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Segmentation

Targeting

Positioning

What are the three phases of the buying process? What kinds of purchases are there? How do consumers make purchase decisions—and how can marketers use this information?

Customer

Company

Context

Collaborators

Competitors

Managerial Checklist

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Chapter 2 Customer Behavior 13

There is some subjectivity in marketing (and in business generally), but there are also many known, reliable patterns that comprise the science of consumer behavior. We’ll spend most of this chapter talking about these effects and how man­ agers can use this knowledge wisely. To prepare, we first con­ sider the three major phases that consumers go through when making any purchase. Next, we’ll see the different kinds of purchases that consumers make. We’ll then drill down and see what makes consumers tick.

2-1 The Three Phases of the Purchase Process Customers go through predictable stages in making a purchase. In the prepurchase phase, the customer identifies that some­ thing is lacking—there is a need or a desire to be satisfied. Crit­ ics sometimes say that marketers create desires in people that they didn’t already have. There is some truth in that (e.g., “Is your breath fresh?” “Do you own the coolest running shoes?”), but even without marketers, people really do need and want all kinds of things. Then the hunt begins. Buyers search for information about products and brands that may be suitable.

For example, a newly minted MBA student has multiple wants: new clothes, a car, a condo and furnishings, restaurants in a new city to take clients or visiting friends, a new dentist, a drycleaner, etc. Such consumers might search for alterna­ tive solutions by going online or asking friends. They might evaluate alternatives by reading comparative shoppers, such as Consumer Reports. By comparison, a newly promoted busi­ ness executive might want a corporate jet. Possible vendors would need to be investigated, and alternatives could be eval­ uated by soliciting and entertaining bids. While the objects of purchase or the details of these two purchases may look different, they both entail a variety of prepurchase activities.

During the purchase phase itself, the consumer is creat­ ing a consideration set that includes all the brands that are deemed potential candidates for purchase and that excludes the brands that have been rejected.1 The MBA student may limit the car search to include only hybrids. The condos considered would be only those within a certain price range. The restau­ rants selected might be only those with menus that can be previewed online. Analogous considerations factor into the executive’s jet quandary: What attributes are important? What attributes must I have or not have? What attributes don’t I care about and therefore will not pay high prices for?

The final stage is the customer evaluation postpurchase. Buyers assess their purchase and the purchase process, pos­ ing such questions as Am I satisfied as a customer? Will I buy this brand again? Will I tell my friends what a great brand I’ve found? Figure 2.1 shows the complete process, from seeing that there is a need, to choosing and buying something that will be a solution to the need, finally to assessing one’s satis­ faction with that purchase. For example, imagine a woman’s high heel breaks on one of her shoes. She realizes she needs new shoes. She goes shopping and selects a pair of shoes. When she sees the reaction of her signficant other, she is pleased that the shoes achieved their mission.

The buying process is consistent whether the buyer is a consumer or a business. Consumer buying is easy to relate to. It involves people buying something for them­ selves or  their households, and we are those people. A business customer is an agent buying something on be­ half of an organization. The agent can be an adminis­ trative assistant deciding to use UPS or FedEx, or the agent can be a group of people, representing differ­ ent aspects of the organization (accounting, operations, etc.) and comprising a collective buying center. All pur­ chases, B2C or B2B, go through the three stages, but the amount of time spent in any stage depends in part on what is being bought. For example, sometimes the prepur­ chase phase is extensive, and sometimes it is very quick. So let’s consider some classes of purchases.2

2-2 There Are Different Kinds of Purchases Marketers distinguish among types of purchases. For con­ sumers, a convenience item is a fairly mindless purchase of staples (standard, frequently consumed goods, such as bread or gas) or an impulse purchase (such as candy or magazines that are available near grocery checkouts). There are also shopping purchases, which require some thought or plan­ ning, as when using Citysearch or OpenTable to find a restau­ rant before heading out of town. Finally, there are specialty purchases such as a car or a new laptop. These purchases are

Prepurchase Purchase Postpurchase

Identify need or want Search possible solution Build consideration set

Narrow consideration set Decide on retail channel

Customer satisfaction Likelihood to repeat Generate word of mouth

Figure 2.1 The Purchase Process

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14 Part 1 Marketing Strategy

pattern (not that it’s very thoughtful!)—to shake up the consumer with news of their brand and break through that white noise clutter.

For items that custom­ ers care more about, they’ll expend some time and effort prior to the purchase, seeking out more information to be a smart shopper and to obtain good value. For even higher customer involvement, as in specialty purchases or new buys, the customers are defi­ nitely engaged. A great deal

occasional, they are often more expensive than other types of purchases, and as a result they require more thought.

For B2B customers, the terms are different from con­ sumer buying, but the ideas are analogous. A purchase can be a straight rebuy, such as when the office copier needs toner and you buy the usual brand. Another purchase may be a modified rebuy, such as when the copier lease comes up and you want to try a different vendor. Last, there is the new buy. For example, perhaps you’re considering buying teleconfer­ encing equipment for the first time, and you don’t even know what attributes you must consider.

