Consumer Behavior And Consumer Research

Front 1

Acquiring Products

Back 1

**Includes everything done leading up to the point of purchase
-Deciding to buy a product
-Deciding between brands
-Where to buy
-How to pay
-Other ways to acquire

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Consuming Products

Back 2

**Describes where, when, and how consumption takes place
-How you use a product
-How you store a product
-Who uses the product
-How much you consume
-How product compares with expectations

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Disposing Products

Back 3

**The ways consumers get rid of products and/or packaging after consumption
-How you get rid of remaining products
-How much you throw away after use
-Reselling products
-How you recycle products

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Offering

Back 4

-A product, service, activity, or idea offered by a marketing organization to consumers

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"The Marketing Concept"

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-Firms exist to satisfy consumers' needs
-Must be done in an efficient and profitable manner, while also benefiting the long-term interests of society

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Why you can't just find out what consumers want and then produce it

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-Social desirability issues
-Consumers may not know what is possible
-Consumers don't always know what they want
-What consumers want may not be feasible
-The marketplace changes over time (and so do consumer preferences)

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Problems with the intuition approach

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-Decisions made on a few observations
-Biases (egocentric bias)
-People infer causality from correlation (use scientific approach instead)

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Consumer Behavior

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-Entails all consumer activites associated with the purchase, use, and disposal of goods and services, including the consumer's emotional, mental, and behavioral responses that procede, determine, or follow these activities.

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Individual Consumers

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-Purchase goods and services to satisfy their own personal needs and wants or to satisfy the needs and wants of others.

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Organizational Consumers

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-Purchase goods and services in order to:
---Produce other goods and services
---Resell them to other organizations or to individual consumers
---Help manage and run their organization

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Consumer Responses

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-Emotional (Affective) Responses: reflect a consumer's emotions, feelings, and moods
-Mental (Cognitive) Responses: include a consumer's thought processes, opinions, beliefs, attitudes, and intentions about products and services
-Behavioral Responses: include a consumer's overt decisions and actions during purchase, use, and disposal activities

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Customer Perceived Value

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-The estimated net gain customers receive from their sacrifice of time, money, and effort expended to purchase, use, and dispose of a product

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Customer Delight

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-Goes a step beyond customer perceived value, suggesting that the customer benefits by not only having their expectations met, but exceeded in unanticipated ways

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Behavioral Science

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-Applies to the scientific method, relying on systematic, rigorous procedures to explain, control, and predict consumer behavior
-Behavioral scientists study people and their behaviors the saem way that natural scientists study physical phenomena

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Interpretivism

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-Views consumers as non-rational beings and their reality as highly subjective
-These researchers' goal is to collect data to describe and interpret this reality

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Marketing Research

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-A systematic process of planning, collecting, analyzing, and interpreting data and information relevant to marketing problems and consumer behavior

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Basic and Applied Research

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-Basic research looks for general relationships between variables, regardless of the specific situation
-Applied research examines these same variables but within a specific context of interest to a marketer

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Market Segmentation

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-The process of dividing the large and diverse mass market into subsets of consumers who share common needs, characteristics, or behaviors, and then targeting one or more of those segments with a distinct marketing mix

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Positioning

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-The process of communicating with our target market(s) through the use of marketing mix variables (product, price, place, promotion) in such a way as to help consumers differentiate a product from competitors and understand how a particular product best satisfies their needs

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Factors Influencing Market Segmentation Strategies

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-Consumer preference heterogenity: tastes and preferences differ among consumers
-Majority fallacy: the largest segment (where competition is most intense) is not always the most profitable
-Sales-cost trade-off: as market segmentation increases, sales increase
-Cannibalization- when products of the same firm are so similiar, they are forced to compete against each other

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Bases of Segmentation

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-Demographic: based on population statistics (age, gender, race, income, occupation, etc.)
-Geographic: based on physical locations (zip codes, cities, states, countries, etc.)
-Geo-demographic (zip-coding marketing): people of similar demographics live near one another (we live near people who are like us)
-Psychographics and Behavioral Bases (refer to separate cards)

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Psychographics

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-The measurement of lifestyle, often combined with measures of attitudes, beliefs, and personalities
-Lifestyle is simply how we live (refer to a separate card for a more specific definition)

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Psychographics- Lifestyle

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-Defined in terms of a person's activities (how they spend their time i.e. volunteering, vacationing, exercising), interests (what they value in life i.e. family, friends, recreational activities) and opinions (how they feel about political, religious, and social issues).

