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CHAPTER

ONE

Consumer
Behavior:
Meeting Changes
and Challenges

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Consumer Behavior
The behavior that consumers display in
searching for, purchasing, using,
evaluating, and disposing of products
and services that they expect will satisfy
their needs.

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Personal Consumer
The individual who buys goods and
services for his or her own use, for
household use, for the use of a family
member, or for a friend.
Organizational Consumer: A business,
government agency, or other institution
(profit or nonprofit) that buys the goods,
services, and/or equipment necessary for
the organization to function.
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Development of the Marketing


Concept
Production
Concept
Product Concept
Selling Concept
Marketing
Concept
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The Production Concept


Assumes that consumers are
interested primarily in product
availability at low prices
Marketing objectives:
Cheap, efficient production
Intensive distribution
Market expansion

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The Product Concept


Assumes that consumers will buy the
product that offers them the highest
quality, the best performance, and the
most features
Marketing objectives:
Quality improvement
Addition of features

Tendency toward Marketing Myopia


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The Selling Concept


Assumes that consumers are unlikely
to buy a product unless they are
aggressively persuaded to do so
Marketing objectives:
Sell, sell, sell

Lack of concern for customer needs


and satisfaction

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The Marketing Concept


Assumes that to be successful, a
company must determine the needs
and wants of specific target markets
and deliver the desired satisfactions
better than the competition
Marketing objectives:
Make what you can sell
Focus on buyers needs

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Implementing the Marketing Concept


Consumer Research: The process and tools
used to study consumer behavior
Two perspectives:
Positivist approach
Interpretivist approach

Segmentation: Process of dividing the market


into subsets of consumers with common
needs or characteristics
Targeting: The selection of one or more of the
segments to pursue
Positioning: Developing a distinct image for
the product in the mind of the consumer

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The Marketing Mix

Product
Price
Place
Promotion

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Successful Relationships
Customer Value - ratio between customers
perceived benefits and the resources used to
obtain those benefits.

Customer Satisfaction - The individual's


perceived vs. expected performance. Loyalists,
apostles, defectors, terrorists, hostages, and
mercenaries

Customer Retention - Provide value to retain


highly satisfied (and profitable) customers

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Customer Profitability-Focused
Marketing
Tracks costs and revenues of
individual consumers
Categorizes them into tiers based on
consumption behavior
A customer pyramid groups customers
into four tiers (Platinum, Gold, Iron, Lead)

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Traditional Marketing Concept Vs. Value and


Retention Focused Marketing
Table 1-2
Traditional Marketing Concept

Value & Retention Focused Marketing

Make only what you can sell


instead of trying to sell what you
Make

Use technology to help customers


customize what you make

Do not focus on the product; focus


on the need that it satisfies
Market products and services that
match customers needs better
than competitors offerings

Focus on the products


perceived value, as well as the
need that it satisfies
Understand customers needs to
develop offerings that they
perceive as more valuable than
competitors offerings

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Impact of Digital Technologies


Consumers have more power and access to
information
Marketers can gather more information about
consumers
The exchange between marketer and
customers is interactive and instantaneous
and goes beyond the PC to mobile phones,
TVs etc..
Marketers must offer more products and
services
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CHAPTER
TWO
The Consumer
Research
Process

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Concept of Consumer
Research
No direct way to look into the Black
Box,
so we make logical inferences by
studying other variables:
- Inductive logic
- from specifics to generalities

- Deductive logic
-from generalities to specifics
IK

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Quantitative Research
Descriptive
Enables marketers to predict consumer
behavior (positivism).
Uses experiments, survey techniques, and
observation.
Findings are descriptive, empirical, and can be
generalized to larger populations.

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Qualitative Research
Consists of depth interviews, focus groups,
metaphor analysis, collage research, and
projective techniques.
Administered by highly trained intervieweranalysts.
Findings tend to be subjective.
Small sample sizes.

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Qualitative vs. Quantitative Research


Qualitative Research
Study Purpose
Provide insights about ideas
Exploratory research before
quantitative study
Types of Questions
Open-ended
Unstructured
Data Collection Methods
Projective techniques
Depth interviews
Focus groups

Quantitative Research
Study Purpose
Describe target market
Results for strategic
marketing decisions
Types of Questions
Close-ended
Attitude scales
Data Collection Methods
Observation
Experimentation
Questionnaires

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Qualitative vs. Quantitative Research,


Qualitative Research

contd.

