CHAPTER

TEN
The Family and Its
Social Class Standing

Prepared by : -
Prof. Ashwin Santoki
“Naranlala School of Industrial Mgt. and Computer Science”
As You See It, What Is the Main
“Family Message” of This Ad?
It Reminds Parents of the Importance
of Creating “Quality Time.”
 The Changing U.S. Family
• Types of families
– Nuclear - is two parents and at least one child
– Extended - the household has at least one
grandparent
– Single-parent
• Changes in household spending patterns
There are changes that have an effect on spending
patterns. With more women working, many
households have double income. In addition, families
are shopping for time-saving products and services
since they have less time at home.
 The process by which
children acquire the skills,
Consumer
knowledge, and attitudes
Socialization
necessary to function as
consumers.

Parents teach their children basic values and modes of behavior.

These include moral and religious principles, as well as everyday
skills such as manners and speech, grooming, and interpersonal
skills.
Do parents teach children consumption skills? Absolutely, they
learn about spending versus savings, how to shop, and how to
make purchase decisions. Children today are exposed to
marketing messages at a very young age, especially through
television advertising and the Internet.
What Is the Name and Definition of
the Process Depicted in This Ad?
 Consumer Socialization - the Process by Which
Children Acquire the Skills, Knowledge, Attitudes, and
Experiences Necessary to Function as Consumers
 A Simple Model of the Socialization Process
It is interesting to
note that the arrows
run both ways from
the child to their
families and their
friends. When you
were a child, didn’t
you help out a family
member with
working a television
remote or told
someone the right
thing to say or do in
a given situation?
 Other Functions of the Family

• Economic well-being
• Emotional support
• Suitable family lifestyles

In addition to socialization , the

family provides other functions.
The family provides economic
security to its members,
emotional support, and a way to
share common goals and
experiences.
 Family Decision Making

• Dynamics of Husband-Wife
Decision Making
– Husband-Dominated
– Wife-Dominated
• Expanding Role of Children In Family Decision
Making
– Choosing restaurants and items in supermarkets
– Teen Internet mavens
– Pester power
 Family Decision Making
• Husbands and wives often need to make decisions together.
The way they balance their influence will differ as to whether
it is joint, single, or dominated by one member. The balance
between the husband and wife will differ from culture to
culture.
• Furthermore, kids are very involved in family decision making.
We are seeing an increase in this as kids are given more
responsibility and are exposed to more media. Because kids
are online so much, they are constantly finding information on
products that they will share with the family. And kids don’t
give up easily; when they want something they will ask many
times. We say kids have pester power because they don’t
give up and ask so many times.
Framework of 10-year-old Influencer
Here is a framework
that was built from a
study of how children
use strategies to
influence their parents
to purchase food. As
you can see, these kids
want to eat food that
other kids eat, they
want to eat in front of
the TV, and they want
to eat food that they
see advertised on
television.
 The Family Life Cycle

• Traditional Family Life Cycle

– Stage I: Bachelorhood
– Stage II: Honeymooners
– Stage III: Parenthood
– Stage IV: Postparenthood
– Stage V: Dissolution
• Modifications - the Nontraditional FLC
Marketers have long used the family life cycle, also known as FLC. It
gives us an idea of the stages that many families pass throughout their
life. The fact is that this traditional life cycle is only passed through by
a certain percent of families, so many modifications have been made
and a nontraditional family life cycle has been created.

In terms of the traditional FLC, we see the 5 stages. Stage I,

Bachelorhood, includes single men and women who have moved out
of their parents’ home and are living on their own. The next stage,
the Honeymooners, occurs immediately after marriage before the
arrival of the first child. They often have start-up expenses as they
establish a new home. Stage III, parenthood, occurs with the arrival
of the first child. In this stage, people’s financial status often changes.
Stage IV, postparenthood occurs when the children have left home.
This is also called the empty-nest stage and is a time when couples
have more time to themselves. The final stage, dissolution, occurs
with the death of one spouse. Many in this stage will remarry or
begin to live a more economical lifestyle.
 To Which Stage of the Family Life
Cycle Does This Ad Apply, and Why?
Bachelorhood – The Target Consumer
Is Not Yet Married
Which Subgroup of “Empty Nesters”
Does This Ad Most Likely Target?
 The ones who are would like to pursue
new interests and fulfill unsatisfied needs
 Nontraditional FLC Family Stages
Alternative FLC Stage Definition/Commentary
Childless couples Increasingly acceptable with more career-
oriented married women and delayed
marriages
Couples who marry later in life Likely to have fewer or no children
Couples with first child in late 30’s or later Likely to have fewer children. Want the
best and live quality lifestyle
Single parents I High divorce rate - about 50% lead to this
Single parents II Child out of married state
Single parents III Single person who adopts
Extended family Adult children return home. Divorced
adult returns home. Elderly move in with
children. Newlyweds live with in-laws.
Dual Spouse Work Involvement (DSWI)

This model of dual

spouse work
involvement takes into
account occupation status
and career commitment
of both spouses for
segmentation. It puts
together an 8-segment
schema that explains
attitudes, motivations,
and consumer spending.
 The division of
members of a society
into a hierarchy of
distinct status classes,
Social Class so that members of
each class have either
higher or lower status
than members of other
classes.
Social Class Measure and Distribution

SOCIAL CLASSES and PERCENTAGE

Upper 4.3%

Upper-middle 13.8%

Middle 32.8%

Working 32.3%

Lower 16.8%
 Social Class Measurement

• Subjective Measures
– individuals are asked to estimate their own social-
class positions (people estimate their own class)
• Objective Measures
– individuals answer specific socioeconomic
questions and then are categorized according to
answers
 Objective Measures
Single-variable Composite-variable
indexes indexes
• Occupation • Index of Status
• Education Characteristics
• Income • Socioeconomic
Status Score
For the single-variable indexes, occupation is commonly used. Education is often used
in combination with occupation or alone. A college degree is often a deciding factor in
evaluating one’s social class. Income is frequently used, although not all researchers
agree on it. Because two individuals will spend that income in different ways, they
have different values that reflect lifestyles of different social classes.

