Mma6e chapter-06 final

Marketing Management:
An Asian Perspective,
6th Edition
Instructor Supplements
Created by Geoffrey da Silva

Analyzing Consumer Markets
3
6 © Pearson Education South Asia Pte Ltd 2013. All rights reserved

Learning Issues for Chapter Six
1. How do consumer characteristics influence buying behavior?
2. What major psychological processes influence consumer
responses to the marketing program?
3. How do consumers make purchasing decisions?
4. In what ways do consumers stray from a deliberative,
rational decision process?

Importance of Understanding Customers
• The aim of marketing is to meet and satisfy target customers’
needs and wants better than competitors.
• Marketers must have a thorough understanding of how
consumers think, feel, and act and offer clear value to each
and every target consumer.

Importance of Understanding Customers
• Successful marketing requires that companies fully connect
with their customers.
• Adopting a holistic marketing orientation means
understanding customers—gaining a 360-degree view of both
their daily lives and the changes that occur during their
lifetimes so the right products are always marketed to the
right customers in the right way.

What Influences Consumer Behavior?
• Consumer behavior is the study of how individuals, groups,
and organizations, select, buy, use, and dispose of goods,
services, ideas, or experiences to satisfy their needs and
wants.
• Marketers must fully understand both the theory and reality
of consumer behavior.
• A consumer’s buying behavior is influenced by cultural, social,
and personal factors. Cultural factors exert the broadest and
deepest influence.

Cultural Factors
• Culture, subculture, and social class are particularly important influences
on consumer buying behavior.
• Culture is the fundamental determinant of a person’s wants and behaviors.

Marketers use cultural factors to their advantage. In
Japan, for instance, it is a New Year’s custom for
merchants to offer fukubukuro ( 福袋) or lucky
mystery bags.
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Fukubukuro are lucky mystery bags started by Ginza Matsuya Department Store and has since
spread to most Japanese retailers. This Japanese custom has spread to other cultures. Many
Sanrio stores in the U.S. adopt this tradition. For the opening of the Apple store in San Francisco,
$250 lucky bags were offered containing a mix of software, audio accessories, and an iPod in
randomly selected bags.
© Pearson Education South Asia Pte Ltd 2013. All rights reserved

Sub-Cultures
• Each culture consists of smaller subcultures that provide more
specific identification and socialization for their members.
• Subcultures include nationalities, religions, racial groups, and
geographic regions.
• Multicultural marketing grew out of careful marketing
research, which revealed that different ethnic and
demographic niches did not always respond favorably to mass
marketing.

Examples of Behaviors in Different Asian Sub-
Cultures
• Chinese consumers, for instance, may respond differently from
Indian, Malay, or Filipino consumers.
• To the Chinese, especially those of the Cantonese dialect group,
feng shui (literally meaning wind water) or geomancy is important.
• Some Chinese avoid buying houses with the number four in the
address because it sounds like, and thus connotes, “death;” while
favoring the number eight as it sounds like “prosperity.”
• The Beijing Olympics was officially opened on 8 August 2008
(8-8-08).

Hong Kong Disneyland and Feng Shui
Disney officials consulted feng
shui experts in building Hong
Kong’s Disneyland. The park
faces water with mountains
behind to suggest plentiful
inflow of revenue and visitors,
while being protected at the
rear.

Social Stratification
• Virtually all human societies exhibit social stratification.
• Most often, it takes the form of social classes, relatively
homogeneous and enduring divisions in a society, hierarchically
ordered and with members who share similar values, interests, and
behavior.

Social Classes
One class depiction of social classes in the United States defined
seven ascending levels:
1. Lower lowers
2. Upper lowers
3. Working class
4. Middle class
5. Upper middles
6. Lower uppers
7. Upper uppers

China’s Occupational Classes—China has 10 distinct
occupational strata
Social classes differ in dress and where they shop. High-end shopping malls like the Plaza 66 in
Shanghai attract higher social class consumers who have disposable income to buy high-ticket
items.

Characteristics of Social Classes
1. First, those within each class tend to behave more alike than
persons from two different social classes. Social classes differ
in dress, speech patterns, recreational preferences, and
many other characteristics.
2. Second, people are perceived as occupying inferior or
superior positions according to social class.
3. Third, social class is indicated by a cluster of variables—for
example, occupation, income, wealth, education, and value
orientation—rather than by any single variable.

Characteristics of Social Classes
4. Fourth, individuals can move up or down the social class
ladder during their lifetimes. The extent of this mobility
varies according to how rigid the social stratification is in a
given society.

Marketing Implications of Social Classes
1. Social classes show distinct product and brand preferences in
many areas, including clothing, home furnishings, leisure activities,
and automobiles.
2. Social classes differ in media preferences, with upper-class
consumers often preferring magazines and books, and lower-class
consumers often preferring television. Even within a media
category such as TV, upper-class consumers tend to prefer news
and drama, and lower-class consumers tend to prefer soap operas
and sports programs.
3. There are also language differences among the social classes.
Advertising copy and dialogue must ring true to the targeted social
class.

Social Factors
Social factors such as reference groups, family, and social roles
and statuses affect our buying behavior.

