CHAPTER 4 Consumer Behaviour

CHAPTER 4
Consumer behaviour
LEA RN IN G OBJE CTIVE S
After studying this chapter, you should be able to:

4.1 explain why marketers require a thorough understanding of consumer behaviour and its
major influences
4.2 understand the major group factors that influence consumer behaviour
4.3 analyse the major individual factors that influence consumer behaviour
4.4 explain the general steps in the consumer decision‐making process.
Copyright © 2017. Wiley. All rights reserved.
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CASE STUDY
Online retailers yet to harness big social data

JYOTIRMOYEE BHATTACHARJYA AND ADRIAN B. ELLISON, UNIVERSITY OF SYDNEY
Around the world, social media is giving consumers
far greater visibility into supply chain processes
and problems. For better or worse, manufacturing
locations and labour conditions, warehouses, ware
house systems, packing processes, logistics partners
and their delivery drivers have increasingly become
associated with a retailer’s brand image. At the same
time, retailers and their logistics partners have set
up virtual helpdesks on Twitter. To work out whether
these have been effective, we analysed data collected
from Twitter over the past two years. And the answer
at this stage is: only partially.
Our database currently contains more than
12 million tweets from companies based in pre
dominantly English speaking countries and their
customers around the world. The data is spatially
distributed as shown in the figure below. Social data
is being co‐created by retailers, logistics service
providers and end consumers as part of everyday business practice in the supply chain, with cus
tomers approaching retailers on Twitter at all stages of the e‐retail logistics process. This includes
problems with online shopping carts, order processing delays, issues with tracking information,
delivery delays, service provided by the relevant logistics/parcel shipping company, damaged pack
ages/items, missing items and reverse logistics processes.
Parcel shipping companies are generally approached regarding tracking information availability,
accuracy and clarity as well as delivery issues including delays, driver behaviour, missing/damaged
packages, missed deliveries and pickup locations. We found conversations tended to be of varying
lengths with two tweets (one from the customer and another from the company) being the shortest length
of a conversation. Longer conversations could involve other companies as well as other customers, and
included everything from the good, the bad and the ugly.
The good
Good conversations included positive feedback for the retailer, the logistics service provider or both.
These are generally short conversations. Good conversations are also those where the problems raised
by customers are resolved by the companies over the Twitter platform and the positive outcomes are
visible to followers of both the companies and the customers.
These conversations provide value to the customer and reflect positively on the brand. In a small
number of cases both retailers and their shipping partners were found to get involved in resolving issues
for customers. We think there is considerable scope for joint customer service to become common
practice amongst retailers and logistics service providers.
The bad
Bad conversations are those where the problems raised by customers are referred to Twitter’s direct
messaging service platform or traditional channels (email, phone numbers) and the outcomes are not
visible to other customers, thus generating little value for the brand. Our research suggests customers
rarely return to Twitter to thank a company for a problem resolved via another channel. However, cus
tomers do use Twitter to complain about not receiving timely responses via either the social media
platform or traditional channels.
Another issue was the infrequency of involvement of parcel shipping carriers when they were specifi
cally mentioned in customers’ complaints to retailers. We think the problem with this lack of involvement
from shipping companies is the message it conveys to the consumer about the strength of the supply
chain relationship.
116 Marketing
The ugly
Ugly conversations were those unintentionally initiated by promotional tweets that reminded customers
of recent or current frustrations with a retailer or logistics provider’s services. These trigger the sharing
of experiences between multiple customers and often place customer service staff in damage control
mode. Consumer experiences with delivery delays around Christmas and confusion over information
available on relevant websites in relation to order processing and shipping times contributed to the
backlash.
Customer service conversations = big social data
A large volume of social media data gets created on a daily basis from these customer service inter
actions. Companies need to be examining both the volumes of unstructured social media data created
by their own processes as well as by their competitors for a better understanding of necessary process
improvements. Managers need to ask themselves if their current big social data analytics platforms and
capabilities are providing them with the necessary insights for improving their supply chains and brand
building efforts.
Our analysis of the data from Twitter suggests companies are failing to respond to customers with
the speed allowed by the platform. While UPS responds in a matter of minutes — albeit usually to
redirect to other channels — many others take hours and sometimes days to respond to customers.
Following up with a customer on the public platform after an issue has been resolved via DM or
email would be a positive from a brand perspective. This is only happening in a limited number of
cases.
Supply chain partners also need to better coordinate their Twitter‐based customer service strategies
so they are able to jointly resolve issues for customers and provide them with a seamless experience.
Big social data can be harnessed to identify a range of process improvement opportunities but retailers
and their supply chain partners need to be ready for change.
Source: Originally published on The Conversation.
QUESTION
Do you think the value of good conversations outweighs the negatives of bad conversations on social
media? Why or why not?
Introduction
In the introduction to marketing chapter, we defined marketing and introduced the concept that those
organisations that adopt a market orientation tend to be more successful than organisations that do not.
In the chapter on the marketing environment and market analysis, we looked at the marketing environ-
ment and how organisations can analyse it. The chapter on market research involved a more in‐depth
examination of how organisations go about understanding the environment, including the individuals
and groups within it. By now we understand something about marketing, the marketing environment,
and the individuals and organisations that make up the marketplace. This begs the question, ‘How do we
formulate a marketing mix to best serve our potential customers?’ Clearly, we need to know the reasons
behind the decisions buyers and consumers make — the what, why, how, when and where of their
behaviours. This is the focus of our study of buyer, or consumer, behaviour.
Consider the example of consumers and online shopping, discussed in the chapter opener. The associ-
ated opportunities and challenges this presents to modern marketers is just another instance of the
changes that have swept across modern societies in recent years. For individual firms, such changes may
have a positive, negative or neutral effect. The challenge to the marketer is to understand such changes,
and how they might affect the firm’s established business model — the products that it creates, how
it communicates with the market, and the distribution channels through which buyers will access the
product. The modern marketing concept suggests that the customer should be at the heart of the business.
Consequently, understanding customers and their behaviour is at the heart of modern marketing.
CHAPTER 4 Consumer behaviour 117
In this chapter we will focus on consumer buying behaviour; not business buying behaviour. It is often
assumed that consumer buying behaviour is different from, and perhaps less rational than, business (or
industrial) buying behaviour. While this sweeping statement is difficult to test, it will be explored further
in the chapter on business buying behaviour.
In this chapter, we will examine the influences on the buyer and how these influences might impact
the buyer’s choice of product category, brand, price, distribution outlet and their response to advertising
messages. Taken together, the buyer’s decision processes, their choices and how they manifest them-
selves in actual purchase and product usage behaviours constitute the field of consumer behaviour, the
core topic of this chapter. The chapter explores a range of models of buyer behaviour, based on varying
levels of consumer involvement.
4.1 What is consumer behaviour?