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The VALS System

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-Employs psychographics by segmenting consumers based on social values and lifestyle variables
-The VALS system classifies American adults into 8 distinct consumer segments, which are grouped along 2 dimensions: primary motivation and resources

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The VALS Segments

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-Innovators (successful, take-charge people)
-Thinkers (ideals, high resources)
-Believers (ideals, low resources)
-Achievers (achievement, high resources)
-Strivers (achievement, low resources)
-Experiencers (self-express, high resources)
-Makers (self-expression, low resources)
-Survivors (lead narrowly focused lives)

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3 Primary Motivators

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-Ideals are guided by ethical codes, religious beliefs, personal philosophies, and a search for life knowledge and understanding
-Achievers seek social approval from society and base their behaviors on the reactions of their peers or aspirational groups
-Self-expression emphasizes individuality, direct experience, and a general quest for variety and risk

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Resources

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-Comprises psychological attributes such as self-confidence, energy, vanity, and intellectualism, coupled with demographic characteristics that influences one's ability to act on his or her primary motivation such as income and education

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Behavioral-Based Segmentation

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-Groups consumers based on their preference for a particular product attribute or benefit, usage occasion, user status, rate of product usage, and loyalty status

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Perceived Pain vs. Perceived Value

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-Perceived pain: the amount of anxiety and negative feelings a consumer experiences when paying what he or she believes is a high price for a product
-Perceived value: the degree to which a consumer views brands within a product category to be unique based on their price

Front 30

Price Segment

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-Consumers feel that most brands are very similar and don't want to pay a high price for a particular brand name
-Ultimate price shoppers who may sacrifice extra benefits and services in order to achieve the lowest price
-Generic and store brands tend to appeal to this segment (Walmart, Target, Kroger, etc.)

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Convenience Segment

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-Consumers view the brands to have little differentiation, but are less price sensitive
-Consumers are most sensitive to the time they have to spend shopping and want to minimize search and evaluation
-Consumers are willing to pay a higher price for the convenience of easy brand selection (online shopping is most preferred)

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Loyal Segment

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-Highly desirable to marketers who have invested to build meaning into their brand name and offer a premium product
-"Choosy mom": if the brand she is looking for is not available, then she won't purchase the product until it becomes available to her (substitute brands are unacceptable)

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Value Segment

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-Consumers view brands to be different, but don't want to pay for this differentiation
-These consumers want it all: the best brand names at the very lowest prices (outlet malls are preferred among these consumers)
-Coupon usage is also high among these consumers becaue they feel like they are getting a special deal on a quality brand

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Market Segmentation Based on Price

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-Price Segmentation: high perceived pain, low perceived value (upper-left quadrant)
-Convenience Segment: low perceived pain, low perceived value (lower-left quadrant)
-Loyal Segment: low perceived pain, high perceived value (lower-right quadrant)
-Value Segment: high perceived pain, high perceived value (upper-right quadrant)

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Positioning Linked to Segmentation Bases

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-Core Benefit: relies on a single attribute or benefit that differentiates the brand
-Premium Pricing: pricing higher than competiting brands (i.e Nordstroms)
-Discount Pricing: pricing lower than competiting brands (i.e. Walmart)
-Product Usage: building a strong association between a brand and its purpose
-Product User: identifying a brand with the user of the product

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Repositioning

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-Attempts to change the way consumers perceive a brand, either their own brand or a competitor's

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Perceptual Mapping

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-Measures the way products are positioned in the minds of consumers and show these perceptions on a graph whose axes are formed by product attributes
-Used to assess how products in a category are positioned, how consumers view the product's attributes, and if there are any product "gaps" in the market

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What "Gaps" in Perceptual Maps Indicate

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-A true opportunity in the market that we could or should begin to pursue
-A combination of attributes that nobody needs or wants, which is why there's a gap
-A combination of attributes that is impossible to deliver to the consumer without the development of new technology

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Primary Data

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-New data collected specifially for the research purpose at hand
-Could be internally or externally collected
-EXAMPLES: experiments, test markets, focus groups, surveys, observations, interviews, etc.

