Make Buying Decisions

Consumer behavior considers the many reasons—personal, situational,

psychological, and social—that people shop for products, buy and use them,

sometimes become loyal customers, and then dispose of them.

Companies spend billions of dollars annually studying what propels consumer

decisions. Google, AOL, and Yahoo! monitor your web patterns and browser

history. The companies that pay for search advertising, or ads that appear on the

web pages you pull up after doing an online search, want to find out what

interests you. Doing so allows these companies to send you pop-up ads and

coupons you might actually be interested in instead of ads and coupons for

things that don't appeal to you.

Massachusetts Institute of Technology (MIT), in conjunction with a large retail

center, has tracked consumers in retail establishments to see when and where

they tended "dwell," or stop to look at merchandise. By tracking the position of

the consumers' mobile phones as the phones automatically transmitted signals to

cellular towers, MIT found that when people's "dwell times" increased, sales

increased, too.

Researchers have even looked at people's brains by having them lie in scanners

and asking them questions about different products. What people say about the

products is then compared to what their brains scans show—that is, what they

are really thinking. Scanning people's brains for marketing purposes might sound

nutty, but maybe not when you consider that 8 out of 10 new consumer

products fail, even when they are test marketed. Could it be possible that what

people say about potential new products and what they think about them are

different? Marketing professionals want to find out ("The Way the Brain Buys,"

2008).

Studying people's buying habits isn't just for big companies. Small businesses and

entrepreneurs can study the behavior of their customers with great success. By

figuring out what zip codes their customers live in, a business might determine

where to locate an additional store. Small businesses such as restaurants often

use coupon codes. For example, coupons sent out in newspapers are given one

code. Those sent out via the internet are given another. When the coupons are

redeemed, the restaurants can tell which marketing avenues are having the

biggest effect on their sales.

Learning Resource

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Some businesses, including a growing number of start-ups, are using blogs and

social networking websites to gather information about their customers at a low

cost. For example, Proper Cloth, a company based in New York, has a site on

Facebook. Whenever the company posts a new bulletin or photos of its clothes,

all its Facebook followers automatically receive the information on their own

Facebook pages. "We want to hear what our customers have to say," says Joseph

Skerritt, the young MBA graduate who founded Proper Cloth. "It's useful to us

and lets our customers feel connected to Proper Cloth" (Knight, 2009). Skerritt

also writes a blog for the company. Podcasts that can be downloaded from

iTunes and Twitter are two other ways companies are amplifying the reach of

information about their products.

Environmental factors (such as the economy and technology) and marketing

actions taken to create, communicate about, and deliver products and services

(such as sale prices, coupons, internet sites, and new product features) may

affect consumers' behavior. However, a consumer's situation, personal factors,

and culture also influence what, when, and how he or she buys things.

Factors That Influence Consumers' Buying Behavior

You've been a consumer with purchasing power for much longer than you

probably realize—since the first time you were asked which cereal or toy you

wanted. Over the years, you've developed rules or mental shortcuts providing a

systematic way to choose among alternatives, even if you aren't aware of it.

Other consumers follow a similar process, but different people, no matter how

similar they are, make different purchasing decisions. You might be very

interested in purchasing a smart car, but your best friend might want to buy a

Ford F-150 truck. What factors influenced your decision, and what factors

influenced your friend's decision?

Consumer behavior is influenced by many things, including environmental and

marketing factors, the situation, personal and psychological factors, family, and

culture. Businesses try to identify trends so they can reach the people most likely

to buy their products in the most cost-effective way possible. Businesses often

try to influence a consumer's behavior with things they can control, such as the

layout of a store, music, the grouping and availability of products, pricing, and

advertising. While some influences may be temporary and others are long lasting,

different factors can affect how buyers behave—whether they influence you to

make a purchase, buy additional products, or buy nothing at all. Let's now look at

some of the influences on consumer behavior in greater detail.

Situational Factors

Have you ever been in a department store and couldn't find your way out? No,

you aren't necessarily directionally challenged. Marketing professionals take

physical factors such as a store's design and layout into account when they are

designing their facilities. Presumably, the longer you wander around a facility, the

more you will spend. Grocery stores frequently place bread and milk products on

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the opposite ends of the stores because people often need both types of

products. To buy both, they have to walk around an entire store, which, of

course, is loaded with other items they might see and purchase.

Store locations also influence behavior. Starbucks has done a good job of

locating its stores. You can scarcely drive a few miles down the road without

passing a franchise location. You can also buy cups of Starbucks coffee at many

grocery stores and in airports—virtually any place there is foot traffic.

Physical factors that firms can control, such as the layout of a store, music played

at stores, the lighting, temperature, and even the smells you experience are

called atmospherics. Perhaps you've visited the office of an apartment complex

and noticed how great it looked and even smelled. It's no coincidence. The

managers of the complex were trying to get you to stay for a while and have a

look at their facilities. Research shows that "strategic fragrancing" results in

customers staying in stores longer, buying more, and leaving with a better

impressions of the quality of a store's services and products. Mirrors near hotel

elevators are another example of atmospherics. Hotel operators have found that

when people are busy looking at themselves in the mirrors, they don't feel like

they are waiting as long for their elevators (Moore, 2008).

Not all physical factors are under a company's control, however. Take weather,

for example. Rainy weather can be a boon to some companies, like umbrella

makers such as Totes, but a problem for others. Beach resorts, outdoor concert

venues, and golf courses suffer when it is raining heavily. Businesses like

automobile dealers also have fewer customers. Who wants to shop for a car in

the rain?

Firms often attempt to deal with adverse physical factors such as bad weather by

offering specials during unattractive times. For example, many resorts offer

consumers discounts on travel to beach locations during hurricane season.