Because single variables are often too narrow for indexing social class, many
researchers will use composite variables. The Index of Status Characteristics takes
occupation, source of income, house type and quality of neighborhood into account.
The Socioeconomic Status Score, which is from the U.S. Bureau of the Census,
combines occupation, family income, and education level.
 Social Class Mobility

• Upward mobility
• Downward mobility
• Rags to riches?

Social class in the United States is not totally fixed. Although

America is known as the land of opportunity, there are currently
some signs of downward mobility where a family is not tending to
do better then the last generation. The rags to riches stories that
once occurred are fewer and further between.
 A composite
segmentation
strategy that uses
both geographic
variables (zip codes,
Geodemographic
Clusters
neighborhoods) and
demographic
variables (e.g.,
income, occupation)
to identify target
markets.
Prizm Clusters
 The Affluent Consumer
Affluent households are an especially attractive target to marketers
because they have a large share of discretional income.

• Growing number
of households can
be classified as
“mass affluent”
with incomes of at
least $75,000
• Some researchers
are defining
affluent to include
lifestyle and
psychographic
factors in addition
to income
 What Is the Name of the Segment Targeted by This
Ad, and Why Is the Appeal Shown Here Used?

This Ad was Used Because it is Effective for the

Affluent Consumer.
 What Is the Middle Class?
• The “middle” 50 percent of household
incomes - households earning between
$25,000 and $85,000
• The emerging Chinese middle class
• Moving up to more “near luxuries”
It is not easy to define the middle class, but we can categorize them
most easily by their incomes. We see that in certain countries,
especially China, there is a growing middle class who are driven by a
desire for social status and will purchase status symbols. As luxury
products become more affordable, middle-class consumers will be
drawn to purchasing them.
 The Working Class?

• Households earning $40,000 or less control

more than 30 percent of the total income in
the U.S.
• These consumers tend to be more brand loyal
than wealthier consumers.

The working class is a sizable part of the U.S.

population. Many companies target this group with
affordable options in food, clothing, and entertainment.
 The Techno Class
• Having competency with technology
• Those without are referred to as
“technologically underclassed”
• Parents are seeking computer exposure for
their children - Technology is becoming
increasingly important to adults and children
• Geeks now viewed as friendly and fun - very
involved in technology - , are seeing that they
are gaining popularity, both as adults and
teens.
In What Ways Have the Prestige and
Status of Geeks Been Changing?
 The Change is Due to the
Importance of Computers.
 Consumer Behavior and
Social Class
• Clothing, Fashion, and Shopping
• The Pursuit of Leisure
• Saving, Spending, and Credit
• Social Class and Communication

Social class is important to keep in mind for marketers.

Consumers of different social classes purchase clothes and spend
their leisure time with different activities. In addition, different
social classes tend to view savings vs. spending differently and
will view different television shows and visit different websites.
 CHAPTER
ELEVEN
Influence of Culture on
Consumer Behavior

Prepared by : -
Prof. Ashwin Santoki
“Naranlala School of Industrial Mgt. and Computer Science”
 To Which Cultural Value or Values Is
This Product’s Advertising Appealing?

Chapter Eleven Slide

Convenience in Food Preparation
 The sum total of learned
beliefs, values, and customs
that serve to regulate the
Culture consumer behavior of
members of a particular
society.

To understand culture, just think of the difference

between two societies. How do they think, believe,
and act differently? Even though many believe
culture is becoming less distinct from country to
country
 A Theoretical Model of Culture’s Influence
on Behavior

This theoretical model of culture’s influence on behavior gives us a sense of how

culture combines with personality traits to build our beliefs and values. This
forms our attitudes, which combine with social norms to determine how we
intend to behave, and consequently do behave, in given situations.
Lifestyle Matrix for Global Youth
Researches have developed
this matrix for ages 14-24.
The segments are as
follows:
1.The in-crowd is all about
privilege and reinforcement
2.Pop mavericks spread
word of mouth rapidly and
like individuality
3.Networked intelligentsia
are the hub of online social
networks and are creative
4.Thrill renegades are all
about infamy, adrenaline,
and anarchy
 Culture Satisfies Needs

• Food and Clothing

• Needs vs. Luxury

What kinds of needs does culture help satisfy? It helps

us decide where to eat, when to eat, and what to eat. It
helps us know which products we simply must have, like
a cell phone, and what products are a luxury, like a
private plane.
In Terms of “Culture,” Do You Consider This Product to
Be a “Good Morning” Beverage? Why or Why Not?
Many Will Say “NO” Due to Lack of Nutritional Value
and Competing Products (Coffee).
 Culture Is Learned
Issues • Enculturation
• Enculturation and – The learning of one’s
acculturation own culture
• Language and symbols • Acculturation
– The learning of a new or
• Ritual foreign culture
• Sharing of culture
We learn about our own culture from the time we are small children. Through both
informal and formal learning, we learn how to behave and the difference between right
and wrong. The learning of our own culture usually happens slowly over time. Quite often,
when someone moves, they must learn a new culture. This process of acculturation can be
very difficult and will differ based on age, interest in the culture, and desire to become part
of the new society. This web link gives you information on doing business in Japan and
some cultural issues, including etiquette and manners.
 Culture Is Learned
Issues • Without a common language
• Enculturation and ,shared meaning could not exist
acculturation • Marketers must choose
appropriate symbols in
• Language and advertising
symbols • Marketers can use “known”
• Ritual symbols for associations
• Sharing of culture