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Pros and Cons of Primary Data

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-Advantages:
---Information is current, specific and relevant to a certain project
---Data collection can be controlled
-Disadvantages:
---Data collection is very expensive
---Requires considerable time to collect, organize, and analyze

Front 41

Secondary Data

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-Information that already exists and is readily accessible for use
-Data is often aggregated, meaning that it is reported as a whole, rather than broken down
-**Collect secondary data first, then collect primary data if it is still needed
---Externally collected through census, Gallup polls, etc.
---Internally collected through company records, sales data

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Pros and Cons of Secondary Data

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-Advantages: time savings, low costs
-Disadvantages (reasons why you may need to do more research and use primary data):
---Out of date? (census is taken every 10yrs)
---Definitions or categories might not be what you're looking for
---Might not have specific enough data

Front 43

Collecting Qualitative Primary Data (tools involving words)

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-Exploratory Research>> generates ideas:
---In-depth interviews (talk to people) and focus groups (have people talk to each other)
-Descriptive Research>> generates numbers and relationships:
---Case Studies

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Collecting Quantitative Primary Data (scaled items involving numbers)

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-Exploratory Research>> generates ideas:
---Observational (no talking)
-Descriptive Research>> generates numbers and relationships:
---Content analysis, surveys, and data mining (scanner pannels- turns words into numbers)
-Casual Research>> assesses cause-effect relationships:
---Experiments and test markets (quasi-experiment)

Front 45

In-depth Interviews

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-Conducted face-to-face with one respondent exploring a subject matter in great detail
-Advantage: researcher can peel away layers of respondents' thoughts and emotions
-Disadvantage: tends to be very time-consuming and costly because the interviewer must be highly trained

Front 46

In-depth Interview Techniques

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-Laddering (why is that important to you?)
-ZMET (pictures illustrating thought and feelings about a product)
-Projective techniques (Rorsach test, brand personification, third person techniques)
-EXAMPLE: Heineken Italia
---Repositioned as trendy, linked new music era to a new bottle design (for 18-24yr olds)

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Focus Groups

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-Group of respondents discuss a problem by responding and reacting to each other
-Conducted for brainstorming new ideas, assessing new product lines, and evaluating promotional campaigns
-Groupthink: when groups make poor quality decisions for the sake of unanimity

Front 48

Focus Group Interviewing Methods

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-Interviewer develops a discussion guide
-Usually 6-12 participants
-Flexible interviewing technique (chain reaction, devil's advocate, false termination)
-Disadvantage: social desirability
-Advantage: more insights (respondents are able to play off each other)

Front 49

Observational Research

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-Making observations of behavior and recording those observations objectively
-Natural settings (at home, the store) vs. artificial settings (a study lab)
---Ethnographic research: the practice of watching people in their natural setting
-Most useful when investigating complex social settings; less useful for studying well-defined hypotheses under specific conditions

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Experimental Research

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-Objective: test hypotheses about casual relationship between variables
---Look at the effect of the independent variable (what you manipulate) on the dependent variable (what you're measuring)
---Different groups of consumers get different "treatments" or different versions of the independent variable
---**Helps determine CAUSALSITY

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3 Types of Variables

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-Independent Variable: the factors that are changed or manipulated
-Dependent Variable: factors that change in response to researchers' manipulations of the independent variables
-Constants: factors that researchers do not allow to change, but instead control

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Correlation vs. Causation

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-Correlation: a statistically testable and significant relationship/association exists between two variables
-Causation: two variables are correlated and one variable produces an effect on the other variable, but not vice versa

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Requirements to Establish Causality

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-Creating a correlation: control/manipulate the cause and hold "everything else" constant (measured by r)
-Temporal antecedence: the cause (independent variable) has to come before the effect (dependent variable)
-Random assignment is used (makes experimental groups statistically equivalent) and no lurking variable exists

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3 Factors Necessary for Causation

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-The two variables are correlated (r)
-The cause must precede the effect (known as temporal antecedence)
-Other potential causes are ruled out (no lurking variable, random assignment is used)