Having an online presence is another way to cope with weather-related

problems. What could be more comfortable than shopping at home? If it's raining

too hard to drive to Gap, REI, or Abercrombie & Fitch, you can buy products

from these companies and many others online. You can shop online for cars, too,

and many restaurants take orders online and deliver.

Crowding is another situational factor. Have you ever left a store and not

purchased anything because it was just too crowded? Some studies have shown

that consumers feel better about retailers with uncrowded stores. However,

other studies have shown that to a certain extent, crowding can have a positive

impact on a person's buying experience. The phenomenon is often referred to as

herd behavior (Gaumer & Leif, 2005).

If people are lined up to buy something, you want to know why. Should you get

in line to buy it too? Herd behavior helped drive up the price of houses in the

mid-2000s before the prices for them rapidly fell.

Social Situation

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The social situation you're in can significantly affect your purchase behavior.

Perhaps you have seen Girl Scouts selling cookies outside grocery stores and

other retail establishments and purchased nothing from them, but what if your

neighbor's daughter is selling the cookies? Are you going to turn her down or be

a friendly neighbor and buy a box (or two)?

Companies like Pampered Chef that sell their products at parties understand that

the social situation makes a difference. When you're at a friend's Pampered Chef

party, you don't want to look cheap or disappoint your friend by not buying

anything. Certain social situations can also make you less willing to buy products.

Most people would not choose a fast food restaurant for a first date. Likewise, if

you have turned down a drink or dessert on a date because you were worried

about what the person you were with might have thought, your consumption

was affected by your social situation (Matilla & Wirtz, 2008).

Time

The time of day, time of year, and how much time consumers have to shop affect

what they buy. Researchers have even discovered that whether someone is a

morning person or evening person affects shopping patterns. Have you ever

gone to the grocery store when you are hungry or after payday when you have

cash in your pocket? When you are hungry or have cash, you may purchase more

than you would at other times. The company 7-Eleven Japan is extremely aware

of how time affects buyers. The company's point-of-sale systems at its checkout

counters monitor what is selling well and when, and stores are restocked with

those items immediately, sometimes via motorcycle deliveries that zip in and out

of traffic along Japan's crowded streets. The goal is to get the products on the

shelves when and where consumers want them. The company also knows that,

like Americans, its customers are busy. Shoppers can pay their utility bills, local

taxes, and insurance or pension premiums at 7-Eleven Japan stores, and even

make photocopies (Bird, 2002).

Companies worldwide are aware of people's lack of time and are finding ways to

accommodate them. Some doctors' offices offer drive-through shots for patients

who are in a hurry and for elderly patients who find it difficult to get out of their

cars. Tickets.com allows companies to sell tickets by sending them to customers'

mobile phones when they call in. The phones' displays are then read by barcode

scanners when the ticket purchasers arrive at the events they're attending.

Likewise, if you need customer service from Amazon, there's no need to wait on

the telephone. If you have an account with Amazon, you just click a button on

the company's website, and an Amazon representative calls you immediately.

Reason for the Purchase

The reason you are shopping also affects the amount of time you will spend

shopping. Are you making an emergency purchase? What if you need something

for an important dinner or a project and only have an hour to get everything? Are

you shopping for a gift or for a special occasion? Are you buying something to

complete a task and need it quickly?

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Purchasing a gift might not be an emergency situation, but you may not want to

spend much time shopping for it either. Gift certificates have been popular for

years. You can purchase gift cards for numerous merchants at your local grocery

store or online. In contrast, suppose you need to buy an engagement ring. Sure,

you could buy one online in a jiffy, but you probably wouldn't do that. What if

the diamond were fake? What if your significant other turned you down and you

had to return the ring? How hard would it be to get back online and return it?

(Hornik & Miniero, 2009).

Mood

Have you ever felt like going on a shopping spree? At other times, wild horses

couldn't drag you to a mall. Moods can temporarily affect consumers' spending

patterns. Some people enjoy shopping, and there are even compulsive spenders

who get a temporary high from the activity.

A sour mood can spoil a consumer's desire to shop. The crash of the US stock

market in 2008 left many people feeling poorer, leading to a dramatic downturn

in consumer spending. Penny-pinching became common, and conspicuous

spending became more infrequent. Costco and Walmart experienced heightened

sales of their low-cost Kirkland Signature and Great Value brands as consumers

scrimped (Birchall, 2009b). Saks Fifth Avenue wasn't so lucky. Its annual release

of spring fashions usually leads to a feeding frenzy among shoppers, but spring

2009 was different. "We've definitely seen a drop-off of this idea of shopping for

entertainment," says Kimberly Grabel, Saks Fifth Avenue's senior vice president

of marketing (Rosenbloom, 2009). To get buyers in the shopping mood,

companies resorted novel measures. The upscale retailer Neiman Marcus began

introducing mid-priced brands. By studying customer's loyalty cards, the French

hypermarket Carrefour hoped to find ways to get its customers to purchase

nonfood items that have higher profit margins.

The glum mood wasn't bad for all businesses though. Discounters like Half Price

Books saw their sales surge. So did seed sellers, as people began planting their

own gardens. Finally, what about those products you see being hawked on

television (e.g., Aqua Globes, Snuggies, and Ped Eggs)? Their sales were the best

ever. Apparently, consumers too broke to go on vacation or shop at Saks were

instead watching television and treating themselves to the products advertised

there (Ward, 2009).

Personal Factors

Personality and Self-Concept

Personality describes a person's disposition, helps show why people are

different, and encompasses a person's unique traits. The big five personality

traits that psychologists discuss frequently include openness, or how accepting

you are of new experiences; conscientiousness, or how diligent you are;

extraversion, or how outgoing or shy you are; agreeableness, or how easy you

are to get along with; and neuroticism, or how prone you are to negative mental

states.

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Do personality traits predict people's purchasing behavior? Can companies

successfully target certain products to people based on their personalities? How

do you find out what personalities consumers have? Are extraverts wild spenders

and introverts penny-pinchers?