As Figure 2.2 indicates, what differentiates these purchases is not the product itself. The distinction is more in the minds of the customers and in their involvement with the brand and product category. For example, the purchase of the same product—an energy drink—can be convenience when shop­ pers mindlessly put their usual brand in their grocery cart; it can

be a shopping purchase when customers see a new offering that they consider trying; and it can be a specialty purchase when customers see an expen­ sive brand that promises anti­ oxidants, which they choose to read up on before making a purchase.

Consumers purchase con­ venience items—or business customers a straight rebuy— in a fairly mindless manner. It’s the proverbial no­brainer. Buyers won’t spend much time thinking about brands or attributes because they just don’t care enough to do so. The challenge for market­ ers is to break that thought

Add to Cart

B2C Convenience Shopping Specialty

B2B Straight rebuy Modi�ed rebuy New buy

HighMediumLow

Customer Involvement

Figure 2.2 Types of Purchases in B2C and B2B Is a Matter of Customer Involvement

Types of B2B Customers B2B customers are often classified according to what they sell:

Installations (e.g., equipment for new factories)

Accessories (e.g., computers to help run the office)

Raw materials (e.g., lumber, plastics)

Components (processed items that are components in a later finished product)

Business services (e.g., insurance, legal, consulting)

Ultimately, the most important classification is how much the buying business cares about the purchase. Then we’ll know whether they care primarily about quality or price.

B2B Buying Center Roles In B2B, big, expensive, purchases can be complicated because it’s not just one person making the decision. Each purchase involves a half dozen or so roles in a buying center:

The Initiator: An administrative assistant who notices that one of the printers in the office is frequently breaking down.

The User: Every staff member who tries to use that printer.

The Influencer: The IT guy who says, “Well, Brand X is cheaper, but Brand Y is cooler.”

The Buyer: The head administrative person whose responsibilities are to facilitate supplies but also to answer to . . .

The Gatekeeper: Traditionally, a conservative accountant type whose job it is to tighten purse strings.

A decision to buy a new printer is complicated by the fact that each of these roles seeks slightly different attributes. Some care only about price, others want great features, and still others may appreciate wiggle room in negotiating delivery dates or follow-up customer service.

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Layout is designed to facilitate the shopper. Upon entering, the

shopper has a choice of selecting a traditional shopping cart, a smaller basket, or shopping carts designed for shoppers with children. For physically

challenged shoppers, motorized shopping carts are often provided.

Anatomy of a Grocery Store In the produce section similar items are close

together (for example, fruits

and vegetables).

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The dairy section contains milk, which is the most commonly purchased item. Because of this, it is located in an area

of the store that requires the customer to travel through the store, increasing the likelihood

of impulse purchases.

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Complementary items are close (chips and dip).

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Checkout counters provide the store the opportunity to capture customer

information through the use of loyalty cards, and bar codes can provide a wealth of data that can be mined to provide insights into customer purchasing decisions.

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The end of each aisle and the area at the checkout lanes are likely to hold high-profit items or grouped items (such as marshmallows, chocolate bars, and graham crackers

for s’mores) designed to inspire impulse buys. Sometimes those aisle-ends are used to promote sale items. “People are 30% more likely to buy items on the end of the aisle

versus in the middle of the aisle—often because we think what’s at the end is a better deal,” says Brian Wansink of

Cornell University and author of Mindless Eating. © D av

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In grocery stores, consumers form

consideration sets (and then choose

brands) as a function of brand

recognition (brand recall helps when searching online). Retailers also place specific brands where they can be seen by specific customers, such as brands

aimed at children shelved at eye level to toddlers seated in shopping carts.

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16 Part 1 Marketing Strategy

of effort is put into researching the best brands, quality, and price. The marketer’s challenge is to convince the buyer that their brand is the best choice.

The category that a brand and target segment is in will suggest the appropriate marketing activities that we’ll se­ lect from in the chapters that follow. For example, for lower­ involvement purchases, we can expect customers to be some­ what more price sensitive. They’ll pay more when they buy things they really like or want (e.g., a cool laptop) or that they expect to be of high quality (e.g., a great restaurant) or that is important to them (e.g., health care for their parents).

Consider the implica­ tions for loyalty programs. The marketer can create such programs regardless of the level of customer engagement, but they’d take different forms, e.g., price discounts for low­involvement purchases vs. brand communities and events for high­involvement prod­ ucts and brands. Customer satisfaction can be fine for low­ involvement purchases, but customers won’t generate word of mouth; they don’t care enough. In contrast, for high­ involvement purchases, strong followers and satisfied cus­ tomers can be zealots and brand ambassadors.

Consider the implications for channels of distribution. Low­involvement products need to be widely available so that the customer can pick them up without thinking. High­involve­ ment products will be sought out by more customer activity.

Finally, consider the implications for promotions. For low­involvement products, the marketer just hopes to cut through the noise and clutter—getting customers’ attention only long enough to register the brand name in the mind of the customer for sheer familiarity. With high­involvement purchases, customers are hungry for information, and mar­ keters can provide much more.

