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Chapter 5 CONSUMER MARKETS AND CONSUMER BUYER BEHAVIOR MARKETING STARTER: CHAPTER 5 GoPro: Be a HERO! Synopsis You may never have heard of GoPro, the small but fast-growing company that makes tiny, wearable HD video cameras. Yet few brands can match the avid enthusiasm and intense loyalty that GoPro has created in the hearts and minds of its customers. A growing army of GoPro customers—many of them extreme sports enthusiasts—are now strapping amazing little GoPro cameras to their bodies, or mounting them on anything from the front bumpers of race cars to the heels of skydiving boots, in order to capture the extreme moments of their lives and lifestyles. Then, they can’t wait to share those emotion-packed GoPro moments with friends. GoPro’s rich understanding of what makes its customers tick is serving the young company well. Its enthusiastic customers are among the most loyal and engaged of any brand. For example, GoPro’s Facebook fan base is more than 1.7 million and growing fast. All that customer engagement and enthusiasm has made GoPro the fastest-growing camera company in the world. GoPro knows that deep down, it offers customers much more than just durable little video cameras. More than that, it gives them a way to share action-charged moments and emotions with friends.

Discussion Objective A focused 10-minute discussion of the GoPro story will help students appreciate the many levels of factors that affect how customers feel about, buy, and consume products. The goal is to explore the reasons why customers buy GoPro cameras, and what the product adds to their lives. Beyond making a durable little video camera, GoPro has fostered an almost fanatically loyal fan base by challenging customers to shoot the most extreme footage possible and then share it with friends across social media channels. It is likely that some of your students will know about GoPro cameras, and have a few of their own stories to share with the class. You will want to capitalize on these student testimonials as you explore the GoPro brand together.

Starting the Discussion Start this discussion by asking students what GoPro is really selling its customers. Of course, the company makes micro-sized video cameras that can survive almost anything. But what are the unique customer insights that have fueled GoPro’s explosive growth? What does GoPro understand about its customers better than the competition? Tour the GoPro website at www.gopro.com. Peruse the tabs across the top, concentrating on the extreme videos and photos submitted by its loyal fans. How does the company encourage its customers to ―be a hero?‖ The goal is to show that GoPro’s allure results from much more than just the functional attributes of its product—it’s all about the customers and how the cameras help them capture their most exciting life experiences. As the discussion progresses, search for GoPro on www.youtube.com and check out some of the more extreme applications that fans have discovered for this device. Use the questions below to guide the discussion.

Discussion Questions 1.

Beyond a small, durable video camera, what is GoPro really selling its customers? How does this product enable users to highlight the best moments of their lives? (To start with, the camera is extremely tough and versatile. It can capture high-quality video under almost any conditions. But ultimately, the GoPro camera enables its fans to experience and document the adventures that touch and thrill them. In turn, users deeply care about sharing these moments with friends and fellow enthusiasts through social media channels, which has only intensified their passion for the GoPro brand.)

2.

GoPro’s company slogan is ―Be a Hero.‖ How does GoPro encourage customers to do so? (Customers become heros through four essential steps in their storytelling and emotion-sharing journeys: capture, creation, broadcast, and recognition. Capture is what the cameras do—shooting pictures and videos. Copyright© 2014 Pearson Education

Creation is the editing and production process that turns raw footage into compelling videos. Broadcast involves distributing the video content to an audience. Recognition is the payoff for the content creator. Recognition might come in the form of YouTube views or LIKES and SHARES on Facebook. More probably, it’s the enthusiastic oohs and ahs that their videos evoke from friends and family. The company’s slogan sums it up pretty well the consumer’s deeper motivations: GoPro—Be a Hero.) 3.

One industry expert has noted, ―Some of the most amazing companies of the coming few years will be businesses that understand how to wrap technology beautifully around human needs so that it matters to people.‖ How does this quote apply to GoPro? (This brand is all about what its cameras let customers do. GoPro users don’t just want to take videos. More than that, they want to tell the stories and share the adrenalin-pumped emotions of the extreme moments in their lifestyles. As GoPro notes, ―Enabling you to share your life through incredible photos and video is what we do. ―We help people capture and share their lives’ most meaningful experiences with others—to celebrate them together.‖)

4.

How does the chapter-opening GoPro story relate to the major concepts in the consumer behavior chapter? (The GoPro story highlights the depth of factors that affect how consumers think, feel, and act toward brands. GoPro really understands what makes consumers tick and, as a result, delivers an exceptional brand experience to loyal consumers. Keep the GoPro example active as you discuss characteristics affecting consumer behavior, types of buying decision behavior, the buyer decision process, and other chapter topics.)

CHAPTER OVERVIEW Use Power Point Slide 5-1 Here In this chapter, we continue our marketing journey with a closer look at the most important element of the marketplace—customers. The goal of marketing is to affect how customers think about and behave toward the organization and its market offerings. But to affect the whats, whens, and hows of buying behavior, marketers must first understand the whys. We look first at final consumer buying influences and processes and then at the buying behavior of business customers.

CHAPTER OBJECTIVES Use Power Point Slide 5-2 Here 1. Define the consumer market and construct a simple model of consumer buyer behavior. 2. Name the four major factors that influence consumer buyer behavior. 3. List and define the major types of buying decision behavior and stages in the buyer decision process. 4. Describe the adoption and diffusion process for new products.