Reference Groups
• A person’s reference groups are all the groups that have a direct
(face-to-face) or indirect influence on their attitudes or behavior.
• Groups having a direct influence are called membership groups.
• Some membership groups are primary groups such as family,
friends, neighbors, and co-workers with whom the person interacts
fairly continuously and informally.
• Some membership groups are secondary groups such as
religious, professional groups that tend to be more formal.

Reference Groups
People are also influenced by groups to which they do not belong:
• Aspiration groups are those a person hopes to join.
• Dissociative groups are those whose values or behavior an individual
rejects.

Influence of Reference Groups
• Reference groups expose an
individual to new behaviors
and lifestyles, influencing
attitudes and self-concept.
• They create pressures for
conformity that may affect
actual product and brand
choices.

Opinion Leaders
• Where reference group influence is strong, marketers must
determine how to reach and influence the group’s opinion
leaders.
• An opinion leader is the person in informal, product-related
communications who offers advice or information about a
specific product or product category.
• Marketers try to reach opinion leaders by identifying
demographic and psychographic characteristics associated
with opinion leadership, identifying the media read by opinion
leaders, and directing messages at opinion leaders.

Family
• The family is the most important consumer-buying
organization in society, and family members constitute the
most influential primary reference group.
• There are two families in the buyer’s life.
– The family of orientation consists of parents and siblings.
– A more direct influence on everyday buying behavior is the
family of procreation—namely, the person’s spouse and
children.

Families in Asia
In Asia, the family is a strong
reference group, influencing
members on numerous
aspects of their daily life.

Family—Roles and Influence of Family Members
• Marketers are interested in the roles and relative influence of
family members in the purchase of a large variety of products and
services.
• These roles vary widely in different countries and social classes.
• Given women’s increasing wealth and income generating ability,
household purchasing patterns are gradually changing in Asia.
• Thus, marketers of products traditionally purchased by men are
now thinking about women as possible buyers.

Focus on Women as Car Buyers
• Korean car makers are taking women more seriously as they
represent 30% of domestic sales.
• Hyundai introduced the Sonata Elegance Special, a female-oriented
version of its flagship mid-sized sedan.
• To provide a more feminine touch to its cars, Kia Motors
focused on fashionable appearances.

Marketing Implications
• For expensive products and services, the vast majority of
husbands and wives engage in joint decision making.
• Men and women may respond differently to marketing
messages.
• Another shift in buying patterns is an increase in the amount
of dollars spent and the direct and indirect influence wielded
by children and teens.

Roles and Statuses
• A person participates in many groups—family, clubs, and
organizations.
• The person’s position in each group can be defined in terms of role
and status.
• A role consists of the activities a person is expected to perform.
• Each role carries a status.
• Marketers must be aware of the status-symbol potential of products
and brands.

Marketing Insight: Face-Saving and the Chinese
Consumer

Personal Factors
Personal characteristics that influence a buyer’s decision include
age and stage in the life cycle; occupation and economic
circumstances; personality and self-concept; and lifestyle and
values.

Age and Stage in Life Cycle
• People’s taste in food, clothes, furniture, and recreation is
often related to our age.
• Consumption is also shaped by the family-life cycle and the
number, age, and gender, of people in the household at any
point in time.
• In addition, psychological life-cycles may matter.
• Marketers should also consider critical life events or
transitions as giving rise to new needs.

Japan’s aging population
Japan’s aging population has
seen the introduction of a
plethora of elderly-friendly
products such as the electronic
nurse and therapeutic electronic
pets.

Example of a Marketer Responding to the Critical
Life Event of Motherhood
Eversoft realizes that in Asia,
being a mother is a critical life
event. In a symbiotic way,
Eversoft cares for your skin,
just like how a mother cares for
her child.

Occupation and Economic Circumstances
• Occupation also influences consumption patterns.
• Marketers try to identify the occupational groups that have
above-average interest in their products and services.
• A company can even tailor its products for certain
occupational groups.

Economic Circumstances
• Product choice is greatly affected by economic circumstances:
spendable income (level, stability, and time pattern), savings and
assets (including the percentage that is liquid), debts, borrowing
power, and attitudes toward spending and saving.
• Purchasing discretionary items on credit has risen in Asia.

Marketing in a Recession
If economic indicators point to a recession, marketers can take
steps to redesign, reposition, and re-price their products or
introduce or increase the emphasis on discount brands so that
they can continue to offer value to target customers.

Personality and Self-Concept
• Each person has personality characteristics that influence his
or her buying behavior.
• Definition of Personality: A set of distinguishing human
psychological traits that lead to relatively consistent and
enduring responses to environmental stimuli.
• Brands also have personalities, and consumers are likely
to choose brands whose personalities match their own.
• We define brand personality as the specific mix of human
traits that we can attribute to a particular brand.

7 Brand Personalities—Jennifer Aaker
1. Sincerity (down-to-earth, honest, wholesome, and cheerful)
For example, Hello Kitty
2. Excitement (daring, spirited, imaginative, and up-to-date)
For example, MTV
3. Competence (reliable, intelligent, and successful)
For example, Samsung
4. Sophistication (upper-class and charming)
For example, Shiseido

7 Brand Personalities—Jennifer Aaker
5. Ruggedness (outdoorsy and tough)
For example, Timberland
6. Passion (emotional intensity, spirituality, and mysticism)
For example, Zara
7. Peacefulness (harmony, balance, and natural)
For example, Yamaha

Hello Kitty Brand Personality
• Hello Kitty has a wholesome,
sincere personality.
Consumers who see
themselves as being honest
and down-to-earth are more
likely to purchase.
• Hello Kitty products than
those who have a different
self concept.