So how do customers learn about brands and make choices? In the rest of the chapter, we’ll look at how custom­ ers think and how marketing can have an impact on their de­ cisions and choices.

2-3 The Marketing Science of Customer Behavior Consumers are human beings and, as such, are sometimes simple and predictable, but often rather complex. In this sec­ tion, we’ll delve into consumer psychology, examining sen­ sation and perception, learning and memory, motivation, attitudes, and decision making.

2-3a Sensation and Perception When marketers formulate positioning statements or pro­ duce perceptual maps, they presuppose a complicated system through which consumers sense and perceive their environment. An enormous wave of sensory stimulation washes over and through us every day. We are selective in

our attention, choosing to con­ sider certain stimuli and effec­ tively screening out others. For example, if we are in the market for a laptop, we’ll watch ads for them. If we’re not in the market, we barely notice the ads. We know that consumer involve­ ment creates a state of height­ ened motivation to learn more

about a purchase or to pay attention to advertisement. The human organism is very efficient at adapting to the mul­ titude of stimuli, helping us focus and block out what we deem to be irrelevant.

Let’s consider how marketers can use information through each of the senses. Visual stimuli are obviously important to marketers. Ads show products, product design, print infor­ mation, imagery visualization to facilitate desirable lifestyles, etc. Even simple colors imbue brand associations and can be integral to some brand identities:

>> Mouthwash packaging is dominated by whites, blues, and greens, implying freshness, cleanliness, water, etc.

>> Skype’s skyblue and white says, “We talk through air!”

>> Yahoo!’s purple says, “We’re different!”

If consumers understand colors, marketers can use that information. For example, when the iPod was launched, all headphones in the market were big and bulky, but, more to the point, black or silver. Recall the splash that Apple’s ads made by showing people in black silhouette with the product and ear pods brightly contrasted in white. A choice of a unique color adds to the buzz of the brand’s distinctiveness.

Colors also come to convey cultural meaning. In the U.S., brides wear white because it symbolizes purity (like newly fallen snow). In India, red conveys purity. In the U.S., red conveys danger and passion; a bride in red would be . . . unusual. Even within Western civilizations, there are dif­ ferences: blue represents femininity in Belgium and the Netherlands and masculinity in Sweden and the U.S. (So, now, how do we package razors, deodorant?) There are a zillion colors and many cultures. Imagine the challenge for a brand manager in selecting packaging or logo designs for global multinational brands.

Hearing is also important to marketers. Research shows that when retailers play background music that is energetic,

“Marketing satisfies a consumer’s needs & wants,

and creates more!”

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Chapter 2 Customer Behavior 17

with a quick tempo, customers spend more. There are other aural brand associations:

>> T­Mobile vs. AT&T ringtones

>> Fancy Feast television commercials feature a high­ pitched ding, ding (a fork clinking against fine crystal) to imply that the food is extra special (and therefore worth its higher price)

Car and motorcycle enthusiasts know that manufacturers are meticulous in delivering distinctive sounds, and, as a re­ sult, consumers have come to learn the sounds, expect them, and pay for them. A high­end Honda motorcycle runs about mid­$20k, whereas a Harley­Davidson runs in the high $30k. Obviously, the sound is not the only difference between the two bikes, but if the Harley didn’t sound like a Harley, a biker won’t fork over the extra $15k. Similarly, a Porsche 911 turbo at $150k is no clunker, but Ferrari’s engineers create a symphony of car sounds and charge $250k. Again, even acknowledging other differences, sound is nevertheless a part of the purchase decision.

A third sense is smell. Think of how many times you’ve walked through a shopping mall and felt carried away on the wafting scent of a Cinnabon store in the food court. Samples of new perfumes are inserted into magazines, and women who work the cosmetic counters in depart­ ment stores ask to spray you. Scent is featured in ads for clean­ ing products—things that make our houses smell fresh or lemony. Old Spice even declares it in its new ad lines: Smell Is Power!

A fourth sense is taste. A classic marketing exercise is to run blind taste tests in order to declare that one’s own product is superior to the market leader. These tests can be dramatic

and compelling. They are also interesting to marketers be­ cause they clearly distinguish the power of the brand from the product itself. For example, most people swear they can identify a Pepsi vs. a Coke, and yet many people actually can­ not. Try it on your friends.

A fifth sense is touch. The predominant means of conveying brand imagery through touch is when market­ ers create well­designed products, compared to products

intended to be positioned for value. Design can mean good ergonomics, as in good kitchen knives, wrist­friendly mice or keyboards, good chairs, etc. De­ sign can also mean clean lines, simplicity, and beauty, such as the products that Apple con­ tinues to create. Finally, design

can also certainly mean a sensual experience, like leather interior options in cars, compared to their less expensive, less touchable alternatives.