The link between people's personalities and their buying behavior is somewhat

unclear. Some research studies have shown that sensation seekers, or people

who exhibit extremely high levels of openness, are more likely to respond well to

advertising that's violent and graphic. The problem for firms is figuring out which

consumers exhibit which personality traits.

Marketers have had better luck linking people's self-concepts to their buying

behavior. Your self-concept is how you see yourself—be it positive or negative.

Your ideal self is how you would like to see yourself—whether it's prettier, more

popular, or more eco-conscious. This formulation, along with others' self-

concept, or how you think others see you, also influences your purchase

behavior. Marketing researchers believe people buy products to enhance how

they feel about themselves—to get themselves closer to their ideal selves.

The slogan "Be All That You Can Be," which for years was used by the US Army

to recruit soldiers, is an attempt to appeal to the self-concept. Presumably, by

joining the US Army, you will become a better version of yourself, which will, in

turn, improve your life. Many beauty products and cosmetic procedures are

advertised in a way that's supposed to appeal to the ideal self that people seek.

All of us want products that improve our lives.

Gender, Age, and Stage of Life

Gender, age, and stage of life are all demographic variables that influence

purchase decisions. Men and women need and buy different products (Ward &

Thuhang, 2007). They also shop differently and in general have different

attitudes about shopping. You know the old stereotypes: men see what they

want and buy it, but women try on everything and shop until they drop. There's

some truth to the stereotypes. That's why you see so many advertisements

directed at one sex or the other—beer commercials that air on ESPN and

commercials for household products that air on Lifetime. Women influence two-

thirds of all household product purchases, whereas men buy about three-

quarters of all alcoholic beverages (Schmitt, 2008). The shopping differences

between men and women seem to be changing, though. Younger, well-educated

men are less likely to believe grocery shopping is a woman's job and are more

inclined to bargain shop and use coupons that are properly targeted at them (Hill

& Harmon, 2007). One survey found that approximately 45 percent of married

men actually like shopping and consider it relaxing.

A study by Resource Interactive, a technology research firm, found that when

shopping online, men prefer sites with lots of pictures of products, and women

prefer to see products online in a lifestyle context—say, a lamp in a living room.

Women are also twice as likely as men to use viewing tools such as the zoom and

rotate buttons and links that allow them to change the color of products.

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Many businesses today are taking greater pains to figure out what men want.

Face toners and bodywashes for men, such as the Axe brand, and hair salons, like

the Men's Zone and Weldon Barber, are a relatively new phenomenon. Some

advertising agencies specialize in advertising directed at men. There are also

many products such as kayaks and mountain bikes targeted toward women that

weren't in the past.

You have probably noticed that the things you buy have changed as you age.

Think about what you wanted and how you spent five dollars when you were a

child, a teenager, and an adult. When you were a child, the last thing you

probably wanted as a gift was clothing. As you became a teen, however, cool

clothes probably became a higher priority.

If you're single and working after graduation, you probably spend your money

differently than a recently married couple. How do you think spending patterns

change when someone has a young child, or a teenager, or a child in college?

Diapers and daycare, orthodontia, tuition, electronics—regardless of their age,

children affect the spending patterns of families. Once children graduate from

college and parents are empty nesters, spending patterns change again.

Empty nesters and baby boomers are a huge market that companies are trying to

tap. Ford and other car companies have created aging suits for young employees

to wear when they're designing automobiles ("Designing Cars for the Elderly,"

2008). The suit simulates the restricted mobility and vision people experience as

they get older. Car designers can then figure out how to configure the

automobiles to better meet the needs of these consumers.

Lisa Rudes Sandel, the founder of Not Your Daughter's Jeans (NYDJ), created a

multimillion-dollar business by designing jeans specifically for baby boomers.

NYDJ became the largest domestic manufacturer of women's jeans under $100.

"The truth is," Rudes Sandel said, "I've never forgotten the woman I've been

aiming for since day one" (Saffian, 2009).

Your chronological age, or actual age in years, is different from your cognitive

age, or how old you perceive yourself to be. A person's cognitive age affects his

or her activities and sparks interests consistent with his or her perceived age.

Cognitive age is a significant predictor of consumer behaviors, including a

person's proclivity for dining out, watching television, going to bars and dance

clubs, playing computer games, and shopping (Barak & Gould, 1985). Companies

have found that many consumers feel younger than their chronological age and

don't take kindly to products that feature "old folks," because they can't identify

with them.

Lifestyle

Despite people's similarities (e.g., being middle-class Americans who are married

with children), their lifestyles can differ radically. To better understand and

connect with consumers, companies interview people or ask them to complete

questionnaires about their lifestyles and their activities, interests, and opinions

(often referred to as AIO statements). Consumers are not only asked about

products they like, where they live, and their gender but also about what they do

—that is, how they spend their time and their priorities, values, opinions, and

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general outlooks on the world. Where do they go other than work? Who do they

like to talk to? What do they talk about? Researchers hired by Procter & Gamble

have gone so far as to follow women around for weeks as they shop, run errands,

and socialize with one another (Berner, 2006). Other companies have paid

people to keep a daily journal of their activities and routines.

A number of research organizations examine the lifestyle and psychographic

characteristics of consumers. Psychographics combines the lifestyle traits of

consumers and their personality styles with an analysis of their attitudes,

activities, and values, to determine groups of consumers with similar

characteristics. One of the most widely used systems to classify people based on

psychographics is the VALS (values, attitudes, and lifestyles) framework. Using

VALS to combine psychographics with demographic information such as marital

status, education level, and income provides a better understanding of

consumers.

Psychological Factors

Motivation

Motivation is the inward drive we have to get what we need. In the mid-1900s,

Abraham Maslow, an American psychologist, developed the hierarchy of needs.