There is a strong symbolic nature to human language. We use symbols to

communicate with each other and marketers will use symbols to
communicate to their customers.
How Does a Symbol Convey the Product’s
Advertised Benefits?
They Provide Additional
Meaning to the Ad.
 Culture Is Learned
Issues • A ritual is a type of symbolic
• Enculturation and activity consisting of a series of
acculturation steps
• Rituals extend over the human
• Language and life cycle
symbols
• Marketers realize that rituals
• Ritual often involve products
• Sharing of culture (artifacts)

You can probably think of many rituals in which you have been involved –
birthday parties, weddings, graduations, or religious rites of passage. Many of
these rituals involved artifacts, objects that are important to the day. Some
rituals might even be informal, like poker night. Are there certain artifacts that
students absolutely must have? Food, perhaps, music or objects.
 Selected Rituals and Associated Artifacts
SELECTED RITUALS TYPICAL ARTIFACTS

Wedding White gown (something old, something new,

something borrowed, something blue)
Birth of child U.S. Savings Bond, silver baby spoon
Birthday Card, present, cake with candles
50th Wedding Catered party, card and gift, display of
anniversary photos of the couple’s life together

Graduation Pen, U.S. Savings Bond, card, wristwatch

Valentine’s Day Candy, card, flowers
New Year’s Eve Champagne, party, fancy dress
 Culture Is Learned
Issues • To be a cultural characteristic, a
belief, value, or practice must
• Enculturation and be shared by a significant
acculturation portion of the society
• Language and • Culture is transferred through
symbols family, schools, houses of
worship, and media
• Ritual
• Sharing of Culture

A culture can not just exist within one person. There must be a large group
which is involved, a significant portion of society.
Facial Beauty Ritual of a Young TV Advertising
Sales Representative
1. I pull my hair back with a headband.
2. I take all of my makeup off with L’Oreal eye makeup remover.
3. Next, I use a Q-tip with some moisturizer around my eyes to make sure
all eye makeup is removed.
4. I wash my face with Noxzema facial wash.
5. I apply Clinique Dramatically Different Lotion to my face, neck, and
throat.
6. If I have a blemish, I apply Clearasil Treatment to the area to dry it
out.
6. Twice weekly (or as necessary) I use Aapri Facial Scrub to remove dry
and dead skin.
7. Once a week, I apply Clinique Clarifying Lotion 2 with a cotton ball to
my face and throat to remove deep-down dirt and oils.
8. Once every three months, I get a professional salon facial to deep-clean
my pores.
 Culture is Dynamic
• Evolves because it fills needs
• Certain factors change culture
– Technology
– Population shifts
– Resource shortages
– Wars
– Changing values
– Customs from other countries
It is important for marketers to realize that culture is changing. The products
that fulfill needs, what is cool and in style, are constantly changing. Large
cultural shifts may occur due to events that affect society. Certain cultures
would like to change. For example, this is a link to changing the drinking
culture at colleges.
 The Measurement of Culture

1. Content Analysis
2. Consumer Fieldwork
3. Value Measurement
Instruments
 A method for
systematically analyzing
the content of verbal
and/or pictorial
Content
communication. The
Analysis
method is frequently
used to determine
prevailing social values
of a society.
Researchers can look at magazines, websites, television
commercials, and even blogs to see what changes might
be occurring and what values are important.
 Which Cultural Value
Is Portrayed, and How So?
Progress – The Fridge has
Superior Design
 Which Cultural Value
Is This Ad Stressing, and How So?
Fitness and Health –
Low Calorie
 Consumer Fieldwork

• Field Observation
– Natural setting
– Subject unaware
– Focus on observation of behavior
• Participant Observation
 Value Measurement Survey Instruments

Rokeach Value Values and

List of Values (LOV)
Survey (RVS) Lifestyles (VALS)
• A self-administered • A value • A value
inventory measurement measurement
consisting of instrument that based on two
eighteen asks consumers to categories: self-
“terminal” values identify their two definition and
(i.e., personal most important resources
goals) and eighteen values from a
“instrumental” nine-value list that
values (i.e., ways of is based on the
reaching personal
terminal values of
goals)
the Rokeach Value
Survey
 Scale to Measure Attitude
Toward Helping Others

Attitude toward helping others (AHO)

• People should be willing to help others who are
less fortunate
• Helping troubled people with their problems is
very important to me
• People should be more charitable toward others in
society
• People in need should receive support from others
 CHAPTER
TWELVE
Subcultures and
Consumer
Behavior

Prepared by : -
Prof. Ashwin Santoki
“Naranlala School of Industrial Mgt. and Computer Science”
 Why Is State Farm Running Magazine
Ads in Spanish? At Whom Are These Ads Directed?
To Build their Market by Reaching the
Hispanic American Consumer
 A distinct cultural group
that exists as an
Subculture identifiable segment
within a larger, more
complex society.
Relationship Between Culture and
Subculture
Examples of Major Subcultural Categories

CATEGORIES EXAMPLES
Nationality Greek, Italian, Russian
Religion Catholic, Hindu, Mormon
Geographic region Eastern, Southern, Southwestern

Race African American, Asian, Caucasian

Age Teenagers, Xers, elderly

Gender Female, male
Occupation Bus driver, cook, scientist
Social class Lower, middle, upper
 Nationality Subculture - Hispanic

• Stronger preference for well-established

brands
• Prefer to shop at smaller stores
• Some are shifting food shopping to non-
ethnic American-style supermarkets
• Youths are more fashion conscious than
non-Hispanic peers
 Why Is Days Inn Running Ads in Spanish, and
Who Are the Consumers Targeted by Such Ads?
Because Hispanic Americans who Speak Spanish as a First
Language Tend to Prefer Spanish-Language Advertising
 Religious Subcultures

• 200+ organized religious groups in the U.S.