Finally, a discussion about sensation and perception wouldn’t be complete without mention of so­called sublimi­ nal advertising. The idea is that an ad can be shown very quickly, on TV or in the mov­ ies, so that it doesn’t quite meet the threshold of liminal recognition and conscious­ ness, and therefore it is said to be subliminal. Yet somehow the vision is captured subcon­ sciously, and marketers hope the message will compel ac­ tion (e.g., buy more pop­ corn). Print ads depend not on brief time exposure but on

Brand Names Research by marketing linguists tells us that some brand names are better for certain products simply because of how they are pronounced:

A sound like a long e is reminiscent of the sound that small animals make, such as a mouse or a little bird (ee-ee or cheep-cheep). Hence, products that are positioned as small and quick should have names with similar sounds: Beetle, Miata, Neon. In contrast, vowel sounds like short o sound slow, large, heavy (e.g., an ox, a cow). Accordingly, larger, more powerful products should have sounds that convey their heft: Durango, Bronco, etc.; see research by Professor Eric Yorkston (TCU).

Brand names (even hypothetical ones) that have some repetition in them (sepsop or temasema) are more appealing than those that don’t (sepfut or temafanu); see research by Professors Jennifer Argo (U Alberta) and Malcolm Smith (U Manitoba).

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Ferrari fine-tunes its cars to sound as good as they look.

“Subliminal doesn’t work. Or does it, does it, does it?”

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18 Part 1 Marketing Strategy

ambiguity. If you think companies don’t do this anymore, take a look at the logo for the Chicago White Sox baseball team (at whitesox.com) in Figure 2.3. Does it spell Sox or sex?

mentioned, those associations are brought to mind. Learn­ ing is the process by which associations get past the sensory and perception stages into short­term memory and then, with repetition and elaboration, into long­term memory. There are several theories about learning, but two are so fundamental and pervasive that every marketer should know them.

The first way that people learn is through classical condi­ tioning. This type of learning is so well known and integrated into our culture that most people have heard of the demon­ strations by Ivan Pavlov on his salivating dogs. The learning goes through stages:

>> Stage 1: A food bowl placed in front of a dog naturally elicits its drool.

>> Stage 2: A bell rung in front of the dog initially elicits no response.

>> Stage 3: A bell rung while a food bowl is simultaneously placed in front of the dog elicits drool.

>> Stage 4: With time, bell rung in front of the dog elicits drool. The dog has come to learn that the bell is associ­ ated with food.

Perhaps you’re thinking, “But that’s just a dog.” Indeed. However, consider Figure 2.4. It’s common to hear that “sex sells,” but why or how does it work? The process is this:

Figure 2.3 Chicago White Sox Logo

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Figure 2.4 Sex Sells due to Classical Conditioning

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While marketers have debunked the notion that sublimi­ nal advertising works, they nevertheless conduct a great deal of research in areas called “mere exposure” and “perceptual fluency.” Neither of these effects is subliminal, per se, but they share a certain subtlety. For example, mere exposure, as its name suggests, says that, though you might not think the bill­ board you drive past every day is having a persuasive effect on you, it is. Marketers know that repeated exposures to a brand name or an ad bring familiarity, and with familiarity comes a comfortable, positive feeling. Thus, brands advertised on bill­ boards are familiar and would probably rate fairly positively.

Perceptual fluency is also a subtle phenomenon. When consumers thumb through a magazine or click through web­ sites, they are probably paying most of their attention to the  content of the message. However, other information is being expressed. Colors and fonts can make a message seem more professional, more emotional, more contemporary, more gothic. Those cues make an impression as well. The cues are liminal but subtle, and they are part of the brand.

2-3b Learning and Memory All those sensory and perceptual impressions can become brand associations. To say that consumers have brand as­ sociations means that, in their memory, they have stored certain attributes attached to the brand. When the brand is

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Chapter 2 Customer Behavior 19

>> Stage 1: A babe (male or female) elicits drool.

>> Stage 2: A car or other product initially elicits no response.

>> Stage 3: A car with a babe draped over it elicits drool.

>> Stage 4: With time, a car elicits drool.

That might sound a little far­fetched, but that’s the learn­ ing process. Consider more neutral stimuli, such as the logos for Honda, Acura, and Hyundai in Figure 2.5. At their intro­ duction, these abstract symbols convey no information and function much like the bell in Pavlov’s lab. With time, while logos might not elicit drool, consumers come to learn and as­ sociate these fairly similar looking symbols with their unique car brands.

It’s also worth noting, in this ever changing world, that sometimes companies want to shed negative associations, and they change their names and logos to do so. For example, in recent years, Blackwater became Xe, Philip Morris became Altria, ValuJet became AirTran, and Andersen Consulting be­ came Accenture. The hope is that the slate has been wiped clean, so that fresh associations might become attached to the new company names and logos.

A fun use of classical conditioning is jingles. It takes only a few exposures before people learn the catchy lyrics. Con­ sider these jingles; it’s hard to resist finishing them, and it’s hard to stop thinking about them:

>> Dr. Pepper: “Wouldn’t you like to be a Pepper too?”

>> Oscar Mayer: “My bologna has a first name . . .”

>> U.S. Army: “Be all that you can be!”

>> Campbell’s soup: “M’mm good!”

>> Coca­Cola: “I’d like to buy the world a Coke . . .”