Quantitative Research

Sampling Methods
Small
Nonprobability samples

Sampling Methods
Large
Probability samples

Data Analysis
Analyzed by
researchers who
collected data
Look for key words
Subjective

Data Analysis
Coded, tabulated, and
entered into database
Use of statistical
methods

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Secondary Data
Data that have been collected for reasons
other than the specific research project at
hand
Includes internal and external data

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Designing Primary Research


Quantitative Research Designs
Include research design, data collection
methods, instruments to be used, and the
sample design

Qualitative Research Designs


Include depth interviews, focus groups,
projective techniques, and metaphor analysis

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Surveys
Data Collection Methods

Personal interview
Mail
Telephone
Online

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Validity and Reliability


A measuring instrument is valid if it
measures what it is supposed to measure.
A measuring instrument is reliable if it
measurement results are the same under
all circumstances.

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Attitude Scales
Likert scales: easy to prepare and interpret;
simple for consumers to answer
Semantic differential scales: relatively easy
to construct and administer
Behavior intention scales: also easy to
construct and administer
Rank-order scales: subjects rank items in
order of preference in terms of some criteria

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Likert Scale
Please place the number that best indicates how
strongly you agree or disagree with each of the
following statements about shopping online in the
space to the left of the statement.
1
2
3
4
5

=
=
=
=
=

Agree Strongly
Agree
Neither Agree or Disagree
Disagree
Disagree Strongly

_____ a. It is fun to shop online.


_____ b. Products often cost more online.
_____ c. It is a good way to find out about new
products.
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Excellent

Neutral

Poor

Semantic Differential Profiles of Three


Pay-Per-Movie Services

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Rank-Order Scale
Rank the following computer manufacturers in terms
of hotline help by placing a 1 next to the one who
provides the best telephone help, a 2 next to the
second best, until you have ranked all six.
_____ IBM
_____ Dell
_____ Compaq

_____Hewlett Packard
_____ Gateway
_____ NEC

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Qualitative Collection Method


Depth Interview

Usually 30 minutes to 1 hour


Unstructured
Interpreted by a trained researcher
Listen to words as well as body
language

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Qualitative Collection Method


Focus Group
8-10 participants
Lasts about 2 hours
Always taped or videotaped to assist
analysis
Often held in front of two-way mirrors

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Qualitative Collection Methods


Projective Techniques
Research procedures designed to
identify consumers subconscious
feelings and motivations
Consist of a variety of disguised
tests

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Projective Techniques
1. Word Association Techniques
1. Simple
2. Controlled
3. Successive

2. Completion Techniques
1. Sentence
2. Story

3. Picture & Visual Techniques


1. Thematic Apperception Technique (TAT)
2. Cartoon Test
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Qualitative Collection Method


Metaphor Analysis: Based on belief that
metaphors are the most basic method of
thought and communication
Zaltman Metaphor Elicitation Technique
(ZMET) combines collage research and
metaphor analysis to bring to the surface the
mental models and the major themes or
constructs that drive consumer thinking and
behavior.
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Customer Satisfaction
Measurement
Customer Satisfaction Surveys
Gap Analysis of Expectations versus
Experience
Mystery Shoppers
Customer Complaint Analysis
Analysis of Customer Defections

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Sampling and Data Collection


Samples are a subset of the population
used to estimate characteristics of the
entire population.
A sampling plan addresses:
Whom to survey
How many to survey
How to select them

Researcher must choose probability or


nonprobabililty sample.
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Common Sampling Techniques


Probability:
- Simple random sample
- Systematic random sample
- Stratified random sample
- Cluster (area) sample

Non-probability:
-

Convenience sample
Judgment sample
Quota sample
Incremental sample

IK

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CHAPTER
THREE

Market
Segmentation
and Strategic
Targeting

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Market Segmentation
The process of dividing a
potential market into
distinct subsets of
consumers and selecting
one or more segments as
a target market to be
reached with a distinct
marketing mix.