LEARNING OBJECTIVE 4.1 Explain why marketers require a thorough understanding of consumer
behaviour and its major influences.
To formulate a marketing mix that best serves our potential customers, we need to know the reasons and
motivations behind the decisions consumers make. Consumer behaviour is the term used to describe
the analysis of the behaviour of individuals and households who buy goods and services for personal
consumption. As mentioned earlier, it is the what, why, how, when and where of consumers’ behaviours.
Recall that the marketing mix refers to all the elements of the offering that the organisation makes to
potential customers. An understanding of consumer behaviour informs every decision made about the
marketing mix, including:
•• what product attributes will appeal to customers
•• how much value a product has for consumers and hence how much they will be willing to pay for it
•• the likely response to various promotional options
•• where the consumer is likely to want to purchase the offering
•• how the consumer evaluates the purchase
•• what the consumer expects from dealing with the organisation.
Generally speaking, consumers purchase products to satisfy their needs and wants. These needs and
wants vary in nature and the ways that consumers go about satisfying them varies as well. The range
of possible consumer behaviours is almost limitless; however, we can identify a range of consumer
decision‐making behaviour along a continuum from simple habitual decision‐making behaviours at one
end to highly complex extended decision‐making behaviours at the other. For example, few consumers
devote much time to choosing their next tube of toothpaste, but most consumers spend a lot of time
deciding on a destination and itinerary for an overseas holiday. The ways in which consumers recognise
their needs and wants, find out about how to satisfy them, choose among the options, and think and feel
about their decision are subject to numerous influences.
Influences on consumer behaviour

The range of factors that may influence a consumer is virtually limitless and studying them systematically
and comprehensively is a mammoth task. The key to this task is to develop an awareness and sensitivity
to the range of issues that may influence an organisation’s target buyers. These influences may be:
•• specific to a situation in which the consumer finds themself
•• related to group (social or cultural) factors

•• unique to the individual.
These broad categories of influences and some of the contributing factors are summarised in figure 4.1
and discussed in detail throughout this chapter.
Situational influences on consumer behaviour are perhaps the easiest to understand. They are simply
the circumstances consumers find themselves in when they are making purchasing decisions and/or
118 Marketing
consuming the product. Some circumstances prompt immediate purchasing decisions; for example, a
person who has a headache will often respond by purchasing Nurofen, Panadol or Herron paracetamol.
Situational influences can also prompt people to decide not to make a purchase; for example, a couple
who decide at the last minute to go to their favourite restaurant for a romantic, candle‐lit dinner may
change their minds if they see that the restaurant is crowded and noisy.
FIGURE 4.1 Factors influencing consumer behaviour
Situational Group Individual
Cultural Social Personal Psychological

Physical
Social
Time Cultural Reference groups Demographics: Motivation
Motivational Subcultural Family ● age Perception
Mood Social class Roles and status ● occupation Beliefs and
● income attitudes
Lifestyle Learning
Personality and
self-concept
The principal situational influences may be classified as:

•• physical — the characteristics of the location in which the purchase decision is made (e.g. fashion
retailers should install flattering lighting in the fitting rooms)
•• social — the interactions with others at the time the purchase decision is made (e.g. the product
knowledge and/or persuasiveness of a salesperson or ‘competition’ with other shoppers during post‐
Christmas sales); not to be confused with social influences on consumer behaviour, discussed later in
this chapter
•• time — the time available for a purchase decision (e.g. a person who has left all of their Christmas
shopping until Christmas Eve may not have the time to contemplate many options)
•• motivational — the reasons for the purchase (e.g. a person choosing a bottle of wine to bring to a
dinner party is likely make a different decision based on different criteria than when choosing a bottle
to consume at home over the evening meal)
•• mood — the mood of a person at the time of the purchase decision (e.g. a person in a tired or emo-
tional state may make a more impulsive decision).
In the following sections, we will turn our attention to the group and individual factors that influence
consumption decisions.
SPOTLIGHT
US election: what impact do celebrity endorsements really have?

NIVES ZUBCEVIC‐BASIC, SWINBURNE UNIVERSITY OF TECHNOLOGY
Celebrities are always part of the show in the US presidential election. This is by no means a new
trend. Historians have traced the role of celebrities in politics back to the 1920 election, when Warren
Harding was endorsed by film stars including Lillian Russell. In 1960, John F. Kennedy was endorsed by
Rat Pack members Sammy Davis Jr. and Dean Martin. More recently, Oprah Winfrey, George Clooney,
will.i.am, Brad Pitt and Samuel L. Jackson supported Barack Obama. Actor Clint Eastwood, however,
endorsed Republicans John McCain in 2008 and Donald Trump this time around. The 2016 election is
no different. So how much of a difference, if any, do high‐profile endorsements make? And to which
demographics?
Who’s endorsing who?
Both Hillary Clinton and Donald Trump have been
endorsed by an army of celebrity supporters. Some
of Clinton’s high‐profile endorsers include LeBron
James, Amy Schumer, Katy Perry, Meryl Streep,
Jamie Lee Curtis, Lady Gaga, Ellen DeGeneres, Drew
Barrymore, George Clooney, Khloe Kardashian, Kerry
Washington, Viola Davis, Britney Spears, John Legend,
Richard Gere, Salma Hayek, Lena Dunham, Jennifer
Lopez, Beyoncé and Snoop Dogg. In contrast, some
of Trump’s supporters include Azealia Banks, Sarah
Palin, Kirstie Alley, Tom Brady, Charlie Sheen, Dennis
Rodman, Kid Rock, Mike Tyson, Donnie Wahlberg,
Gary Busey, Hulk Hogan, Tim Allen and Chuck Norris.
If we simply look at the Twitter power behind some
of the celebrities listed above, Clinton’s camp — with Katy Perry endorsed Hillary Clinnton in the 2016
DeGeneres, Spears, James, Lopez and Beyoncé — US presidential election.
has a combined 195.6 million followers, compared to
Trump’s camp — Sheen, Tyson, Palin, Hogan and Alley — with a combined 21 million followers. Celebri
ties often go beyond simple endorsements and make powerful statements such as Elizabeth Banks’ Fight
Song or the star‐studded Avengers cast’s oblique but powerful statement against Trump.
Celebrities sell
Advertisements featuring celebrities are a popular marketing strategy. In fact, one in five ads glob
ally features a celebrity. Undoubtedly, endorsements are big business. Some well‐known campaigns
include Beyoncé and Pepsi (worth US$50 million), Justin Bieber and OPI nail polish ($12.5 million)
and Brad Pitt and Chanel No. 5 ($6.7 million). Marketers happily spend millions on celebrity endorsers
as they are able to leverage ‘secondary brand associations’ — that is, people transfer their opinions and
feelings about a celebrity to the brand.
In a cluttered world where myriad messages fight for the attention of time‐starved consumers, celeb
rity endorsers serve as arbiters of public opinion. And so, marketing organisations rely on symbolic
and emotional features to generate ‘sociopsychological associations’. Some celebrities are seen to be
so aspirational that even a glimpse of them in an ad conveys positive meaning, like athletes Cristiano
Ronaldo and Roger Federer.
It’s important to understand the traits a celebrity, also referred to as a source, should have in order to
transfer positive meaning to a brand. These are broken down into three categories:
• source attractiveness (physique, intellect, athleticism, lifestyle)
• source credibility (expertise, trustworthiness)
• meaning transfer (compatibility between brand and celebrity).
Quite often, celebrities use their high profile to encourage people, world organisations and politicians
to support their cause, like singer Bono’s ‘One’ campaign against poverty. Actors Jack Black and Neil
Patrick Harris encouraged Californians to vote against the California Marriage Protection Act. Not‐for‐
profit and world organisations are aware of the power of celebrities and create connections in order
to garner publicity, awareness and donations. This includes the United Nations and Angelina Jolie,
and DeGeneres and the Ice Bucket Challenge.
Celebrity endorsements in politics makes sense
We know celebrities grab and hold consumer attention. They also improve ad recall. People are more
likely to think positively about a product because they are familiar with the celebrity. However, expertise
is an important element when wanting to influence consumers. Credibility is another crucial factor that
tells us not all celebrities are equal. Those considered to be more credible have a higher influence on
people’s opinions and decisions.