And the master of all jingles:

>> Two all­beef patties . . .

The second way that people learn is through operant con­ ditioning. This type of learning is also so well known that most people have heard of Skinner boxes. B. F. Skinner studied pigeons pecking at a target, or rats pressing a bar, to receive food pellets. The pigeon learns the desired behav­ ior by being rewarded. The behavior is said to be positively reinforced.

Skinner boxes are programmed to reward the pigeon every time it pecks, or only after every fourth peck, or only at 20 minutes after the hour, etc. When the bird is rewarded every time or every fourth time, the reinforcement sched­ ule is said to be on a fixed ratio reinforcement schedule. When the bird is rewarded on average every fourth time (so perhaps after two pecks, then after six pecks, then after four, etc.), the reinforcement schedule is said to be on a variable ratio. This difference matters because the unpredictability of the variability drives the birds (and humans) a little nuts. In the same amount of time, say, 30 minutes, the bird will peck a lot more on the variable, rather than on the fixed, ratio schedule.

So what? Well, consider loyalty programs. Marketers re­ ward consumers who carry their loyalty cards by giving them every 10th coffee free, for example. If marketers want their consumers to purchase even more frequently and ring up more sales, they would design a variable ratio reinforcement program. Each coffee card could have a scratch­off number indicating that the customer would receive a free coffee after, say, seven coffees. The next card might say 5 or 15, etc.

With current programs, the customer’s behavior is very predictable. With a variable program, the customer would be excited about the seven because it means a free coffee is coming much faster than after 10. Even when they scratch off and get a higher number, like 15, they’ll still recall that they have had smaller numbers in the past. So the sooner they get to 15 and redeem this card, the sooner they’ll get another card, perhaps with a smaller number.

There are also reinforcement schedules based on dura­ tion lapses, but these are not implemented in marketing as frequently. One famous exception, however, is the policy

Figure 2.5 Logos Gain Meaning through Classical Conditioning

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20 Part 1 Marketing Strategy

by Southwest Airlines that allows passengers to obtain their boarding pass classification 24 hours prior to the flight, but no sooner. Passengers who wait too long get less desirable status, so many fliers find themselves poised over their keyboard to press the right letters at just the right time. Keyboard press­ ing is not that different from pigeons pecking.

As any student knows, a big factor in learning and mem­ ory is motivation. Thus, we consider it next.

2-3c Motivation Figure 2.6 depicts psychologist Abraham Maslow’s hierar­ chy of needs. We have to meet basic needs—have food on the table and a roof overhead—before we think about buy­ ing nice clothes. Once we have met our basic needs, we are driven by more abstract motivations, such as love and esteem, qualities that begin to define humanity. At the peak of this pyramid is the phrase, self­actualization, an achievement of our ideal self, with no needs, no excessive wants, no jealou­ sies, etc.

One way that marketers use this hierarchy is by identi­ fying their product with a certain level of needs. They use imagery to appeal to those motivations. For example, the VW crash ads appeal to our need for safety. Similarly, the entire Volvo brand is positioned for safety. Beyond cars, other ex­ amples involve different kinds of security. For example, in B2B, they used to say, “You won’t get fired for buying IBM.” Even though IBM was often the most expensive choice, buy­ ers knew that the quality would be good, so any risk­averse buyer would feel security in having chosen a good brand.

Many of us are fortunate enough that our simpler needs are met, so a great number of brands are positioned to heighten a consumer’s sense of belonging or, at the next level, social acceptance and respect. Belonging can be signaled by explicitly affiliative products, such as team logos, or by con­ spicuously branded products, as in certain men’s athletic

shoes or women’s handbags. Belonging can also be more subtle; many ads appeal to a person’s concern with fitting in with the norm. For ex­ ample, when you start a new job, are you wearing the right clothing? If all your friends drive a hybrid, will they ac­ cept you and your SUV? And so on.

At the higher level, the acceptance, by self (esteem) and others (respect) is often signaled by marketers by pointing a consumer to an as­ piration group. You might be

a business school student right now, but ads will show you the clothes, restaurants, and cars that the most successful CEOs wear, dine in, and drive. The implication is that you should begin to shape your preferences accordingly so that, when you achieve that CEO status, your purchases will exhibit good taste.

Another way that marketers have used this hierarchy is to offer an extended brand line that encourages a customer to reach ever higher in the pyramid. For example, Mercedes makes their entry­level C­Class for the driver who wants the brand but cannot afford much. Mercedes hopes that drivers will like the C­Class and, when they’re ready, trade it in for an E­, then S­, then CL­Class. This product range is a simple manifestation of customer relationship management.

Eenie, Meanie, Jelly Beanie In their article, “Active Choice: A Method to Motivate Behavior Change,” Professors Punam Keller and Bari Harlam studied different kinds of so-called opting behaviors:

1. Opt-in: Check this box if you wish a reminder to . . . 2. Opt-out: Check this box if you do not wish a reminder to . . .