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CHAPTER OUTLINE p. 134

INTRODUCTION You may never have heard of GoPro, the small but fastgrowing company that makes tiny, wearable HD video cameras.

p. 135 Photo: GoPro

Yet few brands can match the avid enthusiasm and intense loyalty that GoPro has created in the hearts and minds of its customers, many of whom are extreme sports hobbyists. Its customers are among the most loyal and engaged of any brand. Intense customer engagement and excitement has made GoPro the fastest-growing camera company in the world. GoPro knows that deep down, it offers customers much more than just durable little video cameras. It gives them a way to share action-charged moments and emotions with friends.  Assignments, Resources Use Web Resource 2 here  Opening Vignette Questions 1. How does GoPro successfully differentiate itself from competitors in today’s crowded electronics marketplace? 2. What does GoPro mean when they encourage their customers to ―be a hero?‖ 3. How has GoPro successfully used social media channels to promote its products? PPT 5-3

Consumer buyer behavior refers to the buying behavior of Chapter Objective 1 final consumers—individuals and households who buy goods and services for personal consumption. p. 136 Key Terms: All of these consumers combine to make up the consumer Consumer Buyer market. Behavior, Consumer Market The American consumer market consists of more than 313 million people.  Assignments, Resources Use Critical Thinking Exercise 1 here Use Small Group Assignment 1 here Use Web Resource 1 here

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p. 136 PPT 5-4

p. 137 Figure 5.1: Model The central question for marketers is: How do consumers of Buyer Behavior respond to various marketing efforts the company might use? Model of Consumer Behavior

The starting point is the stimulus-response model of buyer behavior shown in Figure 5.1. Marketing stimuli consist of the four Ps: product, price, place, promotion. Other stimuli include major forces and events in the buyer’s environment: economic, technological, social, and cultural. The marketer wants to understand how the stimuli are changed into responses inside the consumer’s ―black box,‖ which has two parts. 1. The buyer’s characteristics influence how he or she perceives and reacts to the stimuli. 2. The buyer’s decision process itself affects the buyer’s behavior.

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Characteristics Affecting Consumer Behavior

Chapter Objective 2

Cultural Factors

p. 138 Key Term: Culture

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Culture is the most basic cause of a person’s wants and behavior. p. 137 Figure 5.2: Factors Marketers are always trying to spot cultural shifts. Influencing Consumer Behavior Subcultures are groups of people with shared value systems p. 138 based on common life experiences and situations. Key Term: Subculture The U.S. Hispanic market consists of more than 50 million consumers. p. 138 Ad: Nestle By 2013, the nation’s more than 40 million AfricanAmerican consumers will have a buying power of $1.2 p. 139 trillion. Ad: Procter & Gamble Asian Americans are the most affluent U.S. demographic segment.

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Many marketers now embrace cross-cultural marketing—the practice of including ethnic themes and cross-cultural perspectives within their mainstream marketing. PPT 5-8

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p. 140 Social classes are society’s relatively permanent and ordered Key Term: Social divisions whose members share similar values, interests, and Class behaviors. Social class is not determined by a single factor, but is p. 141 measured as a combination of occupation, income, Figure 5.3 education, wealth, and other variables. Major American Social Classes  Assignments, Resources Use Discussion Question 1 here Use Additional Project 1 and 2 here Use Think-Pair-Share 1 to 3 here Use Video Case here

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Social Factors

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Groups and Social Networks. A person’s behavior is p. 140 influenced by many small groups. Key Term: Group, Marketers use word-of-mouth influence and buzz marketing to spread the word about their brands.

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Opinion leaders are people within a reference group who, p. 141: because of special skills, knowledge, personality, or other Key Term: Opinion characteristics, exert social influence on others. Leader This small percentage of Americans is referred to as the p. 140 influentials or leading adopters. Ad: ShoeDazzle

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Online social networks are online communities where p. 142 people socialize or exchange information and opinions. Key Term: Online Social Network p. 143 Ad: Ford p. 144 Family is the most important consumer buying organization Ad: Timberland in society. p. 145  Of men ages 18 to 64, 51 percent identify themselves Photo: IKEA, as primary grocery shoppers in their households, and Family Buying 39 percent handle most of their household’s laundry. Copyright© 2014 Pearson Education

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Women account for 50 percent of all technology purchases and influence two-thirds of all new car purchases.

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The nation’s 36 million kids age 8 to 12 control an estimated $30 billion in disposable income

Roles and Status. A role consists of the activities people are expected to perform. Each role carries a status reflecting the general esteem given to it by society.  Assignments, Resources Use Real Marketing 5.1 here Use Additional Project 3 here Use Think-Pair-Share 4 here Use Web Resources 3 and 4 here p. 145

Personal Factors

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p. 146 Age and Life-Cycle Stage. People change the goods and Ad: PersonicX services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age-related. Buying is also shaped by the stage of the family life cycle. Marketers often define their targets in terms of life-cycle stage and develop appropriate products and marketing plans for each stage. Consumer information giant Acxiom’s PersonicX life-stage segmentation system places U.S. households into one of 70 consumer segments and 21 life stage groups. For example: 1. The Taking Hold group consists of young, energetic, well-funded couples and young families who are busy with their careers and personal interests. 2. Transition Blues are blue-collar, less educated, midincome consumers contemplating families. 3. Potential Rebounders are those likely to loosen up on spending sooner following a recession.

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Occupation. A person’s occupation affects the goods and services they purchase. Copyright© 2014 Pearson Education

Economic Situation. A person’s economic situation will affect store and product choice. PPT 5-16

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p. 147 Lifestyle is a person’s pattern of living as expressed in his or Key Terms: her psychographics. Lifestyle, Personality This involves measuring major AIO dimensions such as activities (work, hobbies, shopping, sports, social events), p. 148 interests (food, fashion, family, recreation), and opinions Ad: Benjamin Hotel (about themselves, social issues, business, products). Personality and Self-Concept Personality refers to the unique psychological characteristics that distinguish a person or group.

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A brand personality is the specific mix of human traits that p. 149 may be attributed to a particular brand. One researcher Ad: Gucci identified five brand personality traits: 1. Sincerity (down-to-earth, honest, wholesome, and cheerful) 2. Excitement (daring, spirited, imaginative, and up-todate) 3. Competence (reliable, intelligent, and successful) 4. Sophistication (upper class and charming) 5. Ruggedness (outdoorsy and tough) The basic self-concept premise is that people’s possessions contribute to and reflect their identities; that is, ―we are what we have.‖

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Psychological Factors p. 149 Key Term: Motive (Drive)

Motivation A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction. Psychoanalyst Sigmund Freud suggested that a person’s buying decisions are affected by subconscious motives that even the buyer may not fully understand.