• Primary organized faiths include:
– Protestant denominations
– Roman Catholicism
– Islam
– Judaism
• Consumer behavior symbolically and ritualistically
associated with the celebration of religious
holidays.
 Regional Subcultures

• Many regional differences exist in

consumption behavior
– Westerners have a mug of black coffee
– Easterners have a cup of coffee with milk and
sugar
– White bread is preferred in the South and
Midwest
– Rye and whole wheat are preferred on the East
and West coasts
 What Are the
Strategic Goals of This Ad?
This Ad is Placed in “Black Media” which is Very
Important to Many African Americans.
 Major Racial Subcultures
African American
• Prefer leading brands over private-label
brands
• Brand loyal
• Higher than average trips to grocery store
and higher spending
• Spend more then other segments on
telephone services
 Major Racial Subcultures
Asian American
• Fastest growing racial segment
• Diverse group including 6 major ethnicities:
– Chinese, Filipino, Indian, Vietnamese, Korean,
and Japanese
• 95% live in metropolitan areas and business
ownership is high
 Major Age Subcultures

Generation Generation Baby

Seniors
Y X Boomers

Chapter Twelve Slide

 Generation Y

• According to sources, born 1977-1994 OR

1982-2000
• Three groups
– Gen Y Adults – 19-28
– Gen Y Teens – 13-18
– Gen Y Tweens 8-12
• Twixters – 21-29 and live with parents

Chapter Twelve Slide

 Generation X

• Born between 1965 and 1979

• Also referred to as Xers, busters, or slackers
• Do not like labels, are cynical, and do not want
to be marketed to
 Baby Boomers

• Born between 1946 – 1964

• More than 40 percent of the adult population
• Motivated consumers
• Not anxious to retire and handle it as:
– Opportunity for a new start
– A continuation of preretirement life
– Unwelcome disruption
– Transition to old age
 Older Consumers

• Roughly 65 years and older

• Growing segment due to better medical care,
declining birthrate and the aging of the large
baby boomer segment
• Three segments by age
– The Young-Old (65-74)
– The Old (75-84)
– The Old-Old (85 and older)
 Issues in Understanding Gender as a
Subculture
• Sex Roles and Consumer Behavior
– Masculine vs. Feminine Traits
• Consumer Products and Sex Roles
• Women as depicted in Media
 Working Women

• Segments of ALL women

– Stay-at-home
– Plan-to-work
– Just-a-job working
– Career-oriented working
 Marketers should strive
to understand how
Subcultural multiple subcultural
Interaction memberships jointly
influence consumers
behavior
 CHAPTER
THIRTEEN
Cross-Cultural
Consumer Behavior:
An International
Perspective
Prepared by : -
Prof. Ashwin Santoki
“Naranlala School of Industrial Mgt. and Computer Science”
 The Imperative to Be Multinational

• Global Trade
Agreements
– EU
– NAFTA
• Winning Emerging
Markets
• Acquiring Exposure to
Other Cultures
• Country-of-origin Effects
 Country of Origin Effects:
Positive
• Many consumers may take into consideration the country of
origin of a product.
• Country-of-origin commonly:
– France = wine, fashion, perfume
– Italy = pasta, designer clothing, furniture, shoes, and sports cars
– Japan = cameras and consumer electronics
– Germany = cars, tools, and machinery

Consumers will differ in their perceived image of a product based on

the country of origin (COO). COO often makes it easier for a
consumer to make a decision. For example, it might be easier to pick
a wine if you just choose a French wine because you know France is
known for its wine.
 Country of Origin Effects:
Negative
• Some consumers have animosity toward a country
– People’s Republic of China has some animosity to Japan
– Jewish consumers avoid German products
– New Zealand and Australian consumers boycott French
products
There are some groups of consumers which can be
labeled high-animosity consumers when considering
country of origin. The Chinese are reacting to their
occupation in WWII by Japan, the Jewish consumers to
the Holocaust, and some New Zealand and Australian
consumers to France’s nuclear tests in the South Pacific.
 Why Do Most Global
Airlines Stress Pampering
Business Travelers in Their Ads?
 Upscale International Business
Travelers Share Much in Common.
 Other Country-of-Origin Effects

• Mexican study uncovered:

– Country-of-design (COD)
– Country-of-assembly (COA)
– Country-of-parts (COP)
A Mexican study decomposed COO into these three entities.
Origin is now further broken into where the product was
designed, assembled, and/or where the raw materials are
produced. The results of the study showed differences
between Mexicans and Americans and differences in age in
their country-of-origin effects. On the next slide, you can
see a model of COD and COM.
Conceptual Model of COD and COM
 The effort to
determine to what
Cross-Cultural
extent the
Consumer
consumers of two
Analysis
or more nations are
similar or different.

Cross-cultural consumer analysis, the similarity and

differences between consumers in several nations, is
important when deciding whether or not to enter a
foreign market. The analysis carefully considers the
psychological, social, and cultural similarities and
differences among people.
 Cross-Cultural Consumer Analysis
Issues • The greater the similarity
between nations, the
• Similarities and
more feasible to use
differences among
relatively similar marketing
people
strategies
• The growing global • Marketers often speak to
middle class the same “types” of
• The global teen market consumers globally
The more similar two nations, the more likely the marketer can use similar marketing
• Acculturation
strategies.