Maslow theorized that people have to fulfill their basic needs—food, water, and

sleep—before they can begin fulfilling higher-level needs. Have you ever gone

shopping when you were tired or hungry? Even if you were shopping for

something that would make you the envy of your friends (maybe a new car) you

probably wanted to sleep or eat even more than shop.

The need for food is recurring. Other needs, such as shelter, clothing, and safety,

tend to be enduring. Still other needs arise at different points in a person's life.

For example, during grade school and high school, your social needs probably

rose to the forefront. You wanted to have friends and get a date. Perhaps this

prompted you to buy certain types of clothing or electronic devices. After high

school, you began thinking about how people would view you in your station in

life, so you decided to pay for college and get a professional degree, thereby

fulfilling your need for esteem. If you're lucky, at some point you will realize

Maslow's state of self-actualization. You will believe you have become the

person in life that you feel you were meant to be.

Following the economic crisis that began in 2008, the sales of new automobiles

dropped sharply virtually everywhere around the world—except the sales of

Hyundai vehicles. Hyundai understood that people needed to feel financially

secure and ran an ad campaign that assured car buyers they could return their

vehicles if they couldn't make the payments on them without damaging their

credit. Seeing Hyundai's success, other carmakers began offering similar

programs. Likewise, banks began offering "worry-free" mortgages to ease the

minds of would-be homebuyers. For a fee of about $500, First Mortgage Corp., a

Texas-based bank, offered to make a homeowner's mortgage payment for six

months if he or she got laid off (Jares, 2010).

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While achieving self-actualization may be a goal for many individuals in the

United States, consumers in Eastern cultures may focus more on belongingness

and group needs. Marketers look at cultural differences in addition to individual

needs. The importance of groups affects advertising (using groups versus

individuals) and product decisions.

Perception

Perception is how you interpret the world around you and make sense of it in

your mind. You do so via stimuli that affect your senses—sight, hearing, touch,

smell, and taste. How you combine these senses also makes a difference. For

example, in one study, consumers were blindfolded and asked to drink a new

brand of clear beer. Most of them said the product tasted like regular beer.

However, when the blindfolds came off and they drank the beer, many of them

described it as "watery" tasting (Ries, 2009).

Consumers are bombarded with messages on television, radio, magazines, the

internet, and even bathroom walls. The average consumer is exposed to about

three thousand advertisements per day (Lasn, 1999). Consumers are surfing the

internet, watching television, and checking their cell phones for text messages

simultaneously. Some, but not all, information makes it into our brains. This

phenomenon is called selective exposure.

Have you ever read or thought about something and then started noticing ads

and information about it popping up everywhere? Many people are more

perceptive to advertisements for products they need. Selective attention is the

process of filtering out information based on how relevant it is to you. It's been

described as a suit of armor that helps you filter out information you don't need.

At other times, people forget information, even if it's quite relevant to them,

which is called selective retention. Often the information contradicts the

person's belief. To be sure their advertising messages get through to you and you

remember them, companies use repetition. Were you tired of iPhone

commercials before they tapered off? How often do you see the same

commercial aired during a single television show?

Another potential problem that advertisers may experience is selective

distortion, or misinterpretation of the intended message. Promotions for weight-

loss products show models that look slim and trim after using their products, and

consumers may believe they will look like the model if they use the product.

They misinterpret other factors, such as how the model looked before or how

long it will take to achieve the results. Similarly, have you ever told someone a

story about a friend and that person told another person who told someone

else? By the time the story gets back to you, it is completely different. The same

thing can happen with many types of messages.

Using surprising stimuli, or shock advertising, is also a functional technique. One

study found that shocking content increased attention, benefited memory, and

positively influenced behavior among a group of university students (Dahl,

Frankenberger, & Manchanda, 2003).

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Subliminal advertising, the opposite of shock advertising, involves exposing

consumers to marketing stimuli, such as photos, ads, and messages, by stealthily

embedding them in movies, ads, and other media. For example, years ago the

words Drink Coca-Cola flashed for a millisecond on a movie screen. Although

there is no evidence that subliminal advertising works, consumers were thought

to perceive the information subconsciously and to be influenced to buy the

products shown. Many people considered the practice to be subversive, and in

1974, the Federal Communications Commission condemned it. Much of the

original research on subliminal advertising, conducted by a researcher trying to

drum up business for his market research firm, was fabricated (Crossen, 2007).

People are still fascinated by subliminal advertising, however. To create buzz

about the television show The Mole in 2008, ABC began hyping it by airing short

commercials composed of just a few frames. If you blinked, you missed it. Some

television stations actually called ABC to figure out what was going on. One-

second ads were later rolled out to movie theaters (Adalian, 2008).

Different consumers perceive information differently. A couple of frames about

The Mole might make you want to see the television show. However, your friend

might see the ad, find it stupid, and never tune in to watch the show. One man

sees Pledge as an outstanding furniture polish, while another sees a can of spray

no different from any other furniture polish. One woman sees a luxurious Gucci

purse, and the other sees an overpriced bag to hold keys and makeup (Chartrand,

2009).

Learning

Learning refers to the process by which consumers change their behavior after

they gain information or experience. It's the reason you don't buy a bad product

twice. Learning doesn't just affect what you buy, it affects how you shop. People

with limited experience about a product or brand generally seek out more

information than people who have used a product before.

Companies try to get consumers to learn about their products in different ways.

Car dealerships offer test drives. Pharmaceutical representatives leave samples

and brochures at doctor's offices. Other companies give consumers free samples.

To promote its new line of coffees, McDonald's offered customers free samples.

Have you ever eaten the food samples in a grocery store? While sampling is an

expensive strategy, it gets consumers to try the product and gets many

customers buy it, especially right after trying it in the store.

