Marketing

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Absolute threshold

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lowest level at which a stimulus can be detected 50% of the time.

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JND Threshold

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the ability to detect changes or differences between two stimuli.

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Webers Law
(JND Threshold)

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the greater the intensity of the initial stimuli, the more the intensity has to be changed before the change will be noticed.

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Applications of JND

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changes in packaging, changes in serving size/package, changes in corporate identities (logos), changes in price.

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Marketing applications of JND

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for price increases, keep price increases below the JND. For discounts, discounts must exceed the JND to be effective. Decreasing product size, the size decrease should be less than the JND. Increasing product size, increasing must be greater than the JND.

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Classical Conditioning

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type of behavioral theory)- occurs when a stimulus that elicits a response is paired with another stimulus that initially does not elicit a response on its own.

Unconditioned Stimulus  Conditioned Stimulus  Conditioned Response

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Factors that affect classical conditioning:

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stimulus generalization, stimulus discrimination, repetition.

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Example of classical conditioning

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(Example: when a dog sees meat, it salivates. If you ring a bell when a dog sees meat, and eventually take away the meat, when you ring the bell the dog will salivate.

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Operant Learning

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(type of behavioral theory) - occurs as the individual learns to perform behaviors that produce positive outcomes and to avoid those that yield negative outcomes.
Positive reinforcement, negative reinforcement, punishment. Positive reinforcers increase the probability of repeating behaviors whereas negative reinforcers decrease probability of repeating behaviors.

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Observational Learning

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(aka cognitive learning aka vicarious learning) - Consumers develop patterns of behavior by observing the actions of others. Occurs when people watch the actions of others and note the reinforcements they receive from others.

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Marketing Applications for observational learning

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Use spokesperson to model behaviors we want consumers to learn. (Modeling works best when model is physically attractive, credible, successful, similar to the observer, and is shown overcoming difficulties.)

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Consumer decision-making process

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problem recognition
information search
evaluating alternatives
product choice
post purchase evaluation

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Problem Recognition

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Occurs whenever the consumer sees a significant difference between his or her current state and some desired or ideal state. 2 types of recognition- NEED recognition (running out of a product, inadequate product, creating new needs—ideal state) and OPPORTUNITY recognition (exposure to different or better quality products—actual state)

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Information Search

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is the process in which the consumer surveys his or her environment for appropriate data to make a reasonable decision. Can be DELIBERATE (explicit search for information) or ACCIDENTAL (used for up-to-date information) . Sources can be INTERNAL (search memory for past experience) or EXTERNAL (word of mouth, media, salespeople). Search activity is important when: Purchase is important, need to learn more about purchase, information is easily obtained, women shop more than men, consumers are younger and better educated, value style and image.

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Evaluating Alternatives

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occurs either separately or in conjunction with information search. We rely on internal processes to help us organize the evaluation process.

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Product Choice

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Self explanatory, you are choosing the product

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Post Purchase Evaluation

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Consumers evaluate purchases during consumption process. 3 possible outcomes- satisfaction, dissatisfaction (If dissatisfied, the alternative actions would be to do nothing, avoid seller/buyer brand in the future, negative WOM to friends, seek redress of problem from seller, complain to outside agency), and neutral. Post purchase cognitive dissonance. Complaining behavior (based on level of dissatisfaction, importance of decision/purchase, cost/benefit of actions, personal characteristics, and attribution of blame).

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types of decisions

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routine, limited, extended

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Routine Decision Making and Limited Problem Solving

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Low cost products, frequent purchasing, low consumer involvement, familiar product class and brands, little thought, search, or time given to purchase.

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Extensive Problem Solving

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more expensive products, infrequent purchases, high consumer involvement, unfamiliar product class and brands, extensive thought, search, and time given to purchase.

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Types of decision rules

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compensatory and noncompensatory

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Compensatory

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Select the best overall brand (Consumer evaluates brand options in terms of each relevant attribute and computes a weighted or summated score for each brand. The consumer chooses the brand with the highest score.)

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Noncompensatory

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(conjunctive, disjunctive, lexicographic). The weaknesses of a possible alternative are not offset by its strengths. This means that if a product does not meet certain of the consumer’s requirements, it is eliminated from further consideration.

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consumer behavior influences

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internal
external
interdisciplinary

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internal consumer behavior influences

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perception, learning/memory, attitudes, motivation, personality

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external consumer behavior influences

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small group, family, social class, culture/subculture, diffusion

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interdisciplinary consumer behavior influences

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psychology, sociology, economics, semiotics/literary criticism, demography, history, cultural anthropology.