As a basis of similarity, marketers often look to see if a country is more collective in its
culture vs. individualistic. This is really the difference between a “we” culture and an “I”
culture. In a few slides, you can see detailed differences between a Chinese and an
American consumer.
 Comparisons of Chinese and American
Cultural Traits
• Chinese Cultural Traits • American Cultural Traits
• Centered on Confucian • Individual centered
doctrine • Emphasis on self-
• Submissive to authority reliance
• Ancestor worship • Primary faith in
• Values a person’s duty rationalism
to family and state • Values individual
personality
 Cross-Cultural Consumer Analysis

• Growing in Asia, South

Issues America, and Eastern
• Similarities and Europe
differences among • Marketers should focus
people on these markets
• The growing global The middle class will grow globally with the
middle class largest growth coming from China and
India. This creates significant opportunity
• The global teen market to marketers who provide products and
services for this middle class. In some
• Acculturation countries, the middle class is very large.
South Korea is considered to have more
than 90 percent of its population as middle
class.
 Cross-Cultural Consumer Analysis
• There has been growth in an
Issues affluent global teenage and
young adult market.
• Similarities and • They appear to have similar
differences among interests, desires, and
people consumption behavior no
• The growing global matter where they live.
middle class
The interesting thing about the
• The global teen market teen market is the similarities
teens share even when they live
• Acculturation in vastly different countries.
Marketers realize that teens in
most countries value their cell
phone and online sources.
 Cross-Cultural Consumer Analysis

• Marketers must learn

Issues everything that is
relevant about the
• Similarities and
usage of their product
differences among
and product categories
people
in foreign countries
• The growing global
middle class
• The global teen market
• Acculturation
 Research Issues in Cross-Cultural Analysis
FACTORS EXAMPLES
Differences in language and meaning Words or concepts may not mean the
same in two different countries.

Differences in market segmentation The income, social class, age, and sex of
opportunities target customers may differ dramatically
in two different countries.

Differences in consumption patterns Two countries may differ substantially in

the level of consumption or use of
products or services.

Differences in the perceived benefits of Two nations may use or consume the
products and services same product in very different ways.
 (continued)
FACTORS
Differences in the criteria for evaluating
products and services
Differences in economic and social
conditions and family structure
Differences in marketing research and
conditions
Differences in marketing research
possibilities
EXAMPLES
The benefits sought from a service may
differ from country to country.
The “style” of family decision making
may vary significantly from country to
country.
The types and quality of retail outlets
and direct-mail lists may vary greatly
among countries.
The availability of professional consumer
researchers may vary considerably from
country to country.
 Alternative Multinational Strategies:
Global Versus Local
• Favoring a World Brand
• Are Global Brands Different?
• Multinational Reactions to Brand Extensions
• Adaptive Global Marketing
• Frameworks for Assessing Multinational Strategies
Some marketers will argue that since people are becoming
more alike in so many countries, that one marketing
strategy, with some small adjustments in language, are cost
effective and a better idea. Other marketers believe there
are national borders and that marketing strategies must stay
local.
 Products that are
manufactured, packaged,
World and positioned the same
Brands way regardless of the
country in which they are
sold.

World brands are often created with very high-end

products targeted to an affluent market. But beyond this,
other marketers, including P&G, have moved to a world
brand for a small percent of their product portfolio.
Why Does One of the World’s Most Highly Regarded
Wristwatch Brands Use a Single Global Advertising
Strategy (Only Varying the Language)?
They Speak to Them in Their Own Language to
Maximize their “Comfort Zone.”
Cross-Border Diffusion of Popular Culture
 Are Global Brands Different?
• According to a survey – yes
• Global brands have:
– Quality signal - Because a brand is global, consumers
worldwide must believe in it so it must be of good quality.
– Global myth - The global myth characteristic is related to
how consumers feel about themselves. The global brands
make them feel like a citizen of the world, whereas a local
brand gives them less power and identity.
– Social responsibility - global brands tend to show more
social responsibility than local brands. In part because of
their sales revenue and their investment in many
countries, they are viewed as more socially responsible.
 Multinational Reactions to
Brand Extensions
• A global brand does not always have success
with brand extensions
• Example Coke brand extension – Coke
popcorn
– Eastern culture saw fit and accepted the brand
extension
– Western culture did not see fit
 Adaptive Global Marketing

• Adaptation of advertising message to specific

values of particular cultures
• McDonald’s uses localization
– Example Ronald McDonald is Donald McDonald in
Japan
– Japanese menu includes corn soup and green tea
milkshakes
• Often best to combine global and local
marketing strategies
 Framework for Assessing
Multinational Strategies
• Global
• Local
• Mixed
 A Framework for Alternative Global
Marketing Strategies
COMMUNICATON
STRATEGY

PRODUCT STANDARDIZED LOCALIZED

STRATEGY COMMUNICATIONS COMMUNICATIONS

STANDARDIZED Global strategy: Mixed Strategy:

PRODUCT Uniform Product/ Uniform Uniform Product/
Message Customized Message

LOCALIZED Mixed strategy: Local Strategy:

PRODUCT Customized Product/ Customized Product/
Uniform Message Customized Message
The two main areas a marketer must consider in localized
marketing strategies are their product and communications
strategy.

Can they sell the same product in each country or do local

differences require a localized product?

Food products often need to be localized as countries differ

in their response to such flavors as spiciness, saltiness,
sweetness, and use of ingredients.

Product standardization works well on technical products.

The localization of the message is a decision that is distinct
from that of the product. It will depend heavily on language
issues and differences in involvement level of the product.
 Cross-Cultural
Psychographic Segmentation
• The only ultimate truth possible is that
humans are both deeply the same and
obviously different.
This is the best way of looking at global marketing, by
examining psychographic groups. For example, the
percent of the U.S. female population that works outside the
home is the same as the percent of the Japanese female
population. But when we look at the psychographics of
these groups, we find that they have very different
consumer behavior and attitudes to certain products.
 Six Global Consumer Segments

Strivers Devouts Altruists

Fun
Intimates Creatives
Seekers
After extensive research of 35,000 customers in 35 countries,
researchers created these six global value groups or
segments. The strivers are ambitious and materialistic, the
devouts responsible and respectful, the altruists unselfish in
their concern for others, the intimates focus on social
relationships, the fun seekers are young in age and outlook
and value a good time, and the creatives seek knowledge
and have interests in books and new media.
 CHAPTER
FOURTEEN
Consumers and
the Diffusion of
Innovations

Prepared by : -
Prof. Ashwin Santoki
“Naranlala School of Industrial Mgt. and Computer Science”
What Is Shown or Stated in This Ad That Is Designed
to Attract Consumers to This New Product?
New Flavor
 Diffusions of Innovation

• How are new products and services

accepted?
consumers’ acceptance of new products, also called the
diffusion of innovation. The products can be new to the
world or can be smaller changes, such as a new flavor for
an existing chewing gum.
 The process by which the
acceptance of an
innovation is spread by
Diffusion
communication to
Process
members of a social
system over a period of
time.