Celebrities with prior political activism, like Martin Sheen and George Clooney, are more likely to have
a stronger influence. Interestingly, people consider celebrities to be more credible and trustworthy than
politicians. A negative comment by a credible endorser such as Oprah Winfrey can be as damaging as
a positive one. For example, Winfrey stopped eating burgers during the 1996 ‘mad cow’ spread — this
resulted in a 10 per cent drop in cattle futures the next day.
120 Marketing
Effectiveness and audience
Research has found that young adults are more likely to listen to family and friends, rather than celebrities,
as a source of political information. At the same time, young people believe celebrities have an effect
on the way people think — more than politicians, scientists or academics. Outside of age, ethnicity
and gender are also known to affect celebrity endorsement influence. For instance, African‐American
and Caucasian‐American voters are more likely to rely on family and friends. However, Asian‐American,
Polynesian and Hispanic voters are more likely to trust politicians or interest groups. Also, men consider
celebrities to have a greater influence than women do, regardless of cultural background.
Celebrities are able to motivate young people to seek further information and to take part. However, this
is less true of first‐time voters. Those who are less politically savvy or poorly informed are also more likely
to vote for a political party endorsed by a celebrity. What’s interesting is that most celebrities tend to align
themselves with politically uncontroversial issues and tend to steer towards liberal perspectives — for
example, George Clooney and ‘Not On Our Watch’, a campaign for improving human rights.
Trump’s camp includes controversial celebrities who have previously been involved in controversial
branding endorsements, like Charlie Sheen and underwear brand Hanes. Trump was also a celebrity
prior to becoming a candidate. People’s experience of his public persona through his roles on TV have
over time instilled a specific meaning. That meaning is now transferred to his political campaign.
So what’s the final verdict?
With the right celebrity endorsements, political campaigns can do quite well. Oprah Winfrey’s endorse
ment of Obama in 2008 was found to increase overall voter participation and number of contributions
received by Obama, and an estimated overall 1 million additional votes. All it takes is trustworthiness,
credibility, and a lot of followers.
QUESTION
Despite not winning the 2016 US Presidential election, do you still think that celebrity endorsements
represented any value for Hillary Clinton? Explain your answer.
CONCEPTS AND APPLICATIONS CHECK
1. In your own words, define consumer behaviour.

2. Recall four purchases you have made in the past month. Try to include goods and services in your
list and, ideally, choose different types of product (e.g. having a haircut, buying petrol or some
clothes, subscribing to a magazine). Add to your list the biggest purchase you have ever made.
Describe how you made the decision to purchase each product. (Be specific — for example, you
may have purchased new clothes because you had been invited to a party, but how did you actually
make the decision about the clothes you ended up buying?)
3. Ask a friend about what they have bought in the past week. Take some time to try to work out the
reasons behind their purchases. Now ask them their reasons. How accurate were your assumptions?
4. Describe an example of how each of the five situational influences on consumer behaviour has
affected a purchase decision you have made.
4.2 Group factors