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Motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations. Copyright© 2014 Pearson Education

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Abraham Maslow sought to explain why people are driven p. 150 by particular needs at particular times. He determined that Figure 5.4: human needs are arranged in a hierarchal fashion. Maslow’s Hierarchy of Needs Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. p. 150 Selective attention is the tendency for people to screen out Key Term: most of the information to which they are exposed. Perception Selective distortion describes the tendency of people to interpret information in a way that will support what they already believe.

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p. 151 Selective retention is the retaining of information that Ad: American supports their attitudes and beliefs. Association of Advertising Subliminal advertising refers to marketing messages Agencies received without consumers knowing it. Studies have established no link between subliminal messages and consumer behavior. p. 151 Learning describes changes in an individual’s behavior Key Term: Learning arising from experience. p. 150 A drive is a strong internal stimulus that calls for action. Photo: Selective Perception A drive becomes a motive when it is directed toward a particular stimulus object. Cues are minor stimuli that determine when, where, and how the person responds.

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p. 150-151 Key Terms: A belief is a descriptive thought that a person has about Belief, Attitude something. p. 152 Attitude describes a person’s relatively consistent Ad: Vidalia Onion evaluations, feelings, and tendencies toward an object or Committee idea. Attitudes are difficult to change. Beliefs and Attitudes

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 Assignments, Resources Use Outside Example 1 here Use Web Resource 5 here p. 152 PPT 5-27

Chapter Objective 3 Types of Buying Decision Behavior

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Figure 5.5 shows types of consumer buying behavior based on the degree of buyer involvement and the degree of differences among brands.

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Complex Buying Behavior p. 152 Consumers undertake complex buying behavior when they Key Term: are highly involved in a purchase and perceive significant Complex Buying differences among brands. Behavior Consumers may be highly involved when the product is expensive, risky, purchased infrequently, and highly selfexpressive. Typically, the consumer has much to learn about the product category. Marketers of high-involvement products must understand the information-gathering and evaluation behavior of highinvolvement consumers.

p. 153

p. 153 Key Terms: Dissonance-reducing buying behavior occurs when Dissonanceconsumers are highly involved with an expensive, Reducing Buying infrequent, or risky purchase, but see little difference among Behavior, Habitual brands. Buying Behavior Dissonance-Reducing Buying Behavior

After the purchase, consumers might experience postpurchase dissonance (after-sale discomfort) when they notice certain disadvantages of the purchased brand or hear favorable things about brands not purchased. To counter such dissonance, the marketer’s after-sale communications should provide evidence and support to help consumers feel good about their brand choices. p. 153

Habitual Buying Behavior Habitual buying behavior occurs under conditions of low Copyright© 2014 Pearson Education

consumer involvement and little significant brand difference. Consumer behavior does not pass through the usual belief- p. 153 attitude-behavior sequence. Ad: Charmin Consumers do not search extensively for information about the brands, evaluate brand characteristics, and make weighty decisions about which brands to buy. They passively receive information as they watch television p. 153 or read magazines. Figure 5.5: Four Types of Buying Because buyers are not highly committed to any brands, Behavior marketers of low-involvement products with few brand differences often use price and sales promotions to stimulate buying. p. 152

p. 153 Key Term: VarietyConsumers undertake variety-seeking buying behavior in Seeking Buying situations characterized by low consumer involvement but Behavior significant perceived brand differences. Variety-Seeking Buying Behavior

In such cases, consumers often do a lot of brand switching.  Assignments, Resources Use Discussion Question 2 here Use Video Case here Use Individual Assignment 1 here  Troubleshooting Tip By and large, students have not been exposed to the consumer behavior concepts in this chapter before. If they have taken a sociology or human behavior course, chances are very high that the concepts were not presented in a way that allowed the students to understand them as they apply to business in general and marketing in particular. After presenting the concepts of consumer behavior, have the students discuss the concepts in terms of their own buying habits, their backgrounds, and how they differ from others in the class. p. 154

The Buyer Decision Process

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The buyer decision process consists of five stages: Copyright© 2014 Pearson Education

1. 2. 3. 4. 5.

Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior

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Need Recognition

p. 154 Key Term: Need The buyer recognizes a problem or need triggered by either Recognition an:  Internal stimuli, or  External stimuli

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Information Search Information search may or may not occur.

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p. 154 Figure 5.6: Buyer Decision Process

Consumers can obtain information from any of several p. 153 sources. Ad: Snickers  Personal sources (family, friends, neighbors, acquaintances)  Commercial sources (advertising, salespeople, Web sites dealers, packaging, displays)  Public sources (mass media, consumer-rating organizations, Internet searches)  Experiential sources (handling, examining, using the product) Commercial sources inform the buyer. Personal sources legitimize or evaluate products for the buyer.

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Evaluation of Alternatives

p. 155 Alternative evaluation is how the consumer processes Key Term: Alternative information to arrive at brand choices. Evaluation How consumers go about evaluating purchase alternatives depends on the individual consumer and the specific buying situation. In some cases, consumers use careful calculations and logical thinking. Copyright© 2014 Pearson Education

At other times, the same consumers do little or no evaluating; instead they buy on impulse and rely on intuition. p. 155

Purchase Decision p. 155 Generally, the consumer’s purchase decision will be to Key Term: Purchase Decision buy the most preferred brand.