The diffusion process concerns the spread of the new

product or service to the members of society. It has four
important elements, including the innovation, the
channels of communication, the social system, and time.
 Elements of the Diffusion Process

The Innovation

The Channels of Communication

The Social System

Time
 1. The Innovation

• Firm-oriented definitions
– Product is “new” to the company
• Product-oriented definitions
– Continuous
– Dynamically continuous
– Discontinuous
 1. The Innovation
• Innovation is often defined in terms of the firm, the product, the
market, or the consumer. A firm-oriented definition looks from the
perspective of the company and asks whether the product is new to
the firm.

• The product-oriented definitions of innovation can be put in three

classes. A continuous innovation tends to be a small change. It
does not really change the consumers’ pattern. A dynamically
continuous innovation is somewhat more disruptive. You continue
to do something you have done before, but there are often changes
in your methods and style. Most extreme is a discontinuous
innovation, where the consumer adapts to an entirely new way of
doing something. The iPod is a good example of discontinuous
innovation when you compare it to the tape deck or handheld CD
player.
What Kind of Innovation Is Shown
Here, and Why?
Continuous Innovation – The Product
is Modified
 The Innovation

• Market-oriented definitions
– Based on consumer exposure
• Consumer-oriented definitions
– Consumer judges it as “new”
A market-oriented definition is based on how much consumers
see and know about the new product. It is new from a market-
oriented perspective if it has been purchased by very few people
and has only been on the market for a short time.
The consumer-oriented definition is seen through the
interpretation of the consumer themselves. Do they see it as
new? This web link brings you to Amazon’s kindle. E-book
readers have been out for some time, but many see this as the
first to really have a chance in the market.
 The Innovation
Product Characteristics
• Degree to which consumers consider it superior
Relative Advantage to existing substitutes

• Degree to which consumers feel it is consistent

Compatibility with their present needs, values, and practices

• The degree to which it is difficult to understand or

Complexity use

• The degree to which it can be tried on a limited

Trialability basis

• The degree to which its benefits can be observed,

Observability imagined, or described
Developing a Marketing Strategy for Diffusing
Innovations
 2. Channels of Communication

• Channels of communication
– Marketer to consumer
– Consumer to consumer
– Influential impersonal sources
It is one thing to design and manufacture an innovative
product and yet another to have consumers aware and
interested in the product. The marketer must develop
strategies to inform the marketplace and to have people in
the market, especially those who have purchased the
product or are influential, to talk and recommend the new
product.
 3.The Social System
• Modern social systems accept more innovation due to
their:
– Positive attitude toward change
– Advanced technology and skilled labor force
– Respect for education and science
– Emphasis on rational and ordered social relationships
– An outreach perspective where members interact with
outsiders
– A system where members can see themselves in different roles
A social system has a large impact on the diffusion of innovation.
A marketer is more able to reach a small and more closely knit
social system. Furthermore, the tighter group is more likely to
discuss your product.
 4. Time

• Purchase Time
• Adopter Categories
• Rate of Adoption
These are the three main issues in the importance of time
in the diffusion process. Purchase time can differ when we
consider the differences in complexity in the consumer
decision process. Some of the adopter categories will
accept or try the new product faster than other categories.
The time it takes for each consumer to adopt a product
influences the time for the overall adoption process.
 Adopter Categories

Category 2 – Category 3 – Category 4 –

Category 1 - Category 5 –
Early Early Late
Innovators Laggards
adopters Majority Majority

Members of
Second half
the 1st ½ of
Will buy mini of the “mass Very last to
the “mass
First to buy netbook market” who purchase the
market” who
the mini shortly after would mini
would
netbook its purchase the netbook, if
purchase the
introduction mature mini at all
mini
netbook
netbook
Diffusion Curves for Adopter Categories
 Rate of Adoption
Product Number of years
• How long does it
Pager 41
take a new
Telephone 38
product to be
Cable television 25
adopted by the
Fax machine 22
members of a
VCR 9
social system?
Cell pone 9

PC 7

Time Required for Electronic Products to

Penetrate 10 percent of UK market
Table 14.3
 The stages through
which an individual
consumer passes in
Adoption arriving at a decision to
Process try (or not to try), to
continue using (or
discontinue using) a new
product.
 Stages in Adoption Process
NAME OF STAGE WHAT HAPPENS DURING THIS EXAMPLE
STAGE

Awareness Consumer is first exposed to the Eric sees an ad for a 23-inch thin LCD
product innovation. HDTV in a magazine he is reading.