LEARNING OBJECTIVE 4.2 Understand the major group factors that influence consumer behaviour.
Consumers’ purchasing decisions are profoundly affected by group factors, or influences from
groups with which the individual interacts. Group influences comprise social factors (the influence
of other people) and cultural factors (the influence of the values, beliefs and customs of the person’s
community).
Cultural factors
Cultural factors are those influences on behaviours that operate at the level of the whole society or of
major groups within society. In this sense, they represent the broadest of group factors. In studying
cultural factors, we seek to understand how large social groups — and, by extension, the individual
members within them — behave. From a marketing perspective, this level of analysis corresponds with
that of the mass market, in which the marketer is concerned with the aggregate behaviour of markets as
a whole. The study of human behaviour at the cultural level has traditionally been the focus of sociology
and anthropology, and a number of the key concepts used by marketers and behavioural researchers
were originally discovered and studied by sociologists and anthropologists. Concepts such as social class
are of interest to marketers where they can be demonstrated to explain or reliably predict differences in
buyer or consumer behaviour.
Culture
The broadest group influence on behaviour is arguably that of culture, although a precise definition
of what constitutes ‘culture’ is perhaps debatable. For our purposes, we shall define culture as the
system of knowledge, beliefs, values, rituals and artefacts by which a society or other large group defines
itself. Clearly, from this definition, culture is multidimensional and includes both tangible and intangible
elements:
•• tangible elements include housing, technology, clothing, food and artworks
•• intangible elements include laws, beliefs, customs, education and institutions.
It is also important to recognise that culture operates at both the immediate experiential level —
through such things as our tastes in food, music and entertainment — and at a deeper, and arguably
more influential, level, through cultural values. While it is easy to appreciate the visible, tangible aspects
of culture (such as products), this may lead to the more profound, pervasive, influential and intangible
aspects of culture being overlooked.
It has been popular over the past 20 years to argue that our traditional cultural values are being rapidly
eroded and a global culture is emerging as a result of modern information and communications tech-
nology, as well as the influence of modern marketing, particularly through the creation and influence of
global brands. (For example, Starbucks has arguably created a new international ‘coffee culture’ in many
countries of the world, particularly those countries that have had little prior exposure to mass consump-
tion of coffee, such as Japan.) It must be recognised, however, that core cultural values are much more
pervasive, influential and resistant to change than some would have us believe. Consumers the world
over may wear similar clothes with familiar brands, drive the same cars and buy the same consumer
electronics products, and want to live in similar, modern housing — however, at the level of core cultural
values, they may differ markedly.
Differences in national cultures have been measured by a number of researchers. Hofstede, in his orig-
inal landmark studies, found that national cultures could be distinguished by variations across four core
dimensions that he described as follows.1
•• Power distance is the degree of inequality among people that is acceptable within a culture. Western
societies tend to score low on ‘power distance’, reflecting their relatively egalitarian cultures, whereas
Asian societies score high in ‘power distance’, reflecting the greater extent of social inequality and the
traditions that maintain this.
•• Uncertainty avoidance is the extent to which people in a culture feel threatened by uncertainty and
rely on mechanisms to reduce it.
•• Individualism is the extent to which people focus on their own goals over those of the group. Western
societies are generally ‘individualistic’, whereas Asian societies are more ‘collectivist’.
•• Masculinity is the extent to which traditionally masculine values (e.g. assertiveness, status and
success) are valued over traditionally feminine values (e.g. solidarity, quality of life). Australia,
New Zealand and the United Kingdom are examples of more ‘masculine’ cultures, while the Scandi-
navian countries and Thailand are examples of more ‘feminine’ (caring and nurturing) societies.
122 Marketing
Follow‐up research in Asia identified a fifth dimension of long‐term orientation — the extent to
which a pragmatic, long‐term orientation is valued over a short‐term focus.2
More recently, Hofstede and Minkov have added a sixth dimension: indulgence versus restraint.3
Figure 4.2 plots various countries’ cultures on the five original dimensions.4
FIGURE 4.2 Hofstede’s dimensions of culture
WORLD AVERAGE WORLD AVERAGE
Germany Germany
South Africa South Africa

India India
United States Hong Kong United States
Hong Kong
United Kingdom Thailand United Kingdom Thailand
Malaysia
New Zealand Japan Malaysia Singapore Japan

Australia
Australia Singapore New Zealand
0 10 20 30 40 50 60 70 80 90 100 110 0 10 20 30 40 50 60 70 80 90 100 110

Power distance Uncertainty avoidance
WORLD AVERAGE WORLD AVERAGE

Germany Germany
South Africa South Africa

India India
United States Hong Kong United States
Hong Kong
Thailand United Kingdom Thailand United Kingdom
Malaysia Japan Malaysia Japan

Singapore New Zealand Australia Singapore Australia
New Zealand
0 10 20 30 40 50 60 70 80 90 100 110 0 10 20 30 40 50 60 70 80 90 100 110