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Two factors can come between the purchase intention and the purchase decision. 1. Attitudes of others 2. Unexpected situational factors

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Postpurchase Behavior

p. 156 PPT 5-34 The difference between the consumer’s expectations and the Key Terms: perceived performance of the good purchased determines Postpurchase Behavior, Cognitive how satisfied the consumer is. Dissonance PPT-5-35 If the product falls short of expectations, the consumer is disappointed; if it meets expectations, the consumer is satisfied; if it exceeds expectations, the consumer is said to p. 156 Photo: Shopping be delighted. Cognitive dissonance, or discomfort caused by postpurchase conflict, occurs in most major purchases.  Assignments, Resources Use Real Marketing 5.2 here Use Discussion Question 3 here Use Critical Thinking Exercise 2 here Use Marketing Technology here Use Marketing by the Numbers here Use Outside Example 2 here p. 156 PPT 5-36

The Buyer Decision Process for New Products

Chapter Objective 4

A new product is a good, service, or idea that is perceived p. 156 by some potential customers as new. Key Terms: New Product, Adoption The adoption process is the mental process through which Process an individual passes from first learning about an innovation to final adoption. Adoption is the decision by an individual to become a regular user of the product. Copyright© 2014 Pearson Education

p. 157

Stages in the Adoption Process Consumers go through five stages in the process of adopting a new product: 1. Awareness: The consumer becomes aware of the new product, but lacks information about it. 2. Interest: The consumer seeks information about the p. 157 Ad: Best Buy new product. 3. Evaluation: The consumer considers whether trying the new product makes sense. 4. Trial: The consumer tries the new product on a small scale to improve his or her estimate of its value. 5. Adoption: The consumer decides to make full and regular use of the new product.

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Individual Differences in Innovativeness People differ greatly in their readiness to try new products. People can be classified into the adopter categories shown in Figure 5.7. The five adopter groups have differing values.

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1. Innovators are venturesome—they try new ideas at some risk. 2. Early adopters are guided by respect—they are opinion leaders in their communities and adopt new ideas early but carefully. 3. The early mainstream are deliberate—although they rarely are leaders, they adopt new ideas before the average person. 4. The late mainstream are skeptical—they adopt an innovation only after a majority of people have tried it. 5. Lagging adopters are tradition bound—they are suspicious of changes and adopt the innovation only p. 158 when it has become something of a tradition itself. Figure 5.7: Adopter Categorization on Influence of Product Characteristics on Rate of Adoption the Basis of Relative Time of Five characteristics are important in influencing an Adoption of innovation’s rate of adoption. Innovations Copyright© 2014 Pearson Education

1. Relative advantage: The degree to which the innovation appears superior to existing products. 2. Compatibility: The degree to which the innovation fits the values and experiences of potential consumers. 3. Complexity: The degree to which the innovation is difficult to understand or use. 4. Divisibility: The degree to which the innovation may be tried on a limited basis. 5. Communicability: The degree to which the results of using the innovation can be observed or described to others.  Assignments, Resources Use Discussion Question 4 here Use Marketing Ethics here Use Company Case here Use Small Group Assignment 2 here Use Individual Assignment 2 here  Troubleshooting Tip There is a lot of material in this chapter; although it hits only the high points of consumer behavior. Explaining that consumer behavior is usually offered as a course unto itself can actually relieve some of the students’ anxiety. Also helpful is continually reminding them of how they can apply this material to more fully appreciating their own motivations for their purchases. This can then lead them to recognize how a marketer could approach understanding consumers’ motives in general.

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END OF CHAPTER MATERIAL Discussion Questions 1. Review the ―black box‖ model of buyer behavior. Which buyer characteristics that affect buyer behavior influence you most when selecting a restaurant? Are those the same characteristics that would influence you when making a smartphone purchase? Explain. (AACSB: Communication; Reflective Thinking) Answer: Figure 5.1 shows the stimulus-response model of buyer behavior in which marketing and other stimuli enter the consumer’s ―black box‖ and produce certain responses. Marketing stimuli consist of the Four Ps (product, price, place, and promotion). Other stimuli include major forces and events in the buyer’s environment, such as economic, technological, political, and cultural forces. All these inputs enter the buyer’s black box, where they are turned into a set of observable buyer responses: the buyer’s brand and company relationship behavior and what he or she buys, when, where, and how often. The buyer’s characteristics influence how he or she perceives and react to stimuli. These factors include:  Culture: includes overall culture, subculture, and social class.  Social influences: reference groups, family, and roles and status.  Personal factors: age and life cycle stage, occupation, economic situation, lifestyle, and personality and self-concept.  Psychological factors: motivation, perception, learning, and beliefs and attitudes. Students’ responses regarding which characteristic(s) would have the greatest impact on their purchase decisions will vary. 2. What is an opinion leader? Describe how marketers attempt to use opinion leaders to help sell their products. (AACSB: Communication; Reflective Thinking) Answer: Opinion leaders are people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert social influence on others. Some experts call this group the influentials or leading adopters. When these influentials talk, consumers listen. Marketers try to identify opinion leaders for their products and direct marketing efforts toward them. Buzz marketing involves enlisting or even creating opinion leaders to serve as ―brand ambassadors‖ who spread the word about a company’s products. Many companies now create brand ambassador programs in an attempt to turn influential but everyday customers into brand evangelists.

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3. Name and describe the types of buying decision behavior and describe a personal example for each. (AACSB: Communication; Reflective Thinking) Answer: The types of consumer buying decision behavior are: (1) complex buying behavior, (2) dissonance-reducing buying behavior, (3) habitual buying behavior, and (4) variety-seeking buying behavior. Figure 5.5 shows these types based on the degree of buyer involvement and the degree of differences among brands. Complex buying behavior occurs when consumers are highly involved in a purchase and perceive significant differences among brands. Dissonance-reducing buying behavior occurs when consumers are highly involved with an expensive, infrequent, or risky purchase, but see few differences among brands. Habitual buying behavior occurs under conditions of low consumer involvement and little significant brand difference. Variety-seeking buying behavior is undertaken in situations characterized by low consumer involvement but significant perceived brand differences. Students’ examples will vary. 4. What is a ―new product‖ and how do consumers go about deciding whether to adopt a new product? (AACSB: Communication) Answer: A new product is a good, service, or idea that is perceived by some potential customers as new, even though it may have been around for a while. Marketers are interested in how consumers learn about products for the first time and make a decision on whether to adopt them. The adoption process is a mental process in which an individual learns about an innovation to finally adopting it. The stages in the adoption process are: a. Awareness: The consumer becomes aware of the new product, but lacks information about it. b. Interest: The consumer seeks information about the new product. c. Evaluation: The consumer considers whether trying the new product makes sense. d. Trial: The consumer tries the new product on a small scale to improve his or her estimate of its value. e. Adoption: The consumer decides to make full and regular use of the new product.