BreadTalk Brand Personality
BreadTalk creates personalities
for its bread to reflect different
social themes and lifestyle.

Self-Concept
• Consumers often choose and use brands with a brand
personality consistent with their actual self-concept (how
we view ourselves).
• Although in some cases, the match may instead be based on
the consumer’s ideal self-concept (how we would like to
view ourselves).
• Others self-concept (how we think others see us).

Lifestyles and Values
• People from the same subculture, social class, and occupation
may lead quite different lifestyles.
• A lifestyle is a person’s pattern of living in the world as
expressed in activities, interests, and opinions.
• Lifestyle portrays the “whole person” interacting with his or
her environment.

Marketing and Lifestyles
• Marketers search for relationships between their products
and lifestyle groups.
• For example, a computer manufacturer might find that most
computer buyers are achievement oriented.
• The marketer may then aim the brand more clearly at the
achiever lifestyle.
• Marketers are always uncovering new trends in consumer
lifestyles.

Lifestyle: Time Constraints
• Lifestyles are shaped partly by whether consumers are
money-constrained or time-constrained.
• Companies aiming to serve money-constrained consumers
will create lower cost products and services.

Lifestyle: Time Constraints
• Local brands usually fill this need in many emerging markets,
while their foreign counterparts target more affluent
consumers.
• Consumers who experience time famine are prone to
multitasking, that is, doing two or more things at the same
time. Companies aiming to serve them will create convenient
products and services for this group.

Core Values
• Consumer decisions are also influenced by core values, the
belief systems that underlie consumer attitudes and
behaviors.
• Core values go much deeper than behavior or attitude, and
determine, at a basic level, people’s choices and desires over
the long-term.
• Marketers who target consumers on the basis of their values
believe that by appealing to people’s inner selves, it is
possible to influence their outer selves—their purchase
behavior.

Key Psychological Processes
• The starting point for understanding consumer behavior is the
stimulus-response model.
• See Figure 6.1.
• Marketing and environmental stimuli enter the consumer’s
consciousness. A set of psychological processes combine with
certain consumer characteristics to result in decision processes and
purchase decisions.
• The marketer’s task is to understand what happens in the
consumer’s consciousness between the arrival of the outside
marketing stimuli and the ultimate purchase decisions.

Figure 6.1: Model of Consumer Behavior

Motivation: Freud, Maslow, Herzberg
• We all have many needs at any given time.
• Some needs are:
a. Biogenic (arise from physiological states of tension such as
hunger).
b. Others are psychogenic and arise from a need for recognition,
esteem, or belonging.
• A need becomes a motive when it is aroused to a sufficient
level of intensity to drive us to act.

Motivation: Freud, Maslow, Herzberg
• A motive is a need that is sufficiently pressing to drive the
person to act.
• Motivation has both direction—we select one goal over
another—and intensity—we pursue the goal with more or less
vigor.
• Three of the best-known theories of human motivation—those
of Sigmund Freud, Abraham Maslow, and Frederick Herzberg
—carry quite different implications for consumer analysis and
marketing strategy.

Freud’s Theory
• Sigmund Freud assumed that the psychological forces
shaping people’s behavior are largely unconscious, and that a
person cannot fully understand his or her own motivations.
• When a person examines specific brands, he or she will react
not only to their stated capabilities, but also to other, less
conscious cues.
• A technique called laddering lets us trace a person’s
motivations from the stated instrumental ones to the more
terminal ones.

Motivation Research
• Motivation researchers often collect “in-depth interviews” to
uncover deeper motives triggered by a product.
• Projective techniques such as word association, sentence
completion, picture interpretation, and role-playing are used.

Maslow’s Theory
• Abraham Maslow sought to explain why people are driven by
particular needs at particular times.
• Maslow’s answer is that human needs are arranged in a
hierarchy from most to least pressing.
• In order of importance, they are:
a. Physiological needs
b. Safety needs
c. Social needs
d. Esteem needs
e. Self-actualization needs

Figure 6.2: Maslow Hierarchy of Needs

Asian Perspective on Needs Importance
• In collectivistic societies like Asia, it is debatable whether
self-actualization is applicable to Asian consumers.
• These needs may be socially directed instead, given the
strong desire of Asians to enhance their image and position
through contributions to society.
• Socially directed needs considered the most important for
Asians:
– Affiliation
– Admiration
– Status

Three types of socially directed needs may be
considered the most important for Asians:
• Affiliation—This is the acceptance of an individual as a
member of a group. Consumers seeking this need will tend to
conform to group norms.
• Admiration—Once affiliation needs are satisfied, admiration is
sought. This is respect from group members, which is earned
through acts.
• Status—This is esteem received from society at large. Unlike
admiration which tends to be at a more intimate level, status
requires the regard of outsiders.