A kind of operant learning called instrumental conditioning occurs when

researchers are able to get a mouse to run through a maze for a piece of cheese

or a get a dog to salivate just by ringing a bell. In other words, learning occurs

through repetitive behavior that has positive or negative consequences.

Companies engage in operant conditioning by rewarding consumers, which

causes them to want to repeat their purchasing behaviors. Examples include the

prizes and toys that come in Cracker Jacks and McDonald's happy meals, free

tans offered with gym memberships, a free sandwich after a certain number of

purchases, and free car washes when you fill up your car's gas tank.

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Another learning process called classical conditioning occurs by associating a

conditioned stimulus (CS) with an unconditioned stimulus (US) to get a particular

response. The more frequently the CS is linked with the US, the faster the

learning occurs.

Attitude

Attitudes are mental positions or emotional feelings, favorable or unfavorable

evaluations, and action tendencies people have about products, services,

companies, ideas, issues, or institutions (Attitude, n.d.). Attitudes tend to be

enduring, and because they are based on people's values and beliefs, they are

hard to change. Companies want people to have positive feelings about their

offerings. A few years ago, KFC began running ads suggesting that fried chicken

was healthy, until the US Federal Trade Commission told the company to stop.

Wendy's slogan that its products are "way better than fast food" is another

example of a business trying to change customers' attitudes. Fast food has a

negative connotation, so Wendy's is trying to get consumers to think about its

offerings in a more positive light.

An example of a shift in consumers' attitudes occurred when the taxpayer-paid

government bailouts of big banks that began in 2008 provoked the wrath of

many Americans, creating an opportunity for small banks not involved in the

credit bailout and subprime mortgage mess. The Worthington National Bank, a

small bank in Fort Worth, Texas, ran billboards reading: "Did Your Bank Take a

Bailout? We didn't." Another read: "Just Say NO to Bailout Banks. Bank

Responsibly!" The Worthington Bank received tens of millions of dollars in new

deposits soon after running these campaigns (Mantone, 2009).

Societal Factors

Situational factors, personal factors, and psychological factors influence what

you buy, but only on a temporary basis. Societal factors are a bit different. They

are more outward and have broad influences on your beliefs and the way you do

things. They depend on the world around you and how it works.

Culture

Culture refers to the shared beliefs, customs, behaviors, and attitudes that

characterize a society. Culture is a handed-down way of life and is often

considered the broadest influence on a consumer's behavior. Your culture

prescribes the way in which you should live and has a huge effect on the things

you purchase. For example, in Beirut, Lebanon, women can often be seen

wearing miniskirts. If you're a woman in Afghanistan wearing a miniskirt,

however, you could face bodily harm or death. In Afghanistan women generally

wear burqas, which cover them completely from head to toe. Similarly, in Saudi

Arabia, women must wear an abaya, or long black garment. Interestingly, abayas

have become big business in recent years. They come in many styles, cuts, and

fabrics, and some are encrusted with jewels and cost thousands of dollars.

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Even cultures that share many of the same values as the United States can be

quite different. Following the meltdown of the financial markets in 2008,

countries around the world were pressed by the United States to engage in

deficit spending to stimulate the worldwide economy. The plan was a hard sell

both to German politicians and to the German people in general. Most Germans

don't own credit cards and running up a lot of debt is something people in that

culture generally don't do.

Subcultures

A subculture is a group of people within a culture who are different from the

dominant culture but have something in common with one another, such as

common interests, vocations or jobs, religions, ethnic backgrounds, and

geographic locations. The fastest-growing subculture in the United States

consists of people of Hispanic origin, followed by Asian Americans, and African

Americans. The purchasing power of US Hispanics continues to grow, exceeding

$1 trillion in 2010 ("Latino Purchasing Power," 2011). Home Depot has launched

a Spanish version of its website. Walmart is in the process of converting some of

its neighborhood markets into stores designed to appeal to Hispanics. The

Supermarcado de Walmart stores are located in Hispanic neighborhoods and

feature elements such as cafés that serve Latino pastries and coffee and full

meat and fish counters (Birchall, 2009a). Marketing products based on the

ethnicity of consumers is useful but may become harder to do in the future as

the boundaries between ethnic groups blur.

Other subcultures, can develop in response to people's interests, similarities, and

behaviors that allow marketing professionals to design specific products for

them. These can include the hip-hop subculture, people who in engage in

extreme types of sports, such as helicopter skiing, or people who play the

fantasy game Dungeons and Dragons.

Social Class

A social class is a group of people who have the same social, economic, or

educational status in society. While income helps define social class, the primary

variable determining social class is occupation. To some degree, consumers in the

same social class exhibit similar purchasing behavior. In many countries, people

are expected to marry within their own social class. When asked, people tend to

say they are middle class, which is not always correct. Have you ever been

surprised to find out that someone you knew who was wealthy drove a beat-up

old car or wore old clothes and shoes or that someone who isn't wealthy owns a

Mercedes or other upscale vehicle? While some products may appeal to people

in a social class, you can't assume a person is in a certain social class because

they either have or don't have certain products or brands.

In a recession when luxury buyers are harder to come by, the makers of upscale

brands may want their customer bases to be as large as possible. However,

companies don't want to risk cheapening their brands. That's why, for example,

Smart Cars, which are made by BMW, don't have the BMW label on them. For a

time, Tiffany's sold a cheaper line of silver jewelry to a lot of customers.

However, the company later worried that its reputation was being tarnished by

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the line. Keep in mind that a product's price is to some extent determined by

supply and demand. Luxury brands therefore try to keep the supply of their

products in check so their prices remain high.

Some companies, such as Johnnie Walker, have managed to capture market

share by introducing lower-echelon brands without damaging their luxury

brands. The company's whiskeys come in bottles with red, green, blue, black, and

gold labels. The blue label is the company's best product. Every blue-label bottle

has a serial number and is sold in a silk-lined box, accompanied by a certificate of

authenticity.