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Critical Thinking Exercises 1. Form a small group of four or five students. Have each group member interview ten consumers about if and when they purchased their first smartphone. Research when smartphones were first introduced, and based on each respondent’s answer, identify which adopter category best describes that consumer. Create a chart similar to Figure 5.7 to present your results for all group members’ interviews. How far along are smartphones in their adoption cycle? (AACSB: Communication; Diversity; Reflective Thinking) Answer: This should be an interesting exercise for students. Smartphones have actually been around for a long time—1993—but didn’t become a mass market product until relatively recently. Students should be able to find considerable information on the Internet regarding the history of smartphones. One source they will likely use is http://en.wikipedia.org/wiki/Smartphone.

2. Go to the Strategic Business Insights (SBI) Web site and complete the VALS survey at www.strategicbusinessinsights.com/vals/presurvey.shtml. What does VALS measure and what is your VALS type? Does it adequately describe you? On what dimensions are the VALS types based and how can marketers use this tool to better understand consumers? (AACSB: Communication; Use of IT; Reflective Thinking) Answer: VALS is a tool to measure values and lifestyles. The eight VALS types are innovators, thinkers, achievers, experiencers, believers, strivers, makers, and survivors. The two dimensions of the VALS typology are resources/innovation and primary motivations (ideals, achievement, and self-expression). Consumers are segmented into groups based on their values and lifestyles, which enables marketers to better understand their behavior. Marketing Technology: Mourning 2.0 Every culture has rituals for mourning the dead, but technology is now changing many of our long-held cultural norms. The conservative funeral industry is slowly embracing new technologies, resulting in new mourning behaviors. High-definition video screens play video homage to the deceased, live-streamed funerals reach all corners of the globe, digital guest books remain permanently active, e-mails remind the bereaved of the anniversary of a loved-one’s death, and digital candles remain perpetually ―lit‖ on memorial pages. The deceased can now live on in cyberspace and friends can visit them on Facebook long after they have passed on. Quick-response code chips (―QR codes‖) affixed to tombstones can bring a person ―back to life‖ virtually on a smartphone. With nearly half of all Americans owning smartphones, 20 percent owning tablets, 80 percent on the Internet, and almost 70 percent visiting social media sites, the time is now right for the funeral industry to capitalize on these digital trends. And with the stillsluggish economy and new competitors (for example, Walmart and Cosco now sell caskets Copyright© 2014 Pearson Education

online) squeezing profit margins, the funeral industry is more open than ever to ways to satisfy consumers’ mourning needs digitally. 1. Research mourning customs of other cultures. What role do products and services play in making the experience meaningful for mourners? Is technology changing customs outside of the United States? (AACSB: Communication; Diversity; Reflective Thinking) Answer: Students’ answers will vary. There are several sources on the Internet, such as http://en.wikipedia.org/wiki/Mourning, that summarize mourning behavior in different cultures and the role of products and technology in shaping the experience. 2. Describe the characteristics of a new product that affect its rate of adoption. Which characteristics will impact how quickly the new services described for the funeral industry will be accepted by mourners in the United States? (AACSB: Communication; Reflective Thinking) Answer: Students’ examples will vary, but they should discuss these five characteristics that are especially important in influencing an innovation’s rate of adoption:  Relative advantage: the degree to which the innovation appears superior to existing products. The new technologically-based services, such as Web-streaming of funerals, are better than traditional funerals because people not able to attend a funeral personally can still be ―present.‖ However, some students might argue that the event is no longer personal and many people may simply choose to watch it on the Internet and not interact personally with fellow mourners.  Compatibility: the degree to which the innovation fits the values and experiences of potential consumers. While the Internet and social media are almost second nature to younger consumers, these services are not compatible with older consumers’ values and experiences related to funerals. However, the decline of religiosity in the United States may enhance the acceptance of digital mourning.  Complexity: the degree to which the innovation is difficult to understand or use. For younger consumers, using new technology is not a problem, but for older consumers this may not be the case. One person in the industry suggests that the younger generation embraces this technology, and the holdouts will eventually die off and take their traditional values with them.  Divisibility: the degree to which the innovation may be tried on a limited basis. It’s not likely that consumers’ can ―try before they buy‖ for these types of services, so this characteristic will slow the rate of adoption.  Communicability: the degree to which the results of using the innovation can be observed or described to others. The services can be communicated easily, increasing the rate of adoption.

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Marketing Ethics: “Vanity Sizing” What does an ―8‖ mean to you? Well, if you are a female, then it means a lot, especially if you really are a ―12‖ – size, that is. Marketers know that, too, and the trend is for larger sizes to be labeled with smaller numbers. Sizing was standardized in the 1940s and 1950s when women started purchasing mass-produced clothing. But sizes fluctuated in the following decades and the Department of Commerce abandoned sizing standardization in 1983. Now, the size number can mean anything the marketer wants it to mean. Marketers know that a size-12 woman who finds out she can fit into an 8 will get a self-esteem boost and likely purchase more. This practice, known as ―vanity sizing,‖ has the potential to pay off big for clothing manufacturers. With 34 percent of adults in the United States overweight and another 40 percent obese, that adds up to a sizable market potential. Plus-sized clothing designer Torrid caters to the full-sized woman with sizes ranging from 0-5, where a size 4 is actually a size 26. If a large number on the size label really bothers you, stick to the more expensive brands—they tend to be the ones using vanity sizing most. 1. Which factors are clothing marketers using to influence consumers? Ask five female and five male friends how much the size labeled on clothing influences their behavior. Write a brief report of your findings. (AACSB: Communication; Reflective Thinking) Answer: This is an example of cultural and psychological influences on consumer behavior. Specifically, this is an example of attempting to influence perceptions, beliefs, and attitudes. Many of our perceptions, beliefs, and attitudes are influenced by culture. For example, most consumers, especially women, want to be smaller because ―thin is in‖ culturally. Students’ reports after talking to other consumers will vary, but women will probably indicate that the size number matters to them. 2. Should manufacturers be allowed to pick whatever measurements they want and attach any size number they want to them? Should the government or business set standardized sizes? (AACSB: Communication; Ethical Reasoning) Answer: Students’ responses will vary. This will likely draw a heated argument against vanity sizing from females, not only because of the attempt to manipulate a consumer’s self-esteem but also because it makes it very difficult to purchase clothing without trying it on. In defense of clothing manufacturers, however, women are shaped differently than men and differently from each other, and clothing styles vary, making standardization difficult.