Interest Consumer is interested in the
product and searches for
additional information.
Evaluation Consumer decides whether or
not to believe that this product
or service will satisfy the need –
a kind of “mental trial.”
Eric reads about the HDTV set on the
manufacturer’s Web site and then goes
to an electronics store near his
apartment and has a sales person show
him the unit.
After talking to a knowledgeable friend,
Eric decides that his TV will fit nicely on
top of the chest in his bedroom. He also
calls his cable company and finds out
that he can exchange his “standard”
cable box at no cost for an HDTV cable
box.
 Stages in Adoption Process

NAME OF STAGE WHAT HAPPENS DURING THIS EXAMPLE

STAGE

Trial Consumer uses the product on Since the HDTV set cannot be “tried”
a limited basis like a small tube of toothpaste, Eric buys
the TV at this local electronics store on
his way home from work. The store
offers a 14-day full refund policy.
Adoption If trial is favorable, consumer Eric loves his new HDTV set and expects
(Rejection) decides to use the product on a many year of service from it.
full, rather than a limited basis –
if unfavorable, the consumer
decides to reject it.
 The Consumer Innovator
• The earliest purchasers of a new product
• Tend to have higher level of:
– Education
– Social interaction
– Opinion leadership
– Venturesomeness
– Social Status

The consumer innovator is very important to a marketer.

Furthermore, these individuals tend to have very specific personality
traits and social standing characteristics. This web link brings you to a
web site often visited by fashion innovators. The products on this site
tend to be very expensive, which could tie to higher incomes from
educational levels.
Cosmopolitan and Non Cosmopolitan
Types
 The Consumer Innovator

• Interest in product category- They may buy

magazines based around these products or
constantly visit retailers, websites, and blogs
devoted to the sources.
• Opinion leader
 The Consumer Innovator
• Personality traits
– Perceived risk and venturesomeness
– Purchase and consumption characteristics
– Media habits
The consumer innovators will tend to share some characteristics. Three
of these are worth bringing to special attention. If a consumer tends to
have lower perceived risk, they are more apt to try a new product.
Venturesomeness, a related concept to risk as it is a measure of the
consumer's willingness to accept risk for new products, could also be a
signal of an innovator.
There are certain purchase and consumption characteristics of an
innovator. They tend to be less brand loyal, are deal prone, and are heavy
users of the product category in which they innovate. Finally, their media
habits show us they have a greater total exposure to magazines, especially
those involved in the category where they innovate.
 The Consumer Innovator

• Social characteristics
• Demographic
characteristics

Innovators tend to be more socially accepted and

involved than noninnovators. They belong to more
groups and are more involved in those groups. In
addition, they tend to be more educated, younger, and
professionals.
Comparative Profiles of the Consumer Innovator and
Noninnovator
Characteristic Innovator Noninnovator
Social Characteristics

Social integration More Less

Social striving More Less

Group memberships More Less

Demographic Characteristics

Age Younger Older

Income Higher Lower

Education More Less

Occupational status Higher Lower

 Are There Generalized
Consumer Innovators?
• Domain-specific vs. global innovativeness
• Technology and innovators
Researchers have not found that innovators tend to exist
across categories – they find more likely that a person is an
innovator for technology but not fashion or cars. The only
exception might be that there is a generalized “high-tech”
innovator known as a change leader. Their innovation will
tend to run across products, such as computers, cell
phones, and faxes. There is another group called
technophiles who tend to purchase technologically-
advanced products soon after they are introduced to the
market.
 CHAPTER
FIFTEEN
Consumer
Decision Making
and Beyond

Prepared by : -
Prof. Ashwin Santoki
“Naranlala School of Industrial Mgt. and Computer Science”
What Would a Pet Owner Need to Know in Order to
Make a Decision About Buying Pet Insurance?
Do I Need It? How Do I Get More
Information?
 Levels of Consumer Decision Making

• Extensive Problem Solving

– A lot of information needed
– Must establish a set of criteria for evaluation
• Limited Problem Solving
– Criteria for evaluation established
– Fine tuning with additional information
• Routinized Response Behavior
– Usually review what they already know
 Levels of Consumer Decision Making
Not all consumer decision-making situations are the same
and marketers generally put them into these three
groups. At one extreme is extensive problem solving
which usually involves a lot of information, whereas
routinized response behavior usually requires little or no
information. Limited problem solving lies in the middle
of these two extremes where new information is often
added and a criterion for evaluation is formed.
Consumers tend to have little experience with the
product category when engaging in extensive problem
solving as opposed to being very familiar with a
routinized purchase.
Models of Consumers: Four Views of Consumer
Decision Making

• An Economic View - In an economic view, there is perfect

competition and the consumer makes rational decisions.
They are aware of all choices, can rank their benefits, and
can choose the best alternative. Unfortunately for many,
the perfect consumer does not exist.
• A Passive View - the passive view, in which the consumer
is passive to the marketer in making their decisions
• A Cognitive View - the consumer plays no role as they
would in a cognitive view where the consumer is a
thinking problem solver
• An Emotional View
 Consumer
Decision Making
 Consumer Decision Making
The first includes all the external influences on a
consumer. This includes sociocultural factors as
discussed in previous chapters, as well as the
marketer’s efforts. The second section includes the
individual’s consumer decision making, which
occurs in the three stages of need recognition,
prepurchase search, and evaluation of alternatives.
This process is guided by psychological factors and
the consumer’s experiences. The third major
section includes the actual purchase and how the
consumer feels and what they think after they
purchase the product.
 1. Process - Need Recognition

• Usually occurs when consumer has a

“problem”
• Need recognition styles
– Actual state
– Desired state

A consumer usually realizes they have a need

when they have a problem. Maybe they are
hungry or are having friends over for dinner on
Saturday night so they seek out choices in food.
 2. Prepurchase Search

• Begins with internal search and then moves to

external search
• The impact of the Internet
• There are many factors that increase search
– Product factor
– Situational factors
– Social acceptability
– Consumer factors
 3. Evaluation of Alternatives

• Evoked set
• Criteria used for evaluating brands
• Consumer decision rules
• Decisions by functionally illiterate population
• Going online for decision-making assistance
• Lifestyles as a consumer decision strategy
• Incomplete information
• Applying decision rules
• Series of decisions
• Decision rules and marketing strategy
The Evoked Set
 Issues in Alternative Evaluation