Herzberg’s Theory
• Frederick Herzberg developed a two-factor theory that
distinguishes dissatisfiers (factors that cause dissatisfaction)
from satisfiers (factors that cause satisfaction).
• The absence of dissatisfiers is not enough to motivate a
purchase; satisfiers must be present.
• Herzberg’s theory has two implications:
i. Sellers should do their best to avoid dissatisfiers.
ii. Sellers should identify the major satisfiers or motivators of
purchase in the market and supply them.

Perception
• A motivated person is ready to act—how is influenced by his
or her perception of the situation.
• Perception is the process by which we select, organize, and
interpret information inputs to create a meaningful picture of
the world.
• It depends not only on physical stimuli, but also on the
stimuli’s relationship to the surrounding environment and on
conditions within each of us.

Perception: China’s Growing Economic Power
• China’s growing economic
power—The number of people
who consider China’s
economic might as a “bad
thing” is growing fast in
many countries.
• It is perceived negatively in
the U.S. and Canada, while
such growth is welcomed in
Pakistan, Indonesia, Africa,
and the Philippines.

Selective Attention
• Attention is the allocation of processing capacity to some
stimulus.
• It is estimated that the average person may be exposed to
over 1,500 ads or brand communications a day.
• Because we cannot possibly attend to all these, we screen
most stimuli out—a process called selective attention.
• Selective attention means that marketers have to work hard
to attract consumers’ notice.

Selective Perception
Selective perception: It’s impossible for people to pay attention to the thousands of ads they’re
exposed to every day, so they screen most of them out. Apple’s iPod poster ads are eye-catching to
minimize screening out.

Selective Attention: Some Findings
1. People are more likely to notice stimuli that relates to a
current need.
2. People are more likely to notice stimuli that they anticipate.
3. People are more likely to notice stimuli whose deviations
are large in relation to the normal size of the stimuli.

Tobacco Warnings: An Example of Overcoming
Selective Attention
• The Indian government is wrapping tobacco products with
photographs of rotting gums and faces eaten away by cancer
to try to scare Indians into quitting smoking.
• Such vivid pictorial scare tactics have also been used in
Singapore and elsewhere after text warnings failed to deter
smokers.

Marketing Applications of Selective Attention
• Although people screen out much of the surrounding stimuli,
they are influenced by unexpected stimuli, such as sudden
offers in the mail, over the phone, or from a salesperson.
• Marketers may attempt to promote their offers intrusively to
bypass selective attention filters.

Selective Distortion
• Selective distortion is the tendency to interpret information in
a way that fits our preconceptions.
• Consumers will often distort information to be consistent with
prior brand and product beliefs and expectations.
• Examples of branded differences can be found in virtually
every type of product.
• Selective distortion can work to the advantage of marketers
with strong brands when consumers distort neutral or
ambiguous brand information to make it more positive.

Apple vs Samsung
Apple and Samsung are suing
each other over copyright
infringement, with each
believing that it is in the right
and the competitor is in the
wrong.

Selective Retention
• Most consumers don’t remember much of the information to
which they are exposed, but they do retain information that
supports their attitudes and beliefs.
• Because of selective retention, consumers are likely to
remember good points about a product they like and forget
good points about competing products.

Subliminal Perception
• The selective perception mechanisms require consumers’
active engagement and thought.
• The topic of subliminal perception, the argument that
marketers embed covert, subliminal messages in ads or
packages and consumers are not consciously aware of these
messages, but yet they affect their behavior.

Learning
• Learning involves changes in behavior arising from
experience.
• A drive is a strong internal stimulus impelling action.
• Cues are minor stimuli that determine when, where, and how
a person responds.
• Discrimination means that the person has learned to
recognize differences in sets of similar stimuli and can adjust
responses accordingly.

Marketing Implications of Learning Theory
• Learning theory teaches marketers that they can build
demand for a product by associating it with strong drives,
using motivating cues, and providing positive reinforcement.
• A new company can enter the market by appealing to the
same drives that competitors use and by providing similar cue
configurations, because buyers are more likely to transfer
loyalty to similar brand (generalization); or the company
might design its brand to appeal to a different set of drives
and offer strong cue inducements to switch
(discrimination).

De Beers Diamonds in China
• The idea that diamond
symbolizes a lifetime of love
has taken root in China, a
country that traditionally
prefers gold and jade.
• Chinese consumers have
learnt to associate diamond
with love, and diamond rings
are now popular for
weddings.

De Beers Diamonds in China
• The younger generation of
Chinese are influenced by
Western lifestyle and culture
where diamonds are seen as
the most important symbol of
love and loyalty.
• Many Chinese are also buying
diamonds for investment
purposes.

Hedonic Bias
• The hedonic bias says people have a general tendency to
attribute success to themselves and failure to external
causes.
• Consumers are thus more likely to blame a product than
themselves, putting pressure on marketers to carefully
explicate product functions in well-designed packaging and
labels, instructive ads and Web sites, and so on.

Emotions
• Consumer response is not all cognitive and rational; much
may be emotional and invoke different kinds of feelings.
• A brand or product may make a consumer feel proud, excited,
or confident.
• An ad may create feelings of amusement, disgust, or wonder.

Marketers Impact on Emotions
Reckitt & Benckiser and Procter & Gamble—Both these companies launched advertising
approaches for Woolite and Tide, respectively, that tapped not into the detergents’ performance
benefits but into the emotional connection—and challenges—of laundry
Woolite’s style guide focuses on the emotional benefits of choosing and preserving the right look in
clothes for women.