Marketing by the Numbers: Evaluating Alternatives One way consumers can evaluate alternatives is to identify important attributes and assess how purchase alternatives perform on those attributes. Consider the purchase of an automobile. Each Copyright© 2014 Pearson Education

attribute, such as gas mileage, is given a weight to reflect its level of importance to that consumer. Then the consumer evaluates each alternative on each attribute. For example, in the table below, gas mileage (weighted at 0.5) is the most important attribute for this consumer. The consumer believes that Brand C performs best on gas mileage, rating it 7 (higher ratings indicate higher performance). Brand B is perceived as performing the worst on this attribute (rating of 3). Styling and price are the consumer’s next most important attributes. Warranty is least important.

Attributes Styling Gas mileage Warranty Price

Importance Weight (e) 0.2 0.5 0.1 0.2

Alternative Brands A B C 4 6 2 6 3 7 5 5 4 4 6 7

A score can be calculated for each brand by multiplying the importance weight for each attribute by the brand’s score on that attribute. These weighted scores are then summed to determine the score for that brand. For example, ScoreBrand A = (0.2 x 4) + (0.5 x 6) + (0.1 x 5) + (0.2 x 4) = 0.8 + 3.0 + 0.5 + 0.8 = 5.1. This consumer will select the brand with the highest score. 1. Calculate the scores for brands B and C. Which brand would this consumer likely choose? (AACSB: Communication; Analytic Reasoning) Answer: ScoreBrand B = (0.2 x 6) + (0.5 x 3) + (0.1 x 5) + (0.2 x 6) = 1.2 + 1.5 + 0.5 + 1.2 = 4.4 ScoreBrand C = (0.2 x 2) + (0.5 x 7) + (0.1 x 4) + (0.2 x 7) = 0.4 + 3.5 + 0.4 + 1.4 = 5.7 Based on this analysis, the consumer would probably select Brand C because it has the highest score. 2. Which brand is this consumer least likely to purchase? Discuss two ways the marketer of this brand can enhance consumer attitudes toward purchasing its brand. (AACSB: Communication; Reflective Thinking; Analytic Reasoning) Answer: This consumer is least likely to select brand B because it has the lowest score. The marketer can attempt to change consumer attitudes toward its brand in three ways: a. Change beliefs—if consumers believe a brand does not perform well on an attribute, then the marketer can attempt to change that belief. This consumer believes brand B doesn’t have as good of gas mileage as the other alternatives. If this brand is the same as the others, then the marketer needs to educate consumers of this fact. If the Copyright© 2014 Pearson Education

brand truly doesn’t perform well on that attribute, then the product must be improved and then beliefs must be changed as well. This is the most important attribute for consumers, so the marketer needs to address this. b. Change attribute importance—the marketer of brand B can attempt to influence how consumers evaluate product attributes. Brand B performs very well on styling and price, but these attributes are not rated as very important. Increasing the importance weight on those attributes will help this brand considerably because it performs better than both competitors on styling and almost as well at brand C on price. c. Add a new attribute to consider—the marketer of brand B could attempt to get consumers to consider an attribute that is not on the list, such as environmental impact. The added attribute needs to be something that will be considered important by consumers and be one that the brand would be perceived as better than the competition for this to be successful.

Company Case Notes Porsche: Guarding the Old While Bringing in the New Synopsis This case presents a very interesting story about a luxury carmaker, Porsche. Like many marketers of luxury goods, Porsche has had to wrestle with the challenge of serving its core of loyal customers while also making products that appeal to a less traditional, but growing, segment of customers. The case describes the Porsche faithful who like their Porsches only oneway: 2 doors, six cylinders in the rear, and lots of pure sports car performance. The problem that Porsche has faced at various times throughout its existence is that being confined to one kind of customer with one kind of car inevitably results in maturation and stagnation. Sales flatten out, then decline, and so do profits. This case describes recent efforts by Porsche to broaden its product line and appeal to multiple segments of customers. Most notably, Porsche now makes an SUV (the Cayenne) and a fourdoor sedan (the Panamera). Both of these efforts are designed to appeal to a different kind of customer than the ones who typically buy 911s. But these vehicles are not soft around the edges. They perform like, well, the Porsche of SUVs (and sedans). Porsche has identified two types of customers that are sustaining these vehicles and keeping the company on a growth trend. These are Porsche customers who grew up and have practical needs of hauling people and stuff, and the emergence of wealthy people in China, India, and other parts of the world who have more interest in a daily driver. As the economy recovers, Porsche is poised to serve various customer types with a portfolio of outstanding vehicles.