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Three Phases of Marketing


Strategy
Phase 3
Product/Brand Positioning
Phase 2
Target Market and Marketing Mix Selection

Phase 1
Market Segmentation

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Segmentation Studies
Discover the needs and wants of
groups of consumers to develop
specialized products to satisfy group
needs
Used to identify the most appropriate
media for advertising

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Bases for Segmentation

Geographic
Demographic
Psychological
Psychographic
Sociocultural

Use-Related
Usage-Situation
Benefit Sought
Hybrid

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Segment Strategies by Customer Usage


Table 3-8

Current Share
High
High

Low

HiHighs
(stroke)

LowHighs
(chase)

HiLows
(tickle)

LoLows
(starve)

Consumption

Low

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Use-Situation Segmentation
Segmenting on the basis of special occasions
or situations
For example:
Whenever our daughter Jamie gets a raise, we
take her out to dinner
When Im away on business, I try to stay at a
suites hotel
I always buy my wife flowers on Valentines Day

Benefit Segmentation: Segmenting on the basis


of the most important and meaningful benefit

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VALS Framework
Figure 3-7

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Criteria for Effective Targeting of


Market Segments

Identification
Sufficiency
Stability
Accessibility

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Implementing Segmentation
Strategies
Concentrated Marketing
One segment

Differentiated
Several segments with individual
marketing strategies

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CHAPTER
FOUR
Consumer
Motivation

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Types of Needs
Innate Needs
Physiological, Primary or Biogenic needs:
Positive or Supply needs
Negative or Avoidance needs
Specie maintenance need

Acquired needs
Psychological, Secondary or Psychogenic
Ego defensive needs
Ego bolstering needs
Affectional needs

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Goals
The sought-after results of motivated
behavior
Generic goals are general categories of
goals that consumers see as a way to
fulfill their needs
Product-specific goals are specifically
branded products or services that
consumers select as their goals
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Goal Conflicts
Positive Motivation: A driving force toward some object or
condition Approach Goal (A positive goal toward which
behavior is directed)
Negative Motivation: A driving force away from some object
or condition Avoidance Goal (negative goal from which
behavior is directed away)
Conflicts:
Approach/Approach
Approach/Avoidance
Avoidance/Avoidance

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Rational versus Emotional


Motives
Rational implies that consumers select
goals based on strictly objective criteria
such as size, weight, price, or miles per
gallon
Emotional motives imply the selection of
goals according to personal or subjective
criteria

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The Dynamic Nature of Motivation


Needs are never fully satisfied
New needs emerge as old needs are
satisfied
People who achieve their goals set new
and higher goals for themselves

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Goal Adjustments
Substitute Goals
Are used when a consumer cannot attain a
specific goal he/she anticipates will satisfy a
need
The substitute goal will dispel tension
Substitute goals may actually replace the
primary goal over time
Frustration
Failure to achieve a goal may result in
frustration.
Some adapt; others adopt defense mechanisms
to protect their ego.
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Defense Mechanism
Methods by which people mentally
redefine frustrating situations to protect
their self-images and their self-esteem:
- Aggression
- Rationalization
- Regression
- Withdrawal

- Projection
- Daydreaming (Autism)
- Identification
- Repression

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Arousal of Motives

Physiological arousal
Emotional arousal
Cognitive arousal
Environmental arousal

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Philosophies Concerned with


Arousal of Motives
Behaviorist School
Behavior is response to stimulus
Elements of conscious thoughts are to be ignored
Consumer does not act, but reacts

Cognitive School
Behavior is directed at goal achievement
Needs and past experiences are reasoned,
categorized, and transformed into attitudes and
beliefs

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Maslows Hierarchy of Needs


Figure 4.10

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Table 4.3
Murrays List of Psychogenic Needs
Needs Associated with Inanimate Objects:
Acquisition, Conservancy, Order, Retention, Construction

Needs Reflecting Ambition, Power,


Accomplishment, and Prestige:
Superiority, Achievement, Recognition, Exhibition, Infavoidance

Needs Connected with Human Power:


Dominance, Deferrence, Similance, Autonomy, Contrariance

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Table 4.3 (cont)


Murrays List of Psychogenic Needs
Sado-Masochistic Needs :
Aggression, Abasement
Needs Concerned with Affection between People:
Affiliation, Rejection, Nurturance, Succorance, Play
Needs Concerned with Social Intercourse:
Cognizance, Exposition

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A Trio of Needs
Power
individuals desire to control environment

Affiliation
need for friendship, acceptance, and
belonging

Achievement
need for personal accomplishment
closely related to egoistic and selfactualization needs
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CHAPTER
FIVE
Personality and
Consumer
Behavior

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The Nature of Personality


Personality reflects individual
differences
Personality is consistent and enduring
Personality can change

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Theories of Personality
Freudian theory
Unconscious needs or drives are at the
heart of human motivation

Neo-Freudian personality theory


Social relationships are fundamental to the
formation and development of personality

Trait theory
Quantitative approach to personality as a
set of psychological traits