Reference Groups and Opinion Leaders

Reference groups are groups (social groups, work groups, family, or close friends)

a consumer identifies with and may want to join. They influence consumers'

attitudes and behavior. If you have ever dreamed of being a professional athlete,

you have an aspirational reference group. That's why, for example, Nike hires

celebrities such as Michael Jordan to pitch the company's products. There may

also be dissociative groups, or groups to which a consumer does not want to be

associated.

Opinion leaders are people with expertise in certain areas. Consumers respect

these people and often ask their opinions before they buy goods and services.

An information technology (IT) specialist with a great deal of knowledge about

computer brands is one example. These people's purchases often lie at the

forefront of leading trends. The IT specialist is probably a person who has the

latest and greatest tech products, and his opinion of them is likely to carry more

weight with you than any sort of advertisement.

Today's companies are using different techniques to reach opinion leaders,

including the use of special software for network analysis. Orgnet's software

doesn't mine sites like Facebook and LinkedIn but rather uses sophisticated

techniques similar to those that unearthed the links between al-Qaeda terrorists.

Valdis Krebs, the company's founder, explains, "Pharmaceutical firms want to

identify who the key opinion leaders are. They don't want to sell a new drug to

everyone. They want to sell to the 60 key oncologists" (Campbell, 2004).

Family

Most market researchers consider a person's family to be one of the most

important influences on their buying behavior. Like it or not, you are more like

your parents than you think, at least in terms of your consumption patterns.

Many of the things you buy and don't buy are a result of what your parents

bought when you were growing up. Products such as the brand of soap and

toothpaste your parents bought and used, and even the brand of politics they

leaned toward are examples of the products you may favor as an adult.

Companies are interested in which family members have the most influence over

certain purchases. Children have a great deal of influence over many household

purchases. For example, in 2003 nearly half (47 percent) of 9- to 17-year-olds

were asked by parents to go online to find out about products or services,

compared to 37 percent in 2001. IKEA used this knowledge to design their

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showrooms. The children's bedrooms feature fun beds with appealing comforters

so children will be prompted to identify and ask for what they want ("Teen

Market Profile," 2003).

Marketing to children has come under increasing scrutiny. Some critics accuse

companies of deliberately manipulating children to nag their parents for certain

products. For example, even though tickets for concerts featuring the Disney

character Hannah Montana ranged from hundreds to thousands of dollars, the

concerts often still sold out. However, as one writer put it, exploiting "pester

power" is not always ultimately in the long-term interests of advertisers if it

alienates parents (Waddell, 2009).

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Situational influences are temporary conditions that affect

how buyers behave. They include physical factors such as a

store's buying locations, layout, music, lighting, and even

scent. Companies try to make the physical factors in which

consumers shop as favorable as possible. If they can't, they

utilize other tactics, such as discounts. The consumer's social

situation, time factors, the reason for their purchases, and

their moods also affect their buying behavior.

Your personality describes your disposition as other people

see it. Market researchers believe people buy products to

enhance how they feel about themselves. Your gender also

affects what you buy and how you shop. However, there's

some evidence that this is changing. Younger men and women

are beginning to shop more alike. People's consumer

decisions are also affected by their ages and life stages. A

person's cognitive age is how old one feels oneself to be. To

further understand consumers and connect with them,

companies have begun looking more closely at their lifestyles

(what they do, how they spend their time, what their

priorities and values are, and how they see the world).

Psychologist Abraham Maslow theorized that people have to

fulfill their basic needs—like the need for food, water, and

sleep—before they can begin fulfilling higher-level needs.

Perception is how you interpret the world around you and

make sense of it in your brain. To be sure their advertising

messages get through to you, companies often resort to

repetition. Shocking advertisements and product placement

are two other methods. Learning is the process by which

consumers change their behavior after they gain information

about or experience with a product. Consumers' attitudes are

the mental positions people take based on their values and

beliefs. Attitudes tend to be enduring and are often difficult

for companies to change.

Culture prescribes the way in which you should live and

affects the things you purchase. A subculture is a group of

people within a culture who are different from the dominant

culture but have something in common with one another—

common interests, vocations or jobs, religions, ethnic

backgrounds, sexual orientations, and so forth. To some

degree, consumers in the same social class exhibit similar

purchasing behavior. Most market researchers consider a

person's family to be one of the biggest determinants of

buying behavior. Reference groups are groups that a

consumer identifies with and wants to join. Companies often

hire celebrities to endorse their products to appeal to

Key Points

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people's reference groups. Opinion leaders are people with

expertise in certain areas. Consumers respect these people

and often ask their opinions before they buy goods and

services.

Low-Involvement Versus High-Involvement Buying Decisions and the Consumer's Decision Making Process

As you have seen, many factors influence a consumer's behavior. Depending on a

consumer's experience and knowledge, some consumers may be able to make

quick purchase decisions and other consumers may need to get information and

be more involved in the decision making process before making a purchase. The

level of involvement reflects how interested you are in consuming a product and

how much information you need to make a decision. The level of involvement in

buying decisions may be considered a continuum from decisions that are fairly

routine to decisions that require extensive thought and a high level of

involvement. Whether a decision is low, high, or limited, involvement varies by

consumer, not by product, although some products, such as cars or houses,

typically require high involvement for all consumers. Consumers with no

experience purchasing a product may have more involvement than those who

are replacing a product.

You have probably thought about many products you want or need but never did

much more than that. At other times, you've probably looked at dozens of

products, compared them, and then decided not to purchase any of them. When

you run out of products that you buy on a regular basis, like milk or bread, you

may buy the product as soon as you recognize the need, because you do not

need to search for information or evaluate alternatives. Low-involvement

decisions, however, typically involve products that are relatively inexpensive and

pose a low risk to the buyer if she makes a mistake by purchasing them.