Memory
• Cognitive psychologists distinguish between short-term memory
(STM)—a temporary repository of information, and
• Long-term memory (LTM)—a more permanent repository.
• The associative network memory model views LTM as a set of
nodes and links.
• Nodes are stored information connected by links that vary in
strength.
• Any type of information—verbal, visual, abstract, or contextual—can
be stored in the memory network.

Brand Associations
• Consumer brand knowledge is a node in memory with a
variety of linked associations.
• The strength and organization of these associations will be
important determinants of the information that can be
recalled about the brand.
• Brand associations consist of all brand-related thoughts,
feelings, perceptions, images, experiences, beliefs, attitudes,
and so on that become linked to the brand node.

Brand Association
Sangaria associates itself as
oxygen water by having the
scientific notation for oxygen
(O2) clearly written on the
bottle.

Marketing Applications of Consumer Brand
Knowledge
• Marketing can be seen as making sure that consumers have
the right types of product and service experiences such that
the right brand knowledge structures are created and
maintained in memory.
• Companies seek to create mental maps highlighting brand
beliefs in different product categories.

Figure 6.3: Hypothetical Mental Map of the Haier
Brand

Memory Processes
• Memory is a very constructive process, because we don’t
remember information and events completely and accurately.
• Often we remember bits and pieces and fill in the rest.
• Memory encoding describes how and where information gets
into memory.
• The more attention placed on the meaning of information
during encoding, the stronger the resulting associations in
memory will be.

Memory Retrieval
• Memory retrieval refers to how information gets out of
memory.
• Affected by three factors:
i. The presence of other product information in memory can
produce interference effects.
ii. The time between exposure to information and encoding has
been shown generally to produce only gradual decay.
iii. Information may be “available” in memory (potentially
recallable) but may not be “accessible” (unable to be recalled)
without the proper retrieval cues or reminders.

Pepsi
Pepsi’s branding strategy is to introduce a new can and bottle designs every few weeks with plans to
sell 20 or more new different ones annually in every market. This departure from marketing
convention comes as Pepsi believes that consumer attention span is getting shorter and consumers
are faced with a proliferation of brands competing for their time.
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The Buying Decision Process: The Five Stage Model
• The basic psychological processes we’ve reviewed play an important
role in consumers’ actual buying decisions.
• Marketers must understand every facet of consumer behavior.
• Table 6.1 provides a list of some key consumer behavior questions
in terms of “who, what, when, where, how, and why.”
• Smart companies try to fully understand the customers’ buying
decision process—all their experiences in learning, choosing, using,
and even disposing of a product.

Table 6.1: Understanding Consumer Behavior

The Buying Decision Process: The Five Stage Model
• Marketing scholars have developed a “stage model” of the
buying-decision process.
• The consumer passes through five stages: problem
recognition, information search, evaluation of alternatives,
purchase decision, and post-purchase behavior.
• Consumers do not always pass through all five stages in
buying a product. They may skip or reverse some stages.

Figure 6.4: Five-Stage Model of the
Consumer Buying Process

Problem Recognition
• The buying process starts when the buyer recognizes a
problem or need.
• The need can be triggered by internal or external stimuli.
• Marketers need to identify the circumstances that trigger
a particular need by gathering information from a number of
consumers.
• They can then develop marketing strategies that trigger
consumer interest.

Information Search
• An aroused consumer will be inclined to search for more
information. We can distinguish between two types of
arousal:
• The milder state is called heightened attention where a
person simply becomes more receptive to information about a
product.
• The second level is active information search where a
person looks for reading material, going online, etc. to learn
about the product.

Four Main Sources of Information Search
1. Personal—Family, friends, neighbors, acquaintances
2. Commercial—Advertising, Web sites, salespersons, dealers,
packaging, displays
3. Public—Mass media, consumer-rating organizations
4. Experiential—Handling, examining, using the product

Relative Importance of Information Sources
• The relative amount and influence of these sources vary with
the product category and the buyer’s characteristics.
• Generally speaking, the consumer receives the most
information about a product from commercial sources—that
is, marketer-dominated sources.
• However, the most effective information often comes from
personal sources or public sources that are independent
authorities.

Relative Importance of Information Sources
• Each information source performs a different function in
influencing the buying decision.
• Commercial sources normally perform an information
function, whereas personal sources perform a legitimizing or
evaluation function.

Search Dynamics
• By gathering information, the consumer learns about competing brands and
their features.
• See Figure 6.5.
• The first box shows the total set of brands available to the consumer.
• The individual consumer will come to know only a subset of these brands
(awareness set).
• Some brands will meet initial buying criteria (consideration set).
• As the consumer gathers more information, only a few will remain as
strong contenders (choice set). The consumer makes a final choice from
this set.

Figure 6.5: Successive Sets Involved in Consumer
Decision Making

Search Dynamics
• Marketers need to identify the hierarchy of attributes that
guide consumer decision making in order to understand
different competitive forces and how these various sets get
formed.
• This process of identifying the hierarchy is called market
partitioning.