Individualism Masculinity
WORLD AVERAGE
Germany
South Africa
India
United States Hong Kong
United Kingdom
Thailand
Australia Japan
New Zealand Singapore
0 10 20 30 40 50 60 70 80 90 100 110
Long-term orientation
While the validity of Hofstede’s dimensions continues to be the subject of intense academic debate,
marketers must nevertheless be sensitive to cultural differences among consumers and in workplaces
when they seek to market their products overseas. They must not assume that consumers in foreign
countries perceive their products and communication messages in the same way as they are seen in their
home markets.
Subcultures
Just as we can identify a national culture that exists across a society as a whole, so too we can identify
distinctive subcultures that display differences from the dominant national culture along some of the
key dimensions. A subculture is a group of individuals who differ on some influential dimensions from
the broader culture in which they are immersed. Subcultures are usually identified based on differences
in key demographic characteristics such as age, ethnicity, geographic location or religious affiliation.
In this context, Australia displays a high level of multiculturalism, which reflects the ethnic, religious
and geographic diversity of a high proportion of its resident population. Subcultures are important to
marketers when their shopping and purchasing behaviour are significantly different from the remainder
of the population, and they represent a distinct and commercially significant marketing opportunity. For
example, Asian consumers in Australia potentially represent a major opportunity for marketers when
their purchases of food, fashion, information technology, education, motor vehicles or real estate differ
significantly from the Australian population as a whole. Similarly, Australia is famous worldwide for its
beach and surf culture, which has spawned highly successful global surf brands such as Billabong and
Rip Curl.
Within subcultures, members share common attitudes, values and behaviours that distinguish them
from the broader culture. Relative to other subcultures, members may, for example, display clear pref-
erences for specific clothing, entertainment and food. At the same time, it is worth remembering that
subcultures are themselves subject to frequent change in response to changes in the broader society
and in their internal membership. Nevertheless, subcultures can be very important to marketers, as they
represent large potential market segments, often with distinctive preferences and behaviours and strong
group loyalty. Astute marketers will always be on the lookout for changes in subcultures, or the emerg-
ence of new subcultures, which can create opportunities for new products and threats to existing product
categories.
Social class
Most societies exhibit a social hierarchy, organised into social classes. A social class comprises indi-
viduals of similar social rank within the hierarchy. Social ranking forms the basis of social prestige and
respect in most countries. In Australia and New Zealand, the social class system is regarded as ‘open’
because individuals are able to move from one class to another relatively easily. In some other countries,
perhaps most notably India, individuals are seen to be born into their social class, and in which they
remain throughout their lives. The system is, thus, relatively rigid and closed, and it is difficult, if not
impossible, for individuals to move to another social class. In Australia and New Zealand, an individual’s
social class is defined by values and lifestyles, but often rests on indicators such as income, occupation
and education. In India, social class is based on tradition, history, cultural heritage and family back-
ground. While discrimination on the basis of social class has been made illegal in India, it continues to
exert a pervasive influence, particularly outside the major cities.
In Australia and New Zealand, some aspects of consumer behaviour can be attributed to social class,
but often those behaviours are better attributed to more specific underlying indicators of social class. For
example, marketers would often be better served paying attention to the economic indicators of purchasing
power such as income and perhaps occupation or educational background. For products such as entertain-
ment, travel and cars, income is most important; whereas for products such as fashion, restaurants and
real estate, occupation may be a more important determinant of purchasing behaviour.
124 Marketing
For this reason, socioeconomic status can often be a useful concept for marketers studying con-
sumer behaviour, where the primary focus is on ‘purchasing power’. For example, marketers of high
fashion, consumer durables, prestige products and many financial services will be more concerned
with the ability of the target market to purchase. In this sense, it is income that is the primary concern,
and not the source of income, which is implied in the social class construct; and sales of high‐end
products are especially sensitive to changes in annual incomes brought about by macroeconomic
business cycles. Conversely, social marketers often need to understand the behaviour of people at
lower levels of socioeconomic status as this has been identified as a reliable predictor of individuals
or groups who engage in high‐risk social behaviours such as smoking, crime, violence, alcoholism,
drug abuse and gambling.5 Social marketers in the government and not‐for‐profit sectors will often
use low socioeconomic status as a ‘marker’ and will target those groups in their service delivery and
mass communication campaigns.
Social factors
Studying consumer behaviour at the social level is concerned with developing an understanding of the
behaviour of the individual within the wider group. This is the traditional domain of ‘social psychology’
and is focused on understanding how the group influences the behaviour of its individual members,
typically through group pressures on the individual to conform with group norms. Such influences are
collectively known as social factors.
Reference groups
A reference group is any group to which an individual looks for guidance as to what are appropriate
values, attitudes or behaviours. The influence of reference groups is particularly strong when the indi-
vidual lacks previous experience as a guide for behaviour, and where that behaviour carries a level of
social risk. In this context, the individual will seek the approval of the group and will thus be concerned
to conform with the expectations of the group. In a marketing context, if a consumer is contemplating
purchasing a product for the first time, and where that product is socially conspicuous (e.g. clothing),
the individual will often look to the reference group to suggest and endorse the appropriate choice. Ref-
erence groups can be large or small, and an individual may be a member of several reference groups,
depending upon the circumstances and the behaviours in question. For example, an individual may look
to family, work or professional groups, sporting clubs, religious groups or civic organisations depending
upon the particular behaviour or product category.
Three major types of reference groups have been identified.
•• Membership reference groups are groups to which the individual belongs. Individuals will com-
monly identify strongly with membership reference groups and take on the values, attitudes and
behaviours that define members of the group. For example, an individual who considers themself
an ‘Emo’ would adopt the characteristic appearance, clothing, attitudes and music of that group.
Similarly, most individuals will seek to conform to the expectations of their employer or professional
group.
•• Aspirational reference groups are groups of which the individual would wish to be considered a
member. In these circumstances, the individual is likely to mimic the values, attitudes and behav-
iours of the aspirational group. Such groups can therefore become important role models and
marketers may seek to have their products adopted by members of aspirational groups, especially
where the product is new and socially conspicuous, such as fashion, cars, information technology
or drinks.
•• Dissociative reference groups are groups with which an individual does not wish to be associated
or which the individual may wish to leave. An individual may not wish to be seen or to be known
as a ‘bogan’ and so may choose to buy clothing, food and beverages which might set the individual
apart.
A reference group can therefore help the individual in their purchase behaviour through suggesting
information sources, the range of product alternatives and appropriate ways of evaluating and choosing
between alternative products. For example, Globe footwear has become highly accepted among the
surfing and skateboard community, reinforced by Globe’s sponsorship of surfing and skateboard con-
tests. Understanding the identity, dynamics, attitudes and purchase behaviour of such reference groups is
a challenging task for market researchers since the groups are frequently difficult to identify, their group
norms are often arcane, and their dynamics are constantly changing.
The extent to which a reference group influences purchase behaviour depends, in part, on the visi-
bility or conspicuousness of the product and the familiarity of the purchase category. The purchase of
highly visible products such as clothing, cars, information technology and beverages is often strongly
influenced by reference groups. Reference groups can affect whether or not a person chooses to buy a
product at all, to buy a particular product within a product category, or to buy a particular brand. For
example, in certain reference groups, it is important both that you are buying a smartphone and which
brand of smartphone. At the same time, it is not important that you are buying a pair of shoes, but rather
which brand of shoes you will buy. Equally, it may be important to some groups that you are air‐
conditioning your home, although the brand of air‐conditioning may be unimportant.
Opinion leaders
In many reference groups, some individuals occupy the role of opinion leader. These individuals will be
consulted, formally or informally, as being reliable sources of information about the values, attitudes and
behaviours of the group. An opinion leader is a reference group member who provides relevant and influ-
ential advice about a specific topic of interest to
group members. Opinion leaders are regarded
by other group members as experts in a par-
ticular field or topic, such as politics, music,
sport or community values. In a marketing
context, opinion leaders often influence group
members in relation to appropriate purchases
of such products as technology, cars, houses,
holidays, education, fashion, food and bever-
ages. Marketers will often attempt to identify
opinion leaders and to influence them in their
product attitudes and purchase behaviour. For
example, Microsoft or Nintendo might seek to
identify elite computer gamers whose opinions
on games and game consoles might be sought
by other members of their reference group at
school. At the same time, the concept of opinion
leadership is often difficult to work with in
practice because opinion leadership is typically
situation‐ and product‐specific. Within the
same reference group, members may choose
to consult different individuals for opinions
on cars, information technology, sport or poli-
tics. An opinion leader, however, is likely to
be of greatest influence in product categories