Options 1 and 2 did okay, but the setup that was much more effective was:

3. Check one: I will remind myself to . . . vs. Yes, please send me a reminder to . . .

Getting reminders is very important to engaging in a variety of behaviors, such as getting flu shots, signing an organ donation card, or enrolling in a company’s 401k program.

Self- Actualization

Self-Esteem, Respect

Friendship, Love, Belonging

Safety, Security

Food, Water, Sleep, Sex

Figure 2.6 Maslow’s Hierarchy of Needs

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Chapter 2 Customer Behavior 21

Yet another way that the hierarchy is used is when brand managers think about positioning their brands as high in the pyramid as possible. Walmart may make basic sneakers that sat­ isfy simple needs at the bottom of the hierarchy. However, well­ made trainers affiliated with strong brand equity can charge more, not just because the product may be somewhat better but because the consumer wants to believe that the shoes will make them better—better athletes, more fit, more attractive, better people. The basic Walmart sneaker probably can’t be positioned too high in the pyramid, but it would behoove any other sneaker maker to strive for imagery as high in the hierarchy as possible.

Beyond the Maslow pyramid, there are other ways to dis­ tinguish needs and motivations. Many consumer psycholo­ gists speak of utilitarian vs. hedonic products, fulfilling needs and wants. A consumer might need a new interviewing suit but want the Armani threads.

Consumer psychologists also point to the motives that co­ exist in all of us, for conformity vs. individuality. Sometimes one need is more salient than another throughout a person’s life, or, depending on the situation, one motivation may flare stronger than another. If conformity is winning, the consumer

buys a popular brand; if individuality is more important, then the consumer finds an atypical, quirky brand. Luckily, in most product categories, there are large brand assortments; hence, either need may usually be satisfied.

A final means of distinguishing consumer motivations is whether they are risk seeking or risk averse. In some product categories, consumers may be avid customers, very knowledge­ able, opinion leaders, and ready to try the newest that the mar­ ket has to offer (the latest music, fashion, etc.). In other product categories, those same persons may be more risk averse for a variety of reasons, including caring less about the category or not having the expertise to make choices confidently. For these purchases, the consumers would be more conservative, trying to prevent a bad purchase, rather than promoting the hopes of a good purchase.

2-3d Attitudes and Decision Making Marketers want to understand how consumers think and what motivates them so that they might persuade the consumers to

have positive regard for a par­ ticular brand and see it as su­ perior to all others, at least for their needs. Attitudes and de­ cision making affect the extent to which consumers will buy a brand, repeatedly purchase it, become loyal, and recom­ mend it to others. If we’re re­ ally lucky, our brand fans will prefer our brand so much that they’d even be price insensi­ tive if we had to, or wished to, raise prices. So if we seek to enhance attitudes about brands and encourage particu­ lar brand choices, let’s begin with two questions: What are attitudes? What does the deci­ sion­making process look like?

Attitudes are concep­ tualized as a mix of beliefs and importance weights. Beliefs are opinions, such as BMWs are fast, they’re nice to look at, they’re expensive, etc. Importance weights are things like “I don’t care much about whether my car is fast, but I would like it to be at­ tractive” or “I care about the cost.” People can differ on

Consumers and Emotions Recently, marketers have begun paying greater attention to the role of emotions in consumer behavior. Emotions help explain phenomena like brand communities and brand zealots—these are people whose admiration for their favorite brand goes beyond a cognitive comparison of utilities. But understanding emotions turns out to help marketers understand even less extreme consumer behavior. For example, imagine a tax attorney has just spoken rudely to a client. How will that consumer respond? Typically, consumers expect that service providers will be polite, so this client is likely to conclude the attorney is unpleasant, so the client may become upset. Alternatively, imagine a different scenario in which the tax attorney had (politely) pointed out that the client had underpaid and therefore owes taxes. The client’s reaction is likely to be one of embarrassment and concern. In both circumstances, the client is experiencing a negative emotion, but the emotions themselves are different, and the thought processes contributing to the emotions were different, and all of these differences have implications for effective service delivery. In the first scenario, steps toward service recovery are appropriate, beginning with an apology. In the second scenario, the service provider can offer guidance as to the problem’s resolution, and plans to avoid the problem in the future. These examples illustrate how consumers’ cognitive and affective processing are inextricably linked. Compared to human decision making and purchasing. It’s comprised of very few components: wind, water, dirt particles, gravity, temperature. Yet the best we tend to say is, “Tomorrow’s weather will look something like today’s.” Similarly, we make the fewest marketing forecast mistakes if we say, “You’ll buy the same brand of toothpaste this time as you did last time.” Consider the factors that enter into a toothpaste purchase: What did mom buy? What’s on sale? What flavor do I like? Do I need a small tube for travel or a big tube for home? Do I want a whitener? Are my teeth sensitive? Do I want to try something new? Do I have a coupon? Am I buying this for myself or someone else? Do I need floss because that brand is bundled with a container of floss? It’s complicated! Yet marketers have sophisticated research techniques to enhance predictions and answers to questions such as whether this customer is likely to be a brand switcher, sensitive to a price discount, affected by recent advertising, etc. Methods to gather information from customers are discussed throughout this book and in particular are concentrated in Ch. 15 on marketing research.