Search Dynamics
• The hierarchy of attributes also can reveal customer segments.
• Buyers who first decide on price are price dominant; those who
first decide on the type of car (sports, passenger, station wagon)
are type dominant; those who first decide on the car brand are
brand dominant.
• Type/price/brand-dominant consumers make up a segment;
quality/ service/type buyers make up another.
• Each segment may have distinct demographics, psychographics,
and mediagraphics, and different awareness, consideration, and
choice sets.

Search Dynamics and Marketing Implications
• From Figure 6.5 it is important that a company seeks to
strategize to get its brand into the prospect’s awareness set,
consideration set, and choice set.
• The company must also identify the other brands in the
consumer’s choice set so that it can plan the appropriate
competitive appeals.
• In addition, marketers should identify the consumer’s
information sources and evaluate their relative importance.

Evaluation of Alternatives
• No single process is used by all
consumers, or by one consumer in
all buying situations.
• There are several processes, the
most current models of which see
the process as cognitively oriented
• The most current models see the
consumer forming judgments
largely on a conscious and rational
basis.

Consumer Evaluation Process
1. First, the consumer is trying to satisfy a need.
2. Second, the consumer is looking for certain benefits from
the product solution.
3. Third, the consumer sees each product as a bundle of
attributes with varying abilities for delivering the benefits.

The attributes of interest to buyers vary by product.
For example:
•Cameras—Picture sharpness, camera speed, camera size, price
•Hotels—Location, cleanliness, atmosphere, price
•Tires—Safety, tread life, ride quality, price

Example of Attributes in Consumer Evaluation
Sharp’s Healsio, a steam oven, reduces the fat
and salt in food while keeping its vitamin C.
Sharp found that mothers with small children and
elders with health needs were willing to spend
more money to benefit from the added values of
new products that would improve their health.
However, in other parts of Asia, the concern is still
more on price than product benefits.
In North America and Europe, Healsio’s benefits
are not so much its health qualities, but rather its
convenience. It can double as a microwave oven,
defroster, steamer, and grill.

Marketing Implications
• Consumers will pay the most attention to attributes that
deliver the sought-after benefits.
• The market for a product can often be segmented according
to attributes that are important to different consumer groups.

Beliefs and Attitudes
• Through experience and learning, people acquire beliefs and
attitudes.
• These in turn influence buying behavior.
• Belief—a descriptive thought that a person holds about
something.
• Attitude—a person’s enduring favorable or unfavorable
evaluation, emotional feeling, and action tendencies toward
some object or idea.

Attitudes
• Attitudes put people into a frame of mind: liking or disliking
an object, moving toward or away from it.
• Attitudes lead people to behave in a fairly consistent way
toward similar objects.
• Because attitudes economize on energy and thought, they
can be very difficult to change.
• A company is well-advised to fit its product into existing
attitudes rather than to try to change attitudes.

Cosmetic Surgery—Changes in Attitudes
• More teenagers in Singapore are
wanting to go for cosmetic
surgery.
• Several reasons account for the
change in attitude. With the
Internet, information about
various procedures is easily
available. Youths are also
influenced by the celebrities
they see in the media and want
to be like them.

Expectancy-Value Model
• The consumer arrives at attitudes toward various brands
through an attribute evaluation procedure, developing a set of
beliefs about where each brand stands on each attribute.
• The expectancy-value model of attitude formation posits
that consumers evaluate products and services by combining
their brand beliefs—the positives and negatives—according to
importance.
• Most consumers consider several attributes in their purchase
decisions.

Table 6.2: A Consumer’s Brand Beliefs about
Computers
109
Note: Each attribute is rated from 0 to 10, where 10 represents the highest level on that attribute.
Price, however, is indexed in a reverse manner, with a 10 representing the lowest price, because a
consumer prefers a low price to a high price.

Computations on Expectancy-Value
• Suppose the buyer assigned 40% of the importance to the
computer’s memory capacity, 30% to graphics capability,
20% to size and weight, and 10% to price.
• This computation leads to the following perceived values:
1. Computer A = 0.4(10) + 0.3(8) + 0.2(6) + 0.1(4) = 8.0
2. Computer B = 0.4(8) + 0.3(9) + 0.2(8) + 0.1(3) = 7.8
3. Computer C = 0.4(6) + 0.3(8) + 0.2(10) + 0.1(5) = 7.3
4. Computer D = 0.4(4) + 0.3(3) + 0.2(7) + 0.1(8) = 4.7
110
An expectancy-model formulation would predict that the buyer will favor computer A, which (at 8.0) has the
highest perceived value.

What could the manufacturer of Brand B do in order
to stimulate interest in the brand?
1. Redesign the computer—This technique is called real
repositioning.
2. Alter beliefs about the brand—This technique is called
psychological repositioning.
3. Alter beliefs about competitors’ brands—This strategy,
called competitive de-positioning, makes sense when buyers
mistakenly believe a competitor’s brand has more quality
than it actually has.

What could the manufacturer of Brand B do in order
to stimulate interest in the brand?
4. Alter the importance weights—The marketer could try to
persuade buyers to attach more importance to the attributes
in which the brand excels.
5. Call attention to neglected attributes—The marketer
could draw buyers’ attention to neglected attributes, such as
styling or processing speed.
6. Shift the buyer’s ideals—The marketer could try to
persuade buyers to change their ideal levels for one or more
attributes.