where individuals are highly involved, but in
which they lack knowledge and/or experience,
although they share the opinion leader’s values Beauty columnist and author Zoë Foster‐Blake is an example
and attitudes. of an opinion leader.
126 Marketing
For example, beyond their undoubted altruistic credentials, community service clubs such as Rotary,
Lions and Zonta are popular with members because of the opportunities they provide to network
with local professionals, experts and dignitaries. Thus, many members of such groups would regard
themselves as experts in their fields. They would expect to give and receive valued opinions and
business contacts to and from other members, in professional fields such as real estate and property
development, local government affairs, politics, information technology, law, economics, architecture
and education, and in social pursuits such as golf, sailing and fine dining. Local professional service
individuals and organisations might, therefore, target these organisations as a valuable source of clients
and service providers. Similarly, medical practitioners will seek out their professional colleagues at
regular meetings, and especially at annual conferences of various professional societies. Pharmaceutical
companies typically seek to identify the opinion leaders in such groups by sponsoring research or con-
ference sessions of recognised authorities in particular medical fields — such as cardiology, oncology
and gastroenterology.
New products take time to develop popularity in the market. The way in which innovations are
adopted can be described by the theory of diffusion of innovations.6 The theory suggests that the influ-
ence of social groups on the decisions made by individuals determines the way and the rate at which new
products and ideas are adopted and spread. Innovations are introduced and used by ‘innovators’, who
make up only 2.5 per cent of the total population. Because they are often seen as outsiders, they do not
generally influence the adoption of innovations by the rest of society. Rather, consumers known as ‘early
adopters’, who represent about 13.5 per cent of the population, tend to drive widespread adoption. (The
early adopters will have typically learnt of the new product or idea from the innovators.) The early adop-
ters group typically includes the opinion leaders. Adoption by the opinion leaders then drives adoption
by the ‘early majority’, who adopt the innovation earlier than average. The ‘late majority’ adopts the
innovation later than average, reflecting their cautious and sceptical nature. The last group to adopt is
known as the ‘laggards’, who are driven by tradition. (Of course, there may also be a residual group of
‘non‐adopters’.)
The diffusion of innovations process is primarily driven by social networks and communications.
Because the role of the opinion leader is so important, the model suggests the existence and logic
of a two‐step flow of communication in which information can be directed to and focused on the
opinion leader who, after adopting the innovation, will communicate the information to the broader
population. From a marketing communications perspective, this model implies that it is not necessary
to direct a marketing message to the entire population; rather it is more effective to address com-
munication directly to the opinion leader in the expectation that the idea will spread from them to
the wider target population. The theory of diffusion of innovations is examined in more detail in the
product chapter.
Family
For most people, the social group with the most influence over their behaviour is the family. In par-
ticular, from a marketing perspective, the ‘nuclear’ family — parents and siblings — teach the individual
appropriate behaviours relating to purchasing and consuming products. This process starts when children
are very young.
The stage of the family in the family life cycle is also an important influence on consumption behav-
iour. The family life cycle describes the stages through which most families pass. It is summarised in
table 4.1. Of course, not all families go through all five stages in the family life cycle model, and the
incidence of divorce and remarriage and consequent ‘blended families’, single parents, and same‐sex
households are all significant and increasingly common alternative family arrangements. In this sense, it
is perhaps misleading and dangerous to stereotype; nevertheless, marketers should be aware of traditional
family patterns, and the significant alternative family groups.
TABLE 4.1 The family life cycle
Stage Description Example of marketing consequences
Stage 1 Young singles Single person living apart Important target market for home furnishings, cars
from parents and entertainment products
Stage 2 Young marrieds Young married couple Target market for new home construction, functional
without children furniture and whitegoods
Stage 3 Parenthood A married couple with Heavy consumers of household products such as
children at home detergents, food and pharmaceuticals
Stage 4 Post‐parenthood An old married couple with Important buyers of luxury goods, packaged tours,
no children at home investment products and healthcare products
Stage 5 Dissolution A single surviving spouse Buyers with a focus on health, physical security and
continuing financial independence
A further important way in which the family influences consumer behaviour is through the family
decision‐making roles and the influence of family members in decision making. While family roles are
changing, family consumption decisions can still largely be categorised into four types.
•• Autonomic decisions. Most household products are typically purchased by either the husband or wife,
including products such as the husband’s clothing, furniture, cosmetics, pharmaceuticals, household
appliances, cars and holidays.
•• Wife‐dominant decisions. Although the role of women has changed significantly in recent decades,
women still make the majority of household purchasing decisions related to food, health care, laundry
and bathroom products, children’s clothing and kitchen products.
•• Husband‐dominant decisions. A small range of products are traditionally purchased by men, including hard-
ware and garage products, such as lawnmowers (although women represent the fastest-growing market for
many hardware products — typically those associated with home decoration, renovation and gardening).
•• Syncratic decisions. Some products are purchased by husband and wife acting jointly. Typically such
decisions would be the major household purchasing decisions, such as purchasing a home and mort-
gage, choosing a superannuation fund, booking a holiday, buying an entertainment product, selecting
children’s education, or other significant investments.
Note that ‘wife‐dominant’ and ‘husband‐dominant’ are traditional terms. The category refers to the
adult female and male decision makers respectively.
Beyond these four decision patterns, different family members may play different roles in household
purchase decision making, depending upon the nature of the product and the role expertise of individual
family members. For example, the decision to purchase a broadband internet or cable television contract
may be initiated by the children. The information search may be conducted by the older siblings, and the
evaluation of alternatives may involve the entire family, while the actual purchase decision may be made
by the father or mother.
Sometimes the role of children in purchasing decisions is a lot less civilised. The phenomenon of
pester power can be a powerful influence on family consumption decisions. Pester power is the term
used to describe children’s influence over their parents’ purchasing decisions. About one‐quarter of par-
ents take their children with them when they shop, so it is very common for children to be present when
purchasing decisions are being made. The most common purchases made in response to pester power are
fairly small (e.g. chips, biscuits and a preferred brand of toothpaste), but children can also influence or
indeed initiate major purchases as well, such as gaming consoles, home swimming pools and holidays.
For many marketers, children — even if they are not making the purchase — are a substantial target
market. They are the focus of many advertising campaigns. The most successful advertisements targeted
at children also include messages that appeal to parents. While the expression ‘pester power’ conjures
images of children annoying their parents into giving in over a purchase, the term is widely used to
include all child influence over purchasing.7
128 Marketing
The important conclusion here is that a large proportion of household purchase decisions are not made
solely by an individual. In these circumstances the dynamics of household decision making can be quite
complex and vary according to the product category, and between families. Similarly, marketers need
to consider the potential influence of the group on purchasers, particularly in devising their marketing
communications and advertising programs.
Children can have a powerful influence over their parents’ purchasing decisions. What are the chances that this
young boy’s parents will give in to his request to buy a bike?
Roles and status

Each individual in a society plays a number of roles, each of which entails a complex set of expectations —
parent, child, neighbour, employee, employer, customer, friend and so on. We understand that as part of our
roles we are expected to engage in certain behaviours and actions. These roles may have a formal, even
legal, definition, such as the role of parents or of officeholders in social or volunteer organisations. In other
groups, individuals’ roles may be less formally defined but may still be equally influential in the purchase
decision. Such roles will frequently be based on perceived expertise, where the role is that of opinion leader
(discussed earlier in the chapter). Again, this perception of expertise may be specific to a narrow product
category, such as computers, music, food, wine, fashion or politics. Within the social group an individual may
occupy multiple roles and roles may be shared among members of the group. Because such roles are diffi-
cult to generalise, it is equally difficult for marketers to identify in advance how individuals in the group will
make its decisions, and who in the group would be most influential.
The influence of individuals within the decision‐making social group will frequently be based on the
perceived status of the individual, which reflects the position occupied by an individual in a notional
hierarchy of group members. Such status can be based on a range of criteria, including formal role, age,
length of group membership, technical competence, access to resources or social popularity. Under such
circumstances, the usual challenges for the marketer are to identify group leaders and to seek to influ-
ence their behaviours, although the criteria for group leadership and the identity of group leaders remain
as challenges. The combination of roles and status typically shape the expectations of group members,
which exert an important influence on the buyer’s final decision.
SPOTLIGHT
Fast food companies use social networking sites to target children