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Bases for segmentation

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geographic
demographic
psychographic
benefit sought
usage rate

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geographic

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location

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demographic

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Segmenting markets by age, gender, income, ethnic background, and family life cycle

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psychographic

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Market segmentation on the basis of personality, motives, lifestyles (how time is spent, beliefs, and importance of surroundings), and geodemographics (combines geographic, demographic, and lifestyle segmentation, segmenting potential customers into neighborhood lifestyle categories)

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benefit sought

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The process of grouping customers into market segments according to
the benefits they seek from the product

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usage rate

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Dividing a market by the amount of product bought or consumed.

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segmentation strategies

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mass marketing
niche marketing
differentiated marketing

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mass marketing

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(aka undifferentiated marketing) is a method in which segmentation is not used. The marketer offers the same product to the entire consumer population. Example- coke, certain breakfast cereals, and many household products.

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niche marketing

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(aka concentrated marketing) is the selection of one market segment to pursue, even though the product may appeal to several. The reason may be expertise and resources available, access to distribution or media, or brand image.

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differntiated marketing

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The selection of two or more different segments to pursue. Example: Coca-Cola has diet coke, cherry coke, etc.

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Information processing model

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(involves several different cognitive processes- receiving information, organizing information, attaching meaning to information, storing information, retrieving information.)

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steps of the information processing model

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sensory stimuli
sensory receptors
attention
interpretation
responses
long term memory
retreival

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sensory stimuli

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Vision- visual elements in advertising, store design, and packaging.
Smell- odors can stir emotions or create feelings such as happiness/hunger.
Sound- research has analyzed effects of: background music and speaking rates
Touch- shown to be a factor in sales interactions
Taste- ethnicity affects taste preferences.

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attention

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The extent to which processing activity is devoted to a particular stimulus.
Selective attention/selective exposure (size, color, position, novelty)
voluntary attention
involuntary attention
perceptual defense
perceptual blocking.

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interpretation

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Organize and interpret information, comprehend information, assign meaning to information, associated yet with short term memory.
Perceptual Interpretation- The ways in which we perceive shapes and forms, figures, and lines in our visual world.
We view stimuli in terms of relationships with other events, sensations, or images.

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sensory memory

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Temporary storage of sensory information.
High capacity, less than one second (vision) or few seconds (hearing).

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short term memory

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Working memory; primary work area of information processing system.
Information is held onto briefly (10-30 seconds).
Limited capacity, 5-9 pieces of information.
Capacity is enlarged if consumer is highly involved.
Chunking (group several pieces of information together in a set),
Rehearsal (mental repetition of information, keeps info in ST memory longer and helps transfer info into LT memory), and
Encoding (Assign a word or visual image to represent information).

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long term memory

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Unlimited capacity to store information
Information is constantly being organized and reorganized as new chunks of information are transferred in from ST memory.
Information in stored in associative networks called schemas (nodes, linkages)

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retrieval

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The process whereby information is recovered from LT memory.
Spreading activation- as one node is activated, other nodes associated with it also being to be triggered. Thus, meaning spreads across the network bringing up concepts including competing brands and relevant attribute s that are used in making decisions.
Factors affecting retrieval: Physiological, mood congruence effect, familiarity and recall, and salience and recall.

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stimulus generalization

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consumer makes same response to slightly different stimuli’s.

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stimulus discrimination

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the ability to select a specific stimulus from among similar stimuli.

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applications of stimulus generalization

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Product line, form, and category extensions, family branding, family licensing, generalizing usage situations.

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examples of stimulus generalizatoin

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Snickers candy bars and snickers ice cream bar, or arm and hammer baking soda and arm and hammer toothpaste

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why do marketers use stimulus discrimination

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Marketers use this principle to help consumers distinguish between their products and a competitor’s. Example: JLO and her perfume.

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applications for stimulus discrimination

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Positioning, Differentiation.

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Consumer Involvement
What is involvement

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the level of perceived personal importance and/or interest evoked by a stimulus.

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High vs Low involvement

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High is elaboration
low is simple processing

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dimensions of involvement

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personal interest in product or category, risk importance, probability of bad purchase, pleasure value of product category, sign value of product category

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faces of involvement

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product
message response
ego-involement

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involvement
product

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related to a consumers level of interest in a specific product

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involvement
message response

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refers to a consumers interest in processing marketing communications),

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involvement
ego-involvement

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efers to the importance of a product to a consumers self-concept

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strategies to increase involvement

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Build a bond with consumer, use celebrity endorsers, use novel stimuli, and use prominent stimuli.