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Teaching Objectives 1. Apply a specific product situation to the buyer decision process. 2. Contrast the way that different customer experience the buyer decision process. 3. Explain how and why social, psychological, and personal factors affect the manner in which consumers solve their problem. 4. Gain practical experience by applying the concepts of attitude, self-concept, and reference groups. Discussion Questions 1. Analyze the buyer decision process of the traditional Porsche customer. Need recognition: This can come from internal stimuli (basic needs such as hunger, thirst, protection) or external stimuli. The traditional Porsche buyer needs a car that reflects their self-image. That is, the are not part of the regular world, but exceptions to it. Such buyers need a car that goes beyond the basic utilities provided by most cars. They need (want) a car that can be enjoyed. They want a car that can be “worn” like an accessory. They want a car that performs without being flashy or phony. Information search: Again, this can be internal or external. However, the nature of internal/external influences is different for this phase. Potential Porsche customers could draw from either source. They draw from internal (i.e., experiential) sources (their own knowledge based on previous experience or exposure to product information) based on how familiar they are with the brand. For those very familiar with the brand, frequent purchasers, they may not gather information beyond internal information. However, many will draw from external sources, including friends and acquaintances or company advertising/point-of-purchase displays/sales people. Evaluation of alternatives: Methods used for evaluating alternatives vary widely. Thus, it is difficult to illustrate what the traditional Porsche customer might do for this phase. However, one thing is consistent across individuals as they go through this phase. Consumers compare the option(s) in question to a set of criteria. For the traditional Porsche customer, there may only be one alternative (it must be a Porsche). But for those who are open to multiple brands, the evaluation of alternatives will be compared to those traits outlined in the need recognition phase. Purchase decision: The traditional Porsche customer will chose the vehicle that best satisfies the stated criteria. There are additional considerations that may pop up at this phase, including the opinion of friends and unexpected changes to any of the factors considered during evaluation of alternatives. Postpurchase behavior: During this phase, consumers form impressions that will have an effect on future purchase and word-of-mouth. Much of this boils down to the concept of satisfaction: How do consumers perceive the product’s performance relative to their expectations prior to purchase? Porsche customers expectations could be based on Copyright© 2014 Pearson Education

things already mentioned in the previous steps of the buyer decision process. If they are confirmed or exceeded, then the consumers develop some level of satisfaction or delight. They then are more likely to spread positive word-of-mouth and purchase again. If the Porsche customers’ expectations are not met, they are then dissatisfied. 2.

Contrast the traditional Porsche customer decision process to the decision process for a Cayenne or Panamera customer. Need recognition: This customer may still be looking to satisfy some of the same needs as the traditional customer (self-image, performance, a car to be enjoyed, one that isn’t flashy or phony). But these customers add to this list more practical needs, such as carrying 4-5 people, hauling gear and cargo, roominess, ability to navigate through all kinds of weather, and a large back seat (for those who want to be chauffeured). Information search: This customer is more likely to research external sources (Internet, company promotional material, sales people, etc.). Evaluation of alternatives: The newer type of customer is more open to comparing alternatives from various brands. They may not be a previous Porsche owner, but a person who has always wanted a Porsche. Purchase decision: Similar to the traditional Porsche customer, the new customer will chose the vehicle that best satisfies the stated criteria. However, the criteria, as noted above, is different for this customer. Postpurchase behavior: The traditional customer will not be affected by things that might affect the new customer. A traditional, loyal customer is more likely to put up with issues such as lack of creature comforts, impracticality of reduced cargo space, and even unreliability. Thus, the traditional customer may be very satisfied even if there are negatives in these areas. The new Porsche customer will likely be more demanding on these issues that affect daily driving.

3.

Which concepts from the chapter explain why Porsche sold so many lower-priced models in the 1970s and 1980s? The biggest factor that contributed to the high numbers of people who purchased more affordable Porsches during those decades is that of social groups. Specifically, reference groups. The text specifies aspirational groups, on to which an individual wishes to belong. Prior to the less expensive Porsches, only the more wealthy could afford one. But with affordability, people of lesser means signed up for the image that went along with owning a Porsche. They wanted to become members of the high achieving, successful, elite. However, this social desire ultimately backfired for Porsche. The traditional Porsche buyer felt that the brand was being high-jacked and diluted. It wasn’t as attractive. The entry level buyer of the time found that Porsches weren’t all they were cracked up to be. Indeed, they were purchasing lower performing vehicles. And, they had to put up with all the Porsche idiosyncrasies that bother most care buyers. Copyright© 2014 Pearson Education

Other concepts from the chapter that may help to explain this issue are roles and status, culture and subculture, and personality and self-concept. 4.

Explain how both positive and negative attitudes toward a brand like Porsche develop. How might Porsche change consumer attitudes toward the brand? As noted in the chapter, attitudes are comprised of evaluations (thoughts or beliefs), feelings, and tendencies (behaviors) toward an object. Thus, when a belief that is positive and important to a customer is present, that contributes to a positive attitude. Likewise, when customers experience a positive emotional response from using (or witnessing other use) a Porsche, this becomes a factor in a more positive attitude. The same can be said for negative inputs. Thus, if companies want to improve consumer attitudes toward the brand, they need to identify beliefs and emotions that are important to customers. For example, the emotion of that results from the sound, vibration, and feel of a Porsche as it hugs a corner is much more important than the emotion that results from knowing the car is built to high safety specifications. In Porsches promotional efforts as well as the performance of the finished product, the emotional hot buttons must be touched. Additionally, relevant information (beliefs) must also be engendered.

5.

What role does the Porsche brand play in the self-concept of its buyers? Self-concept is based on the premise that people’s possessions contribute to and reflect their identities. Porsche is a brand that caters to self-concept. As the case notes, Porsche buyers want a car that “mirrors their self-image—it stands for the things owners like to see in themselves and in their lives.” And the way that they like to see themselves is as successful people who set high goals and work doggedly to meet them.

Teaching Suggestions There is an interesting trend that has been identified among youth and young adults today. Cars are not the status symbol for these people that they are for previous generations of folks. This may be due to the fact that the younger generation is more environmentally conscious and views cars as polluting machines, necessary for transportation. There may be other factors that contribute to this as well. And this may not be true universally, but is true in the aggregate. The younger generations derive status from clothing and gadgets (laptops, MP3 players, smart phones). Ask students if there is something that they aspire to own? Work this discussion to move beyond things like “a house”. What are the things that they want right now? When they graduate? Cars may be on the list, but pry in order to determine the type of cars that they want. At the same time, use some of the other items that they suggest to compare to the issues brought up in this case. What items contribute to Copyright© 2014 Pearson Education

their self-concept? What items fulfill aspirational needs? What items do the want badly, even if they aren’t practical? This case also works well with the marketing environment chapter (Chapter 3) and the market targeting chapter (Chapter 6).