PARK THAICHON, S P JAIN SCHOOL OF GLOBAL MANAGEMENT
Australia’s voluntary advertising codes around the
marketing of fast food to children are not very effective
in protecting them from being manipulated by inno
vative online marketing, especially in social media, our
new research has found.
Australia has a set of regulatory and self‐regulatory
measures controlling the promotion of food and bever
ages to children. The system of industry self‐regulation
codes includes the Responsible Children’s Marketing
Initiative (RCMI) and Quick Service Initiative (QSRI),
administered by the Advertising Standards Board.
While the RCMI and QSRI apply to corporate web
sites, other online activities are not well regulated
because of their diverse and complex nature. The RCMI and QSRI are also criticised for not controlling
definitions of marketing messages like ‘healthier choice’ and the narrow interpretation of activities that
should be restricted (that is, those ‘directed primarily at children’).
Our research used in‐depth interviews to find the strategies used by social networking sites to
actively craft children’s attitudes to and consumption of fast food. This includes tactics such as give
away vouchers and toys to engage a young audience.
One of these, the engagement strategy, uses fun and novelty to appeal to young kids. For example,
young consumers are encouraged to ‘like’ companies’ Facebook page or sign up for their Twitter feeds,
usually in exchange for premiums such as toys or discounts.
Our study included a sample of 30 Australian children who used social networking sites. Half of the
children of the sample were male and their average age was 12.5: the youngest was 11 and the oldest
16. Their parents were also present during the interview; however they agreed not to intervene during
the conversation.
The children said they wanted to see online advertisements on social networking sites so they could
find out more about certain toy collections. Content on the websites could also prompt young users to
visit linked sites, such as corporate webpages. Many of them said that the offer of complimentary toys
that come with the meal options motivated them to look at advertisements.
Children stated that they were happy to see or to receive more information through advertisements on
social networking sites. This can be considered a result of the ability of tailored online advertising (web
browsing behaviour or demographic-based advertisements) to meet the interests of a target audience
group. The research showed children feel more approving of advertising and even perceive it as part of
their day-to-day activities, if they are constantly exposed to a large number of ads for a long period of
time.
The appealing pictures in the advertisements clearly create positive perceptions of the consumption
of fast food. Many of the children admitted that they were enticed to try the foods depicted in the online
ads because of their eye‐catching visuals.
Effects of advertising on social network sites
On Facebook, young users’ activities, such as liking a page or posting a comment, are shown in the
newsfeeds of their friend’s Facebook accounts as endorsements or sponsored stories. It is often harder
for children and parents to detect the boundaries between online content and pure advertising, on
social media sites than in traditional media such as television. On top of that, social networking sites
use a wide range of behavioural advertising that targets the audience on the basis of their web browsing
behaviour and demographics.

Our interviews indicate children are influenced by the promotion of fast food products as well as the
complimentary toys, exploiting their natural curiosity about new foods and love of novelty. Eventually,
this leads to likely purchase of the advertised food and a change of their eating habits.
130 Marketing
More regulation needed?
Existing regulation of food advertising to children in Australia, especially on digital platforms, is still
limited. But children might not be aware of the actual effects of advertising on their behaviour and can
be influenced to purchase particular brands and products if the advertisements are appealing enough.
This points to a need for policy makers to review the regulations related to online communications tar
geting young children on social networking sites. As such, the dimensions of visuals used in advertising
can be strictly defined and monitored to protect customers at a younger age.
Also, the use of incentives such as toys targeting young children should be restricted. In addition,
advertising seems to exert its influence on children through another agent — their peers, a relatively
strong force in determining children’s food preferences and choices. In general, a tougher legislation
system to shield children from unhealthy food marketing is essential to prevent the problems of obesity
and to build a healthier society.
QUESTION
Do you think it is acceptable for businesses to target children through social media? Explain your answer.
1. ‘In Australia and New Zealand, some aspects of consumer behaviour can be attributed to social
class, but others are better attributed to specific underlying indicators of social class.’ Discuss.
2. What are the three types of reference groups? For each, provide two examples of groups relevant
to you.
3. Explain how opinion leaders influence group behaviours. Choose five products (ideally a mix of
goods and services), and explain who you would consider an opinion leader in your decision to
purchase each. Explain your choice.
4. Describe each of the five dimensions of culture according to Hofstede’s model. Choose a product
(a good or a service) and briefly explain the issues a marketer should address when marketing it in
cultures at opposite extremes of the cultural dimensions.
5. Critique the four family decision‐making types. Do they reflect your personal experiences?
6. Find an advertising campaign that is designed to invoke pester power. Analyse the campaign in
terms of which elements are aimed at children and which elements are aimed at the purchaser (most
likely a parent).
4.3 Individual factors

LEARNING OBJECTIVE 4.3 Analyse the major individual factors that influence consumer behaviour.
So far we have discussed how situational influences and group factors affect consumer behaviour. A third
range of factors influence the consumer’s behaviour and operate independently of social circumstances.
These are known as individual factors and relate to personal and psychological characteristics. These
factors can be measured for an individual and are presumed to differ significantly between individuals —
in large part, they explain the individual’s purchase process and final product choice.
Personal characteristics
At the level of individual buyer or consumer, we can identify a range of personal characteristics that
have been shown to exert a significant influence on consumers’ choice processes and ultimate purchase
decisions. These personal characteristics, in some ways, constitute an individual’s identity and, in this
sense, are objective and relatively stable in the short term (although they will inevitably change as the
individual ages and develops). This short‐term stability is attractive to marketers in that these character-
istics are relatively easy to observe and measure. They can therefore form the basis of ongoing marketing
campaigns.
Demographics
Demographic factors describe the general makeup of the population in terms of existing objective,
measurable characteristics that are either assumed or demonstrated to be related to the purchase or con-
sumption of products. In a strict sense, demographic characteristics do not cause shopping or choice
behaviour (since the individual will always have free will and choices), but rather they vary system-
atically and predictably with the observed behaviour. It is this systematic, and therefore predictable,
variation that is attractive to marketers. This, combined with their ready accessibility from organisations
such as the Australian Bureau of Statistics and Statistics New Zealand, has made them useful and reliable
predictors of shopping behaviour. They are commonly used in the description and explanation of con-
sumer behaviour.
As a rule, demographic factors should always be used as part of the description and explanation of
consumer behaviour and, in many cases, these demographic characteristics will be sufficient for the mar-
keter’s purposes. Their use enables marketers and researchers to establish the relationship between the
causal explanation for behaviour and the likely observable distribution of that behaviour. For example,
there is a strong, measurable relationship, or correlation, between the consumption of alcohol and age.
While age alone does not explain the consumption of alcohol, a knowledge of age distribution of the
population enables marketers to understand the likely incidence and geographic distribution of alcohol
consumption, on the one hand, and of age‐related alcohol abuse such as chronic alcoholism and binge
drinking, on the other. Aimed with this knowledge, marketers of alcoholic beverages can tailor their
marketing efforts accordingly. Government bodies and health advocacy groups can also craft social
marketing campaigns to best target those groups and individuals most likely to be at risk of alcohol
misuse.
Similarly, occupation is a strong
predictor of computer, mobile phone
and internet usage. Marketers of these
products seek to identify variations in
occupational distribution across the popu-
lation and across specific geographic
markets. Likewise, in financial services
markets, income is a leading indicator
of customers’ needs for sophisticated
financial products such as investment
funds, mortgage and investment loans,
wealth management, and so on. Finan-
cial service organisations such as AMP
find it profitable to target so‐called ‘high
net worth individuals’ who are always
looking for better financial returns from
their investments, and lower costs and
charges on their loans. While income
does not strictly explain the demand for
financial services products, it is a very