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Media
High Vs Low involvement

HIGH

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print media, left brain activity, active processing, verbal, reading, information processing through meaning

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Media
High vs. Low involvement
LOW

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television, right brain activity, passive involvement, non-verbal, pictorial, information processing through repetition and recognition.

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Purchases
High vs Low involvement

HIGH

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purchases that are very important to the consumer, provoke extensive problem solving/information processing

cars, dandruff shampoo

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purchases
high vs low involvement

LOW

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purchases that are not important to the consumer, limited information processing.

gum, shampoo

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Left/Right brain processing

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The left and right hemispheres of the brain “specialize” in the kinds of information they process.

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Left Hemisphere

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Responsible for cognitive activities
Rational, active, realistic
Reading, speaking, attribution information

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Right Hemisphere

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Responsible for non-verbal
Emotional, metaphoric, impulsive, intuitive
Pictorial, creative, holistic information

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Freudian theory and advertising

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personality is the conflict between gratification and responsibility
id
ego
superego
reality principle

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id

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pleasure principle

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ego

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mediates between the id and the superego

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superego

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our conscience

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reality principle

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ego gratifies the id in such a way that the outside world will find acceptable.

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Marketing implications for Freudian theory:

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unconscious motives underlying purchases, symbolism in products to compromise id and superego, Freudian ideas unlock deeper product and advertisement meaning.

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source credibility

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made up of trustworthiness and expertise.

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self esteem

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the positivity of a persons self concept

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factors of self esteem

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high vs. low
acceptance by others
social comparison

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high vs low self esteem

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high self esteem think they will be successful and will take risks

low self esteem thinks they will not perform well

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social comparison

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ads can trigger this
ex: attractive models using a product

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consumer reserach

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focus groups
ethnographic research
trends in research

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objective of focus groups

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To obtain insights and depth on issues, product ideas, etc.

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factors of a focus group

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5-12 respondents,
develop interview guide with client, facilitate and videotape,
analyze content,
report results,
recommendations.

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info of focus groups

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Should feel free-flowing and relatively unstructured
The moderator must follow a pre-planned script and set goals for the information to be gathered
Keep the discussion on track without inhibiting the flow of ideas and comments
Often start with general and move to specific

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ethnography

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is a form of research focusing on the sociology of meaning through close field observation of sociocultural phenomena.

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what does the ethnographer focus on

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Typically, the ethnographer focuses on a community (geographic, work, leisure, etc).

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ethnographic method

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The ethnographic method starts with selection of a culture and variables perceived as significant by members of the culture.
Gains entrance, looks for patterns, can use chat rooms, blogs, etc.

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trends in research

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consulting gains in importance

mixed methodologies

greater importance of social sciences perspectives for deeper insights to consumers

beyond traditional advertising media

deeper engagement w/ customer

growing importance of cultural perspectives

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consulting gains in importance

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Marketers want researches to serve as strategic partners and consultants rather than just data collectors. They want to understand the meaning behind and strategy implications of study findings.

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mixed methodologies

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Study designs will increasingly employ mixed methods and findings will integrate findings from alternative data collection approaches such as focus groups, online research, depth interviews, ethnographic observation, user diaries, etc. This approach provides deeper, richer and more valid insights into consumers' behaviors and attitudes than any single method.

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greater importance of social sciences perspectives for deeper insights to consumers

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Concepts and approaches drawn from psychology, cognitive science, anthropology and socio-linguistics are gaining importance. Researchers are using these ideas to dig beneath the surface of what consumers are saying.

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beyond traditional advertising media

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In response to the declining reach of TV advertising, many marketers are allocating more resources to sales promotion, point-of-sale messages and novel uses of media, such as embedding advertising communications inside programming. Qualitative research methods that lend themselves to these new approaches, such as retail ethnography, are gaining favor.

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deeper engagement with customer

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A desire to delve deeply into the consumer's everyday reality - at home, in their neighborhoods, at work, while shopping, during leisure - is growing. Ethnographic approaches are becoming particularly important to support emerging marketing orientations such as viral marketing or marketing to the individual.

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growing importance of cultural perspectives

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Group memberships based upon nationality, age, interests and other sub-cultural traits are coming to be seen as sharing significance with psychological explanations (drives, needs, meanings) of consumer behavior.

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Maslow

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Maslows hierarchy of needs

self actualization
esteem
social
safety
physiological needs

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reactance theory

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When individuals feel their freedoms are threatened, they experience reactance and assert themselves to gain back threatened ground

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types of reactance

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Source of threat (personal, impersonal), form of threat (influence attempt, barrier), how it is manifested (boomerang effect, increased attraction).