Influencing Consumer Attitudes
Consumer attitude towards
GOLD by Safi is optimized by its
adherence to Islamic beliefs,
the reminder of gold as a
traditional Malayan treatment
for beauty, and an endorsement
from the religious authority.

Purchase Decisions
• In the evaluation stage, the consumer forms preferences
among the brands in the choice set and may also form an
intention to buy the most preferred brand.
• In executing a purchase intention, the consumer may make
up to five sub-decisions:
i. Brand (brand A)
ii. Dealer (dealer 2)
iii. Quantity (one)
iv. Timing (weekend)
v. Payment method (credit card)

Non-Compensatory Models of Consumer Choice
• The expectancy-value model is a compensatory model, in
that perceived good things about a product can help to
overcome perceived bad things.
• But consumers often take “mental shortcuts” called
heuristics or rules of thumb in the decision process.
• With non-compensatory models of consumer choice,
positive and negative attribute considerations do not
necessarily net out.

1. With conjunctive heuristic method, the consumer sets a
minimum acceptable cutoff level for each attribute and
chooses the first alternative that meets this minimum.
2. With the lexicographic heuristic method, the consumer
chooses the best brand on the basis of its perceived most
important attribute.

3. With the elimination-by-aspects heuristic method, the
consumer compares brands on a attribute selected and
eliminates brands that do not meet minimum acceptable
cutoffs.
Consumers do not adopt only one type of choice rule and may
combine two or more decision rules.

Intervening Factors
• Even if consumers form brand evaluations, two general
factors can intervene between the purchase intention and the
purchase decision.
• See Figure 6.6.
• There are two main factors:
i. Attitude of others
ii. Unanticipated situational factors

Figure 6.6: Steps Between Evaluation
of Alternatives and a Purchase Decision

Attitude of Others
• The extent to which another person’s attitude reduces the
preference for an alternative depends on two things:
i. the intensity of the other person’s negative attitude toward the
consumer’s preferred alternative and
ii. the consumer’s motivation to comply with the other person’s
wishes.
• The more intense the other person’s negativism and the
closer the other person is to the consumer, the more the
consumer will adjust his or her purchase intention.

Attitude of Others
Wipro introduced the “cloth
feel” diapers to overcome the
attitude Indian grandmothers
have towards disposable
diapers and satisfy the needs of
comfort sought by modern
mothers.

Influence of “informediaries”
• Related to the attitudes of others is the role played by
infomediaries who publish their evaluations.
• Examples include Consumer Reports, which provides unbiased
expert reviews of all types of products and services;
professional movie, book, and music reviewers; customer
reviews of books and music on Amazon.com; and the
increasing number of chat rooms where people discuss
products, services, and companies.

Unanticipated Situational Factors
• The second factor is unanticipated situational factors that
may erupt to change the purchase intention.
• A consumer might lose her job, some other purchase might
become more urgent, or a store salesperson may turn her off.
• Preferences and even purchase intentions are not completely
reliable predictors of purchase behavior.

Perceived Risks
• A consumer’s decision to modify, postpone, or avoid a
purchase decision is heavily influenced by perceived risk.
• There are many types of risks that consumers may perceive
in buying and consuming a product.
• Six types of risks are discussed.

Types of Perceived Risks
1. Functional risk—The product does not perform up to
expectations.
2. Physical risk—The product poses a threat to the physical
well-being or health of the user or others.
3. Financial risk—The product is not worth the price paid.

Types of Perceived Risks
4. Social risk—The product results in embarrassment from
others.
5. Psychological risk—The product affects the mental well-being
of the user.
6. Time risk—The failure of the product results in an
opportunity cost of finding another satisfactory product.

Post-purchase Behavior
• After the purchase, the consumer might experience
dissonance about their purchase and be alert to information
that supports their decision.
• Marketing communications should supply beliefs and
evaluations that reinforce the consumer’s choice and help him
or her feel good about the brand.
• Marketers must monitor post-purchase satisfaction, post-purchase
actions, and post-purchase uses.

Post-purchase Satisfaction
• Satisfaction is a function of the closeness between
expectations and the product’s perceived performance.
• If the performance falls short of expectations the consumer
is disappointed.
• If the performance meets expectations the consumer is
satisfied.
• If the performance exceeds expectations the consumer is
delighted.

Post-purchase Actions
• A satisfied consumer is more likely to purchase the product
again and will also tend to say good things about the brand to
others.
• On the other hand, dissatisfied consumers may abandon or
return the product. They may take public action by
complaining to the company, going to a lawyer, or
complaining to other groups (such as business, private, or
government agencies).

Post-purchase Actions
• Private actions include making a decision to stop buying the
product (exit option) or warning friends (voice option).
• Post-purchase behavior will have implications for customer
relationship management (CRM).

Post-purchase Use and Disposal
• Marketers should also monitor how buyers use and dispose of
the product. A key driver of sales frequency is product
consumption rate.
• One potential opportunity to increase frequency of
product use is when consumers’ perceptions of their usage
differ from reality.
• Marketers also need to know how the consumer disposes of
the product once it is used.

Figure 6.7: How Customers Use or Dispose of
Products

Reminding Consumers on Replacements
Oral B toothbrushes come with color indicators to inform consumers when the bristles are worn off
and the toothbrushes need to be changed.