Consumers often engage in routine response behavior when they make low-

involvement decisions—that is, they make automatic purchase decisions based

on limited information or information they have gathered in the past. For

example, if you always order a Diet Coke at lunch, you're engaging in routine

response behavior. You may not even think about other drink options at lunch

because your routine is to order a Diet Coke, and you simply do it. Similarly, if

you run out of Diet Coke at home, you may buy more without seeking out any

new information.

Some low-involvement purchases are made with no planning or previous

thought. These buying decisions are called impulse buying. While you're waiting

to check out at the grocery store, perhaps you see a magazine with Angelina

Jolie and Brad Pitt on the cover and buy it on the spot simply because you want

it. You might see a roll of tape at a check-out stand and remember you need one,

or you might see a bag of chips and realize you're hungry. These are items that

are typically low-involvement decisions. Low-involvement decisions aren't

necessarily products purchased on impulse, although they can be.

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By contrast, high-involvement decisions carry a higher risk to buyers if they fail,

are complex, or have high price tags. A car, a house, and an insurance policy are

examples. These items are not purchased often but are important to the buyer.

Buyers don't engage in routine response behavior when purchasing high-

involvement products. Instead, consumers engage in what's called extended

problem solving, where they spend a lot of time comparing factors such as the

features of the products, prices, and warranties.

High-involvement decisions can cause buyers a great deal of postpurchase

dissonance, or anxiety, if they are unsure about their purchases, or if they had a

difficult time deciding between two alternatives. Companies that sell high-

involvement products are aware that postpurchase dissonance can be a problem.

Frequently, they try to offer consumers a lot of information about their products,

including why they are superior to competing brands and how they will meet

customer expectations. Salespeople may answer questions and be extra

attentive to customers.

Limited problem solving falls somewhere between low-involvement (routine) and

high-involvement (extended problem solving) decisions. Consumers engage in

limited problem solving when they already have some information about a

product or service but continue to search for a little more information. Assume

you need a new backpack for a hiking trip. While you are familiar with

backpacks, you know that new features and materials are available since you

purchased your last backpack. You're going to spend some time looking for one

that's decent because you don't want it to fall apart while you're traveling and

dump everything you've packed on a hiking trail. You might do a little research

online and come to a decision relatively quickly. You might consider the choices

available at your favorite retail outlet but not look at every backpack at every

outlet before making a decision. Or you might rely on the advice of a person you

know who's knowledgeable about backpacks. In some way you shorten or limit

your involvement and the decision-making process.

Products, such as chewing gum, which entail low-involvement decisions for most

consumers, often use advertising such as commercials and sales promotions like

coupons to reach many consumers at once. Companies also try to sell these

products in as many locations as possible. Many products that typically entail

high-involvement decisions, such as automobiles, may be sold with a higher

degree of personalization to answer consumers' specific questions. Brand names

can also be very important, regardless of the consumer's level of purchasing

involvement. Consider a low- versus high-involvement decision—say, purchasing

a tube of toothpaste versus a new car. You might routinely buy your favorite

brand of toothpaste, not thinking much about the purchase (engage in routine

response behavior), but not be willing to switch to another brand either. Having a

brand you like saves you search time and eliminates the evaluation period

because you know what you're getting.

When it comes to buying a car, you might engage in extensive problem solving

but, again, only be willing to consider a certain brand or brands. If it's a high-

involvement product you're purchasing, a good brand name is probably going to

be very important to you. That's why the manufacturers of products that

typically require high-involvement decisions can't become complacent about the

value of their brands.

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Stages in the Buying Process

At any given time, you're probably in a buying stage for some product or service.

You're thinking about the different types of things you want or need to

eventually buy, how you are going to find the best ones at the best price, and

where and how will you buy them. Meanwhile, there are other products you

have already purchased that you're evaluating. Will you discard them, and if so,

how? Then what will you buy? Where does that process start?

Stage 1. Need Recognition

You plan to travel around the country after you graduate and don't have a

particularly good backpack, so you realize that you must get a new one. You may

also be thinking about the job you've accepted after graduation and know that

you must get a vehicle to commute. Recognizing a need may involve something

as simple as running out of bread or milk or realizing that you must get a new

backpack or a car after you graduate. Marketers try to show consumers how

their products and services add value and help satisfy needs and wants. Do you

think it's a coincidence that Gatorade, Powerade, and other beverage makers

locate their machines in gymnasiums so you see them after a long, tiring

workout? Previews at movie theaters are another example. How many times

have you have heard about a movie and had no interest in it—until you saw the

preview? Afterward, you may have felt like you had to see it.

Stage 2. Search for Information

For products such as milk and bread, you may simply recognize the need to make

a purchase, go to the store, and buy more. However, if you are purchasing a car

for the first time or need a particular type of backpack, you may need to get

information on the many options. Maybe you have owned several backpacks and

know what you like and don't like about them. Or there might be a particular

brand that you've purchased in the past that you liked and want to purchase in

the future. This is a great position for the company that owns the brand to be in

—something firms strive for—because it often means you will limit your search

and simply buy their brand again.

If what you already know about backpacks doesn't provide you with enough

information, you'll probably continue to gather information from various sources.

Frequently people ask friends, family, and neighbors about their experiences

with products. Magazines such as Consumer Reports (considered an objective

source of information on many consumer products) or Backpacker Magazine

might also help you. Similar information sources are available for learning about

different makes and models of cars.

Internet shopping sites, such as Amazon, have become common sources of

consumer-generated reviews and information about products. People often

prefer independent sources like these when they are looking for product

information. However, they also often consult non-neutral sources of

information, such advertisements, brochures, company websites, and

salespeople.