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Freudian Theory
Id
Superego
Ego
Consumer researchers using Freuds
personality theory see consumer purchases as
a reflection and extension of the consumers
own personality

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Neo-Freudian Personality
Theory

Social relationships are fundamental to


personality
Alfred Adler:
Style of life (seeking rational goals)
Feelings of inferiority

Harry Stack Sullivan


We establish relationships with others to reduce
tensions and anxiety

Karen Horneys three personality groups


Compliant: move toward others
Aggressive: move against others
Detached: move away from others

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Trait Theory
Focus on measurement of personality
in terms of traits
Trait - any distinguishing, relatively
enduring way in which one individual
differs from another
Personality is linked to broad product
categories and NOT specific brands

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Personality and Understanding


Consumer Behavior

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Consumer Innovativeness
Personality trait that fosters a
willingness to create and accept
change
Further broken down for hi-tech
products
Global innovativeness
Domain-specific innovativeness
Innovative behavior

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Consumer Innovativeness Scales


Table 5.3 (excerpt)

A GENERAL CONSUMER INNOVATIVENESS SCALE


1. I would rather stick to a brand I usually buy than try
something I am not very sure of.
2. When I go to a restaurant, I feel it is safer to order
dishes I am familiar with.
A DOMAIN-SPECIFIC CONSUMER INNOVATIVENESS
SCALE
1. Compared to my friends, I own few rock albums.
2. In general, I am the last in my circle of friends to
know the titles of the latest rock albums.

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Dogmatism
The degree of rigidity a person displays
toward things unfamiliar and
information contrary to his or her own
established beliefs
Need for Uniqueness: Consumers who
avoid conforming to expectations or
standards of others
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Social Character
Ranges on a continuum for inner-directedness
to other-directedness
Inner-directedness
rely on own values when evaluating products
Innovators
Other-directedness
look to others
less likely to be innovators

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Optimum Stimulation Level


A personality trait that measures the level or amount
of novelty or complexity that individuals seek in their
personal experiences
High OSL consumers tend to accept risky and novel
products more readily than low OSL consumers.
Sensation Seeking: The need for varied, novel, and
complex sensations and experience. And the
willingness to take social and physical risks for the
sensations.

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Variety-Novelty Seeking
Measures a consumers degree of
variety seeking
Examples include:
Exploratory Purchase Behavior
Use Innovativeness
Vicarious Exploration

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Cognitive Personality Factors


Need for cognition (NFC)
A persons craving for or enjoyment of thinking
Individual with high NFC more likely to respond
to ads rich in product information

Visualizers
Verbalizers
.

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From Consumer Materialism to


Compulsive Consumption
Materialistic People:
Acquire and show-off possessions
Self-centered and selfish
Seek lifestyle full of possessions
Do not get greater personal
satisfaction from possessions

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From Consumer Materialism to


Compulsive Consumption
Fixated consumption behavior
Characteristics
Passionate interest in a product category
Willingness to go to great lengths to secure
objects
Dedication of time and money to collecting

Compulsive consumption behavior


Addicted or out-of-control consumers

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Consumer Ethnocentrism and


Cosmopolitanism
Ethnocentric consumers feel it is wrong to
purchase foreign-made products because of
the impact on the economy
Target by stressing nationalistic themes
Cosmopolitan orientated consumers
consider the world to be their marketplace
and would be attracted to products from
other cultures and countries.

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Product Anthropomorphism and


Brand Personification
Product Anthropomorphism
Attributing human characteristics to
objects,

Brand Personification
Consumers perception of brands
attributes for a human-like character
Mr. Coffee is seen as dependable, friendly,
efficient, intelligent and smart.

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A Brand Personality Framework


Figure 5.12

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Product Personality Issues


Gender
Coffee and toothpaste perceived as masculine;
bath soap and shampoo perceived as feminine
Geography
Actual locations, like Philadelphia cream cheese
and Arizona iced tea
Fictitious names such as Hidden Valley and Bear
Creek
Color
Color combinations in packaging and products
denotes personality
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Self and Self-Image


Consumers have a variety of enduring images
of themselves
Self image contains traits, skills, habits,
possessions, relationships, and way of
behavior
Developed through background, experience,
and interaction with others
Consumers select products congruent with
their self-image

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Different Self-Images

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Extended Self
Possessions can extend self in many
ways:
Actually
Symbolically
Conferring status or rank
Bestowing feelings of immortality
Endowing with magical powers

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Virtual Personality
You can be anyone
Gender swapping
Age differences
Mild-mannered to aggressive
Altering the Self-Image: Using self-altering products
to express individualism by:
Creating new self
Maintaining the existing self
Extending the self
Conforming

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CHAPTER
SIX
Consumer
Perception

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Perception
The process by which an individual
selects, organizes, and interprets stimuli
into a meaningful and coherent picture of
the world
Elements of Perception

Sensation
Absolute threshold
Differential threshold
Subliminal perception

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Sensation
Sensation is the immediate and direct
response of the sensory organs to
stimuli
A stimulus is any unit of input to any of the
senses.