Product Disposal
• If consumers throw the product away, the marketer needs to
know how they dispose of it, especially if it can damage the
environment (as in the case with batteries, beverage
containers, and disposable diapers).
• Increased public awareness of recycling and ecological
concerns as well as consumer complaints need to be
considered.

Moderating Effects on Consumer Decision-Making
The manner or path by which a consumer moves through the
decision-making stages depends on several factors, including
the:
a. level of involvement; and
b. extent of variety-seeking.

Low-involvement Consumer Decision-making
• The expectancy-value model assumes a high level of
consumer involvement, or engagement and active processing
the consumer undertakes in responding to a marketing
stimulus.
• Elaboration Likelihood Model

Low-involvement Consumer Decision-making
• Describes how consumers make evaluations in both low and
high involvement circumstances.
– Central route
– Peripheral route
• Consumers follow the central route only if they possess
sufficient motivation, ability, and opportunity. If any of these
are lacking then the consumers tend to follow the peripheral
route.

Converting a Low-Involvement Product into One of
Higher Involvement
Techniques used by marketers include:
a. They can link the product to some involving issue.
b. They can link the product to some involving personal situation.
c. They might design advertising to trigger strong emotions
related to personal values or ego defenses.
d. They might add important features.

The Peripheral Route
• If, regardless of what the marketer can do, consumers still have low
involvement with a purchase decision, they are likely to follow the
peripheral route.
• Marketers must pay special attention to giving consumers one or
more positive cues that they can use to justify their brand choice.
• Brand familiarity can be important if consumers decide to just buy
the brand about which they have heard or seen the most.
• Frequent ad repetition, visible sponsorships, and vigorous PR are all
ways to enhance brand familiarity.

Variety-seeking Buying Behavior
• Some buying situations are characterized by low involvement
but significant brand differences.
• Brand switching occurs for the sake of variety rather than
dissatisfaction.

Kit Kat—Example of Variety Seeking Behavior
Japanese consumers, especially
the young, seek variety. This
led KitKat to introduce limited
edition flavors such as
Cantaloupe Melon and Koshian
Maccha (green tea with red
bean filling).

Market Leaders versus Challenger Firms
• The market leader and the minor brands in this product
category have different marketing strategies.
• The market leader will try to encourage habitual buying
behavior by dominating the shelf space with a variety of
related but different product versions, avoiding out-of-stock
conditions, and sponsoring frequent reminder advertising.
• Challenger firms will encourage variety seeking by offering
lower prices, deals, coupons, free samples, and advertising
that tries to break the consumer’s purchase and consumption
cycle and presents reasons for trying something new.

Behavioral Decision Theory and Behavioral
Economics
• As a result of low-involvement decision making and variety-seeking,
consumers don’t always process information or make
decisions in a deliberate, rational manner.
• One of the most active academic research areas in marketing
over the past three decades has been behavioral decision
theory (BDT).
• Behavioral decision theorists have identified many situations
in which consumers make seemingly irrational choices.

Table 6.3: Selected Behavioral Decision Theory
Findings

Decision Heuristics
• Other heuristics similarly come into play in everyday decision
making when consumers forecast the likelihood of future
outcomes or events.
a. The availability heuristic—Consumers base their predictions
on the quickness and ease with which a particular example of
an outcome comes to mind.
b. The representativeness heuristic—Consumers base their
predictions on how representative or similar the outcome is to
other examples.
c. The anchoring and adjustment heuristic— Consumers arrive
at an initial judgment and then adjust it based on additional
information.

Framing
• Decision framing is the manner in which choices are
presented to and seen by a decision-maker.
• Richard Thaler and Cass Sunstein show how marketers can
influence consumer decision making through what they call
the choice architecture—the environment in which
decisions are structured and buying choices are made.

Mental Accounting
• Researchers have found that consumers use mental
accounting when they handle their money.
• Mental accounting refers to the way consumers code,
categorize, and evaluate financial outcomes of choices.
• Formally, it is “the tendency to categorize funds or items of
value even though there is no logical basis for the
categorization, e.g., individuals often segregate their savings
into separate accounts to meet different goals even though
funds from any of the accounts can be applied to any of the
goals.

Core Principles of Mental Accounting
1. Consumers tend to segregate gains. When a seller has a
product with more than one positive dimension, it’s desirable
to have the consumer evaluate each dimension separately.
Listing multiple benefits of a large industrial product, for
example, can make the sum of the parts seem greater than
the whole.
2. Consumers tend to integrate losses. Marketers have a
distinct advantage in selling something if its cost can be
added to another large purchase. House buyers are more
inclined to view additional expenditures favorably given the
high price of buying a house.

Core Principles of Mental Accounting
3. Consumers tend to integrate smaller losses with larger
gains. The “cancellation” principle might explain why
withholding taxes from monthly paychecks is less aversive
than large, lump-sum tax payments—the smaller
withholdings are more likely to be absorbed by the larger
pay amount.
4. Consumers tend to segregate small gains from large
losses. The “silver lining” principle might explain the
popularity of rebates on big-ticket purchases such as cars.

Prospect Theory
• The principles of mental accounting are derived in part from
prospect theory.
• Prospect theory maintains that consumers frame their
decision alternatives in terms of gains and losses according to
a value function.
• Consumers are generally loss-averse. They tend to
overweight very low probabilities and underweight very high
probabilities.

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