ADDITIONAL PROJECTS, ASSIGNMENTS, AND EXAMPLES Projects 1. Every culture contains smaller subcultures. In the United States, the rapidly increasing Hispanic market holds opportunities for many businesses. Look around your community and make a list of those businesses that may well prosper from this increasing subculture. Why do you think this is so? (Objective 2) 2. What social class do you belong to? Why? What would it take for you to move up a class? (Objective 2) 3. Think about the online social networks such as Facebook or Twitter. How are marketers trying to use these networks to promote their products? (Objective 2)

Small Group Assignments 1. Form students into groups of three to five. Each group should read the opening vignette to the chapter on GoPro. Each group should then answer the following questions and share the answers with the class. (Objective 2) a. Are you an outdoor enthusiast? An extreme sports lover? If so, how might you use a GoPro camera? Once you captured your video, how might you share it with friends? b. Visit the GoPro website at www.gopro.com. Beyond making well-engineered video cameras, how has the company become a favorite among adventure enthusiasts? c. Beyond the applications discussed in class, which new uses can you think of for the GoPro camera? 2. Form students into groups of three to five. Each group should read Inside Real Marketing 5.1: Harnessing the Power of Online Social Influence. Each group should then answer the following questions and share the answers with the class. (Objectives 2 and 4) a. Discuss examples of companies that have attracted you by reaching out through social media. How did you respond? Did the contact result in a purchase? b. Recall examples of companies who have somehow failed at using social media. Why did this occur? What did the company miss? c. If you are a user of social media, do you believe it can serve as an effective marketing tool, or is it simply a nuisance to users? Justify your answer. d. Do you believe that social media is a smart investment for marketers, or are they just ―shooting in the dark‖? Why do you believe this? Copyright© 2014 Pearson Education

Individual Assignments 1. Take a look at the Web sites for Apple (www.apple.com), Dell (www.dell.com), and Hewlett-Packard (www.hp.com). Which types of consumers are each of these companies appealing to through their marketing approaches? Are they targeting personalities, using technical comparisons, or something else? Based on what you have read in this chapter, why do you believe each company chose this marketing approach? (Objective 2) 2. Check out the Web site for consumer information giant Acxiom (www.acxiom.com). Explore the services they provide to marketing organizations and describe those services in a 500word report. How does the company gather its information, and how is it used? How does Acxiom’s approach differ from that of its competitors? In your report, be sure to cite specific examples from this chapter. (Objective 2)

Think-Pair-Share Consider the following questions, formulate and answer, pair with the student on your right, share your thoughts with one another, and respond to questions from the instructor. 1. Describe a cultural shift that has impacted marketers in a major way. (Objective 2) 2. Highlight some of the more significant differences in purchase habits between AsianAmericans and the U.S. Hispanic market. (Objective 2) 3. What factors determine social class in the United States? (Objective 2) 4. How are online social networks changing the face of marketing? (Objective 2)

Outside Examples 1. Age and lifecycle changes have a dramatic impact on the many types of products we purchase and consume. Go to Jeep’s Web site (www.jeep.com) and examine their complete product offering. How has Jeep tried to reach consumers of all ages and stages of the lifecycle, especially mature consumers? (Objective 2) Possible Solution: Over the past 20 years, Jeep has excelled at reaching a diverse customer base. From a review of their Web site and product offerings, it becomes evident that they design and produce vehicles to satisfy consumers of all ages and stages of the lifecycle. In addition, if you pay attention to the individual options offered on some of the vehicles, it becomes clear that certain vehicles are targeted to consumers in particular stages of the lifecycle. 2. When asked about their least favorite aspect of TV viewing, most people say it’s the commercials. Although most consumers understand that commercials support free programming, they are bothered by the growing number of commercial interruptions. One way to avoid all the clutter is to channel surf and bypass commercials. But digital video recorders (DVRs) offer another solution—skip commercials altogether while still watching your favorite show on your own schedule. Copyright© 2014 Pearson Education

Consumers are discovering DVRs and love the freedom they find through services like TiVo. The service allows consumers to automatically record shows and skip commercials during playback. Statistics show that DVR users watch more TV, channel surf less, and move many prime-time week shows to the weekend, when they have more leisure time. Will DVRs put an end to commercial dominance and put the consumer in the driver’s seat? This question assumes that television will continue its long-running domination as the number-one outlet for program content. But the nature of how consumers are getting their news, sports, and entertainment programming is in flux like never before. For starters, more and more consumers are opting to purchase their favorite show on DVD or through download services like iTunes. As with the DVR option, this cuts out commercials altogether. But for the launch of a recent season, the four major networks (ABC, NBC, CBS, and FOX) made a landmark move. Each began offering full episodes of many of their top programs through their Web sites. The episodes are available the day after they air on television, are delivered in high-resolution streaming video, can be viewed full screen, and are available 24/7. The price? They are free, but viewers must watch a single commercial five or six times during a one-hour show. Not exactly commercial-free, but far less than the 18 or so minutes per hour devoted to ads on television. What a novel concept: deliver the content for free, and pay for the programming through ad revenues. And while the delivery of program content will likely evolve for some time to come, the bottom line is consumers will choose the viewing method and options that give them the features they value most. Big screens? High resolution? No ads? Convenience? Ondemand? Only time will tell. 1. What social and personal factors might influence the purchase of a DVR? (Objective 2) 2. How would you market this product in order to create a need in the consumer’s mind? (Objective 3) Possible Solution: 1. A multitude of social and personal factors may have influence here. Age, economic situation, and lifestyle may all come into play. Younger consumers are typically more adventurous and more likely to try the newer technologies. Associatively, although DVRs are not terribly expensive, it is necessary to have a certain degree of discretionary income (or excess income available to spend) in order to purchase the product. Finally, active lifestyles, given their somewhat more busy schedules, are more likely to find this product to be useful. 2. It is necessary to market this product as a time-saving convenience, on the cutting edge of technology to effectively reach the target market.

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Web Resources 1. http://247.prenhall.com This is the link to the Prentice Hall support link. 2. www.GoPro.com GoPro’s home page. 3. www.facebook.com If you are not familiar with social networking, take a look at Facebook and Twitter below. 4. www.twitter.com Twitter’s home page. 5. www.jeep.com Go to this site to learn about Jeep and its marketing strategies.

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