The absolute threshold is the lowest


level at which an individual can
experience a sensation.

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Differential Threshold
(Just Noticeable Difference j.n.d.)
Minimal difference that can be detected
between two similar stimuli
Webers law
The j.n.d. between two stimuli is not an
absolute amount but an amount relative to
the intensity of the first stimulus
The stronger the initial stimulus, the greater
the additional intensity needed for the
second stimulus to be perceived as
different.
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Marketing Applications
of the J.N.D.

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Subliminal Perception
Stimuli that are too weak or too brief to
be consciously seen or heard
They may be strong enough to be perceived
by one or more receptor cells.

Is it effective?
Extensive research has shown no evidence
that subliminal advertising can cause
behavior changes
Some evidence that subliminal stimuli may
influence affective reactions

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Aspects of Perception

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Perceptual Selection
Selection Depends Upon:

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Perceptual Selection
Important Concepts
Selective Exposure: Tendency to seek out
message that are pleasant, close to self
identity and promise goal attainment (e.g., will
help make good purchases)
Selective Attention: Motivation, contrast etc.
Perceptual Defense: Tendency to screen out
unpleasant or threatening stimuli
Perceptual Blocking: Avoid being bombarded by
tuning out, TiVo etc.
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Perceptual Organization.
Figure and ground: The figure is sharp, ground is
usually hazy. Marketers usually design so the
figure is the noticed stimuli.
Grouping: Grouping stimuli by proximity,
similarity etc.. It helps memory and recall.
Closure: Supplying in missing details to
complete an experience
Good Figures: People tend to perceive familiar,
well-known, symmetrical designs better than
unfamiliar or odd ones

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Interpretation
People hold
meanings related to
stimuli

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Interpretation
Positive attributes of
people they know to
those who resemble
them
Important for model
selection

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Interpretation
Verbal messages
reflect stereotypes

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Interpretation
First impressions
are lasting
The perceiver is
trying to determine
which stimuli are
relevant, important,
or predictive

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Interpretation
Consumers perceive
and evaluate
multiple objects
based on just one
dimension

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Product Positioning
Establishing a specific image for a
brand in the consumers mind in
relation to competing brands
Conveys the product in terms of how it
fulfills a need
Successful positioning creates a
distinctive, positive brand image

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Packaging as a Positioning Element


Packaging conveys the image that the
brand communicates to the buyer.
Color, weight, image, and shape are all
important.
Repositioning might be necessary
because:
Increased competition
Changing consumer tastes

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Perceptual Mapping
An analytical technique that enables
marketers to plot graphically
consumers perceptions concerning
product attributes of specific brands

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Positioning of Services
Image is a key factor for services
Services often want a differentiated
positioning strategy to market several
versions of their service to different
markets.

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Perceived Price and Perceived


Quality
Reference prices used as a basis for
comparison in judging another price
Internal
External

Perceived Quality of Products


Intrinsic vs. Extrinsic Cues

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Perceived Quality of Services


Difficult due to characteristics of services

Intangible
Variable
Perishable
Simultaneously Produced and Consumed

SERVQUAL scale used to measure gap between


customers expectation of service and perceptions of
actual service.
A more recent measure is:
RATER - Reliability, Assurance, Tangibles, Empathy,
and Responsiveness

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Price/Quality Relationship
The perception of price as an indicator
of product quality (e.g., the higher
the price, the higher the perceived
quality of the product.)

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Perceived Risk
The degree of uncertainty perceived by the
consumer as to the consequences (outcome)
of a specific purchase decision
Types

Functional Risk
Physical Risk
Financial Risk
Social Risk
Psychological Risk
Time Risk

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How Consumers Reduce Risk

Seek Information
Buy the same brand
Buy the most popular brand
Select by Brand Image
Rely on Store Image
Buy from the same salesperson
Buy the Most Expensive choice
Buy the cheapest
Seek Reassurance, etc.

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CHAPTER
SEVEN
Consumer
Learning

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