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22 Part 1 Marketing Strategy

both their beliefs and importance weights. Some people might say that BMWs aren’t that attractive or expensive rela­ tive to other cars. Some people might not care how much a car costs but care very much about speed.

Importance weights are like the concept of customer in­ volvement. It is an important truism in marketing, with its natu­ ral implications, that, in any purchase category, customers can be classified according to how much they care about the given purchase. For the things consumers care about, they spend more time learning about the options and brands, and they’re usually willing to pay more for excellence. For the things con­ sumers care less about, they spend less time investigating, and it’s likely that they won’t want to pay much.

The job of marketers is to play with both components of atti­ tudes—beliefs and importance weights. Marketers seek to make the beliefs in an attribute or benefit more positive and to make the attributes on which the brand is dominant seem even more important. The beliefs and importance weights are modified or strengthened through learning and memory and by appealing to consumer motivations that the brand purportedly satisfies.

Attitudes contribute to decision making and brand choice. In some product categories, there aren’t that many choices, so brands can be compared fairly readily. In catego­ ries with a lot of choices, consumers usually proceed through two stages. In the first, quick stage, they decide which brands should be considered in more detail vs. those that don’t make the cut to be in the consideration set. The second stage is relatively prolonged, during which consumers compare the brands in the set to make a purchase choice.

The first stage is thought to be conducted quickly by non­ compensatory mechanisms. “Noncompensatory” means that some attributes are very important. If the brand has them, then it may be considered further; otherwise, the brand is precluded. Even if the brand excels at something else, that other excellent attribute does not compensate for the lack of the first, important quality. An example of this approach is called “lexicographic”; the idea is that a customer would compare all the possible brands along the attribute or dimension that is most important (e.g., quality, price, size, etc.). Whichever brands make the cut

on this first dimension continue to be considered. That subset of brands is compared on the next most important attribute and so on until the set is reduced to only a few brands.

Once the consideration set has been reduced to a man­ ageable number, consumers switch gears and use a com­ pensatory model. This model uses a costs and benefits logic, whereby excellence on one attribute can make up for the fact that the brand is not so great in some other ways. One such model is that of averages; e.g., if a brand is strong on attribute A and only so­so on B, it may dominate a brand that is aver­ age on both attributes A and B.

A lot of online sites allow consumers to select from a number of brands or models to enable a side­by­side com­ parisons. This information sorting helps consumers see which brands are best on the attributes they care most about. The algorithms request that consumers first select the brands to be compared. This stage mimics the noncompensatory stage in reducing the number of possible brands to a more man­ ageable number for further consideration. The online com­ parators facilitate the second, compensatory stage, in that the attributes are lined up for easy viewing. A brand choice is made, and the decision process is completed.

2-3e How Do Cultural Differences Affect Consumers’ Behavior? In addition to individual differences in how consumers respond to ads and brands, there are also predictable sociocultural ef­ fects. We’ll consider two examples: social class and age.

In the U.S., we might not wish to acknowledge that so­ cial class matters, but in many ways it does, and it certainly does for the marketer. Some societies have clear class distinc­ tions, but gradations in socioeconomic standing are discern­ ible even in relatively classless societies. People tend to be more comfortable with others in comparable standing, and they tend to marry others who are approximately their equals.

Social class is a construct that is more complicated than just economic access to resources. Income is important, but so is family background (e.g., old money vs. nouveau riche) and ca­ reer paths (e.g., some allowance for social mobility). Old­monied

people seek exclusivity in their brands, to affirm their special standing in society. They are alarmed by the mass­class movement, in which designers of high­end luxury goods pro­ duce far less expensive lines (albeit not of the same quality) to allow access by us peasants.

In contrast, nouveaus try to make purchases to attain their status, the purchases being the so­called status

Consumers Online It turns out that www actually stands for “what will we [buy now]?”

U.S. online retail is about $250b, almost 10% of which is through our smartphones and another 10% through social media networks. Daily deals are only 1% but they’re growing rapidly.

Euro e-sales are at $210b, Brazil is $16b, India is at $60b, and China? $710b.

From the start, we’ve bought online primarily for convenience, access to a broader assortment, and the easier ability to make price comparisons. In addition, these days, we’re also reading product reviews and ratings and searching for coupons.

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Chapter 2 Customer Behavior 23

symbols. They indulge in conspicuous consumption, e.g., buying goods with garish, loud branding that shows the world they’ve made it. Obviously, designing products, brands, and marketing communications for these two different groups calls for different approaches.

Age cohorts also produce reliable, predictable shopping patterns. Some patterns are obvious, following the household composition and income availability. Young people first buy furniture and kitchenware, entertainment and travel, and large screen TVs. They proceed to the stage of buying diapers and toys and minivans. Soon there is college to pay for, then maybe travel, and, soon, health care. (Gee, that was depressing.)

Age groups are particularly important when they are large in size. The infamous baby boomer group is graying and be­ ginning to retire. Older people are traditionally ignored by advertisers who like to feature youth, but the deep wallets of baby boomers will soon force companies to pay attention. Cruises will sell, whereas sophomoric movie comedies might decline.