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Stage 3. Product Evaluation

Obviously, there are hundreds of different backpacks and cars available. It's not

possible for you to examine all of them. In fact, good salespeople and marketing

professionals know that providing you with too many choices can be so

overwhelming that you might not buy anything. Consequently, you may use

choice heuristics or rules of thumb that provide mental shortcuts in the decision-

making process. You may also develop evaluative criteria to help you narrow

down your choices. Backpacks or cars that meet your initial criteria before any

deeper consideration will determine the set of brands you'll consider for

purchase.

Evaluative criteria are characteristics that are important to buyers, such as the

price of the backpack, the size, the number of compartments, and color. Some of

these characteristics are more important than others. For example, the size of

the backpack and the price might be more important to you than the color. You

must decide what criteria are most important and how well the different

alternatives meet that specification.

Companies want to convince you that the evaluative criteria you are considering

reflect the strengths of their products. For example, you might not have thought

about the weight or durability of the backpack you want to buy. However, a

backpack manufacturer like Osprey might remind you through magazine ads,

packaging information, and its website that you should pay attention to the

features that happen to be key selling points of its backpacks. Automobile

manufacturers may have similar models, so don't be afraid to add criteria to help

you evaluate cars.

Stage 4. Product Choice and Purchase

With low-involvement purchases, consumers may go from recognizing a need to

purchasing the product. However, for backpacks and cars, you decide which one

to purchase after you have evaluated different alternatives. In addition to

selecting a backpack or car, you are probably also making other decisions at this

stage, including where and how to purchase the product and on what terms.

Maybe the backpack was cheaper at one store than another, but the salesperson

there was rude. Or maybe you decide to order online because you're too busy to

go to the mall. Other decisions related to the purchase, particularly those related

to big-ticket items, are made at this point. For example, if you're buying a high-

definition television, you might look for a store that will offer you credit or a

warranty.

Stage 5. Postpurchase Use and Evaluation

At this point in the process you decide whether the backpack you purchased is

everything it was cracked up to be. Hopefully it is. If it's not, you're likely to

suffer what's called postpurchase dissonance, also known as buyer's remorse.

Typically, dissonance occurs when a product or service does not meet your

expectations. Consumers are more likely to experience dissonance with products

that are relatively expensive and that are purchased infrequently.

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You want to feel good about your purchase, but you don't. You begin to wonder

whether you should have waited to get a better price, purchased something else,

or gathered more information first. Consumers commonly feel this way, which is

a problem for sellers. If you don't feel good about what you've purchased from

them, you might return the item and never purchase anything from them again.

Or, worse yet, you might tell everyone you know how bad the product was.

For smaller items, companies may try to prevent buyer's remorse by offering a

money-back guarantee or encouraging their salespeople to tell you what a great

purchase you made. How many times have you heard a salesperson say, "That

outfit looks so great on you!" For larger items, companies might offer a warranty,

instruction booklets, or a toll-free troubleshooting line to call, or they might have

a salesperson call you to see if you need help with product. Automobile

companies may offer loaner cars when you bring your car in for service.

Companies, especially service-oriented businesses like restaurants. may also try

to set expectations in order to satisfy customers. Think about when the hostess

tells you that your table will be ready in 30 minutes. If they seat you in 15

minutes, you are much happier than if they told you that your table would be

ready in 15 minutes, but it took 30 minutes to seat you. Similarly, if a store tells

you that your pants will be altered in a week and they are ready in three days,

you'll be much more satisfied than if they said your pants would be ready in

three days, yet it took a week before they were ready.

Stage 6. Disposal of the Product

There was a time when neither manufacturers nor consumers thought much

about how products got disposed of, so long as people bought them. But that's

changed. The disposal of products is becoming extremely important to

consumers and society in general. Computers and batteries, which leech

chemicals into landfills, are a huge problem. Consumers don't want to degrade

the environment if they don't have to, and companies are becoming more aware

of this stance.

Take for example Crystal Light, a water-based beverage that's sold in grocery

stores. It is available in a bottle, but many people prefer to buy it in its

concentrated form, put it in reusable pitchers or bottles, and add water. That

way, they don't have to buy and dispose of many plastic bottles, damaging the

environment in the process. Windex has done something similar with its window

cleaner. Instead of buying new bottles of it all the time, you can purchase a

concentrate and add water. You have probably noticed that most grocery stores

now sell cloth bags consumers can reuse instead of continually using and

discarding new plastic or paper bags.

Other companies are less concerned about conservation than they are about

planned obsolescence. Planned obsolescence is a deliberate effort by companies

to make their products obsolete, or unusable, after a period of time. The goal is

to improve a company's sales by reducing the amount of time between the

repeat purchases consumers make of products. When a software developer

introduces a new version of product, it is usually designed to be incompatible

with older versions of it. For example, not all the formatting features are the

same in Microsoft Word 2007 and 2010. Sometimes documents do not translate

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properly when opened in the newer version. Consequently, you will be more

inclined to upgrade to the new version so you can open all Word documents you

receive.

Making products disposable is another way that firms have managed to reduce

the amount of time between purchases. Do you know anyone today that owns a

non-disposable lighter? Believe it or not, prior to the 1960s, scarcely anyone

could have imagined using a cheap disposable lighter. There are many more

disposable products today than there were in the past—including everything

from bottled water and individually wrapped snacks to single-use eye drops and

cell phones.

Consumer behavior looks at the many reasons that people

buy things and later dispose of them. Consumers go through

distinct buying phases when they purchase products: (1)

realizing the need or desire, (2) searching for information

about the item, (3) evaluating different products, (4) choosing

a product and purchasing it, (5) using and evaluating the

product after the purchase, and (6) disposing of the product.

A consumer's level of involvement corresponds with how

interested he or she is in buying and consuming a product.

Low-involvement products are usually inexpensive and pose a

low risk to the buyer if he or she makes a mistake by

purchasing them. High-involvement products carry a high risk

to the buyer if they fail, are complex, or are expensive.

Limited-involvement products fall somewhere in between..

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