• Evoked Set
• Criteria used for evaluating brands
• Consumer decision rules and their application
• Decisions by functionally illiterate population
• Going online for decision-making assistance
• Lifestyles as a consumer decision strategy
• Incomplete information
• Applying Decision Rules
• Series of decisions
• Decision rules and marketing strategy
 Consumer Decision Rules

• Compensatory
– evaluates each brand in terms of each relevant
attribute and then selects the brand with the highest
weighted score.
• Noncompensatory
– positive evaluation of a brand attribute does not
compensate for a negative evaluation of the same
brand on some other attribute
– Conjunctive, disjunctive, or lexicographic
These rules are also referred to as heuristics, decision strategies, and
information-processing strategies. They are the procedures that a
consumer uses to make their brand choices. If they are compensatory,
the consumer will evaluate each attribute and add them up for the
brand. The belief is that the consumer will choose the brand with the
highest rating.

In a noncompensatory decision, the consumer does not balance

positive attributes against negative, but every attribute must reach a
minimum level or it will be disqualified.

In a conjunctive rule, the consumer will establish a minimally

acceptable cutoff point for each attribute evaluated. Brands that fall
below the cutoff point on any one attribute are eliminated from further
consideration. In a disjunctive rule, the consumer will establish a
minimally acceptable cutoff point for each relevant product attribute.
In a lexicographic rule, a consumer will first rank product attributes in
terms of importance, then compare brands in terms of the attribute
considered most important.
 Hypothetical Use of Decision Rules

Decision Rule Mental Statement

Compensatory rule I selected the netbook that came out best when I
balanced the good ratings against the bad ratings

Conjunctive rule I selected the netbook that had no bad features

Disjunctive rule I picked the netbook that excelled in at least one

attribute
Lexicographic rule I looked at the feature that was most important to
me and chose the netbook that ranked highest on
that attribute
Affect referral rule I bought the brand with the highest overall rating
 Issues in Alternative Evaluation

• Evoked Set
• Criteria used for evaluating brands
• Consumer decision rules and their application
• Decisions by functionally illiterate population
• Going online for decision-making assistance
• Lifestyles as a consumer decision strategy
• Incomplete information
• Applying Decision Rules
• Series of decisions
• Decision rules and marketing strategy
The Decision Process for Functionally Illiterate
Consumers
 Issues in Alternative Evaluation

• Evoked Set
• Criteria used for evaluating brands
• Consumer decision rules and their application
• Decisions by functionally illiterate population
• Going online for decision-making assistance
• Lifestyles as a consumer decision strategy
• Incomplete information
• Applying Decision Rules
• Series of decisions
• Decision rules and marketing strategy
 Coping with Missing Information

• Delay decision until missing information is

obtained
• Ignore missing information and use available
information
• Change the decision strategy to one that
better accommodates for the missing
information
• Infer the missing information
 Issues in Alternative Evaluation
• Evoked set
• Criteria used for evaluating brands
• Consumer decision rules and their application
• Decisions by functionally illiterate population
• Going online for decision making assistance
• Lifestyles as a consumer decision strategy
• Incomplete information
• Applying Decision Rules
• Series of decisions
• Decision rules and marketing strategy
 4. Output of Consumer Decision
Making
• Purchase behavior
– Trial purchases
– Repeat purchases
– Long-term commitment
There are three types of purchases consumers make – trial,
repeat, and long-term commitment. Trial includes the first time
a consumer buys a product when there is potential for repeat
purchases. This is their attempt to evaluate the product to see if
they really like it. If so, there will be repeat purchases over
time. Products which are rarely purchased and kept for a long
time are different then those trial-and-repeat purchases. These
long-term commitment products include cars, appliances, and
housing.
 Postpurchase Evaluation

• Actual Performance Matches Expectations

– Neutral Feeling
• Actual Performance Exceeds Expectations
– Positive Disconfirmation of Expectations
• Performance Is Below Expectations
– Negative Disconfirmation of Expectations
 Gifting Behavior

Gifting is an act of
symbolic
communication, with
explicit and implicit
meanings ranging from
congratulations and
love, to regret,
obligation, and
dominance.
Reported Circumstances and Motivations
for Self-Gift Behavior

CIRCUMSTANCES MOTIVATIONS

Personal accomplishment To reward oneself

Feeling down To be nice to oneself
Holiday To cheer up oneself
Feeling stressed To fulfill a need
Have some extra money To celebrate
Need To relieve stress
Had not bought for self in a while To maintain a good feeling
Attainment of a desired goal To provide an incentive toward a goal
Others Others
 Gifting Relationships
GIFTING DEFINITION EXAMPLE
RELATIONSHIP

Intergroup A group giving a gift to A Christmas gift from one family to

another group
Intercategory An individual giving a gift
to a group or a group
giving a gift to an
individual
Intragroup A group giving a gift to
itself or its members
Interpersonal An individual giving a gift
to another individual
another family
A group of friends chips in to buy a new
mother a baby gift
A family buys a VCR for itself as a
Christmas gift
Valentine’s Day chocolates presented from
a boyfriend to a girlfriend

Intrapersonal Self-gift A woman buys herself jewelry to cheer

herself up
 Consuming and Possessing

• Consumers find pleasure in possessing,

collecting, or consuming
• Products have special meanings and
memories
Consumers purchase and own things and experiences for
a variety of reasons. Many people collect as a hobby and
we have many possessions which are much more
important to us than the price for which they could be
sold. Products help us remember the past and view the
future
A Model of Consumption
 Marketing aimed at
creating strong,
lasting relationships
with a core group of
customers by making
Relationship
them feel good about
Marketing
the company and by
giving them some
kind of personal
connection with the
business.
Relationship Marketing Success