The baby boomer generation was always societal minded, so we might expect to see large­scale altruism and record

levels of infusions of resources into nonprofits. In an odd con­ tradiction, this generation was also dubbed “the me genera­ tion,” and indeed sales of Viagra and cosmetic surgeries have also begun inching upward.

Social class and age cohort are among the various socio­ cultural factors that impinge on how buyers form impressions and preferences, collect information, form opinions, and make brand choices. Gender matters: Men and women are socialized differently, they think about products differently, and they shop differently.

Finally, ethnicity and country culture provide different perspectives, and they can be very interesting (and compli­ cated). We’ll see examples throughout the book. Be fore­ warned: It is difficult to provide generalizations without devolving into stereotypes, so note there are always excep­ tions. To foreshadow a few observations now:

>> Wealthy Chinese like their consumption conspicu­ ous. Due to their purchases, Louis Vuitton has found its busy season has moved to late January and early February, just before Chinese New Year (from tra­ ditional 4th­quarter peaks, attributable to Christmas shopping).

>> China is now second to Japan in buying luxury goods, to show­off personal wealth and in gift giving.

>> European brands tend to dominate the high end, due not just to a perception or cultural heritage but also to structural industry differences, such as

>> fine craftsmanship in watches built in Switzerland, >> fashion or exotic cars designed in Italy, or >> supply chains such as extensive fields of flowers

or vineyards for perfumeries or vintners in France.

>> Brazil’s emerging middle class is buying up cell phones, HDTVs, small laptops

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How do cultural differences affect consumers’ behavior?

Managerial recap

Keep the buyer in mind, whether you deal with consumers or business customers. Marketing managers can be nimble and adaptive to industry changes if they have a basic understand­ ing of consumer behavior3

>> There are three major phases of consumption: prepur­ chase, purchase, and postpurchase.

>> There are three major classes of purchases: For B2C, these are called convenience, shopping, specialty; for B2B, these are called straight rebuy, modified rebuy, and new buy. The difference among the three has to do with customer involvement.

>> How do consumers think?

>> They begin with sensing and perceiving information, which may be learned and stored in memory.

>> Motivations help marketers understand what consumers are seeking to satisfy with their purchases.

>> Attitudes and decision making are subject to influ­ ence by good information as well as biases.

>> Finally, social norms, such as generational preferences or choices based on wealth, define us as well.

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24 Part 1 Marketing Strategy

Various media equip consumers to make side­by­side com­ parisons of brands’ relative strengths (e.g., Consumer Re- ports, Bizrate, etc.). These comparisons are acclaimed not from the manufacturer but from a third party, so they’re per­ ceived as objective and neutral. The following table (based on reviews at CNET) compares 3­D televisions on a number of criteria. The attribute of crosstalk (in the table) is not a good thing; it’s the ghost­like double image that shadows some 3­D objects depending on the technology; hence, less is better. All the TVs are about 65 inches currently. The 3­D glasses must

be purchased with each TV. (The technology is specific to the firm and the TV, so the Panasonic glasses won’t work with the LG TV, for example.) The glasses run about $150 a pair.

Sometimes customers know just what they want: a par­ ticular brand or a particular feature. Sometimes their thought processes are little more meandering. Some consumers are rather systematic decision makers, such as when they follow a procedure to eliminate certain alternatives by some cri­ teria. Use this table to simulate the thought processes of a consumer.

Insight into Consumer Decision Making—3-D TV

Mini-Case

Brand

Model

Panasonic LG Sony Samsung

TC-PVT25 PX950 XBR-HX909 UNC8000

Technology Plasma Plasma LCD LCD

Price

Least crosstalk

Clear color

Clear, deep black

3-D from angle

Flicker

3-D glasses

$2,479 $1,850 $2,497 $2,999

Ugly and uncomfortable

Rechargeable via USB

Comfortable, good peripheral

Light to wear

Now imagine you are a consumer thinking about buying a 3­D TV.

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Chapter 2 Customer Behavior 25

Located at back of the textbook

□ Rip-Out Reference Card

Located at www.cengagebrain.com

□ Develop a marketing plan online □ Watch video on Scholfield Honda for a real company

example □ Complete the interactive quiz to prepare for tests □ Complete the B2B Interactive Analytical Tool

online . . . and more!

Further Reference

Discussion Questions

1. First, quickly at a glance, what TV do you think you would buy?

2. On what criteria do you think you based that decision?

Try these decision-making processes, see what brand results for each, and see how confident you feel about the resulting brand sug- gested from each approach:

3. What attribute do you find least informative? Eliminate that row. Continue to do so until a clear brand winner emerges.

4. Which brand of TV would seem to be the riskiest to buy? Elimi- nate it. Continue until an obvious choice results.

5. If you made a price-based decision, would you be happy?

6. How would your final brand choice define you?

Which of these criteria wouldn’t have concerned you? How similar was this thought process to your natural analysis? How can you find out whether your consumers think along these lines?

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