reliable ‘surrogate’ or ‘proxy’ indicator
of likely customer demand. Conversely,
low income levels are a reliable indicator Consumers regularly make purchases that are aspirational and
of demand for charity, emergency loans that reflect a preferred lifestyle. This woman’s penchant for
and financial counselling. expensive shoes may reflect a desire for glamour.
132 Marketing
Lifestyle
A person’s lifestyle is defined by how they spend their time and how they interact with others. There may
be a significant difference between an individual’s actual lifestyle and their preferred lifestyle. For many
of us, our actual lifestyle (which might involve work, study, shopping for groceries and the occasional
party) is much more predictable and staid than our preferred lifestyle (which might involve glamour,
excitement, travel, and luxury cars and yachts). Consumers regularly purchase products that play a role
in their lifestyle. They also often purchase products to enhance or express their preferred lifestyle. Such
products are aspirational or symbolic in nature. Consumers often choose to express their preferred life-
style through such products as fashion, motor vehicles, holidays, recreational equipment and activities,
and entertainment. Marketers of lifestyle‐oriented products should therefore devote considerable effort
to understanding the preferred lifestyles of their target customers and how those lifestyles might be
changing.
Lifestyle is partly a choice. For example, some people choose to spend their weekends surfing and
their weekdays studying; others choose to work during the week and spend the weekend pursuing some
creative hobby; and others choose to be politically active in their communities. Lifestyle is, however,
also influenced by personality and demographic characteristics such as age, income and education. Life-
style is typically measured through a lengthy series of questions, the outcome of which is frequently
used in psychographic (or lifestyle‐based) market segmentation (see the chapter on markets: segmen-
tation, targeting and positioning). Table 4.2 presents a psychographic (lifestyle) market segmentation
scheme from Nielsen Consumer and Media View.8
TABLE 4.2 PALS (Personal Aspiration Lifestyle Segments) psychographic data
Balance seekers • More likely to have a young family

Representing 19 per cent of the population, they • Lead healthy lifestyle
actively aspire to a balanced lifestyle, and are more • Not too concerned about how others see them in
likely to be middle‐aged, with those in the workforce terms of appearance
more likely to be found in managerial or professional • Less attracted than most to new ideas and
roles. technology
• Only slightly motivated by success, but family very
important — it’s all about balance
• Medium to heavy viewers of commercial TV
• Medium to heavy listeners of commercial radio
Health‐conscious • Heavily skewed to couples with no children

Representing 29 per cent of the population, their • All about healthy living, exercising and eating
priorities are health and fitness. They avoid unhealthy • Least likely to try out new technology
foods and exercise regularly to maintain their fitness, • Less likely to be driven by success vs. other PAL
although they are less likely to be concerned about segments
their image. Definitely not early adopters of new • Heavy commercial TV and pay‐TV viewers
technology. • Medium to heavy non‐commercial TV viewers
• Light to medium use of the internet
• Print heavy (magazines/newspapers)
Harmony seekers • Singles/couples, no children in the household

Representing 13 per cent of Australian consumers, • Not particularly concerned about health
these people are older; they have arrived and are • Less likely to try to impress others
now concerned about giving and sharing through • Career and goals do not dominate their thinking
community work. They are actively involved in hobbies • Heavy viewers of commercial and non‐commercial
and indulge in luxuries afforded by their achievements. TV
They are not concerned about physical fitness or • Heavy viewers of pay‐TV
health, and are not quick to embrace new ideas or • Medium to heavy use of internet
technology.
Individualistic • No children in the household; heavy skew towards
Constituting 18 per cent of Australian consumers, singles
these are ‘me first’ people who consider family a • Like to wear clothes noticed by others and be stylish
low priority. Life is really all about themselves; they • Early adopters of new technology and new ideas
are image and fashion conscious, heavily oriented to • Conscious about health
success and goal achievement. They are also big new • Success and goal oriented
technology, media and internet users. • Light commercial TV viewers
• Medium to heavy non‐commercial TV viewers
• Heavy internet users
• Heavy cinema goers
Fun seekers • A sense of fun in their life is their main priority

Representing 4 per cent of Australians, they are heavy • Skewed towards families with a heavy skew towards
consumers of commercial media and while responsible young families
concerning family and financial security, they aspire to • Like to look good and be fashionable
add more fun so as to improve their fairly structured • Most likely to agree that technology/computers
lifestyles. Their escapist attitude makes them ideal makes life easier; willing to try new products
candidates for holiday/entertainment and lifestyle • Medium commercial TV viewers
improvement products and services. • Less likely to watch non‐commercial TV
• Heavy listeners of commercial radio
Success driven • Career is a top priority

Representing 17 per cent of Australians, they consider • Very goal and success oriented
their career a top priority, so success and visible signs • Skewed towards families, especially older families
of success are important to them. While families play a • Health is not on the forefront of their mind
role in life, they are strongly oriented to personal goal • Very conscious regarding their image — strive always
achievement. They are early adopters of technology to look stylish
and new ideas and heavy consumers of media to stay • Early adopters of technology and new ideas
in touch. • Light viewers of commercial and non‐commercial TV
• Heavy internet users
• Heavy cinema goers
Source: Nielsen Consumer and Media View.
Personality
Personality is perhaps the most distinctive characteristic that defines an individual’s behaviour, yet it is
notoriously difficult to measure reliably. We can define personality as the set of unique psychological
characteristics and behavioural tendencies that characterise an individual. While it is relatively easy to
describe someone’s personality (with words such as ‘positive’, ‘intense’ or ‘competitive’), attempts by
researchers to establish a reliable relationship between personality and behaviour have met with limited
success. It is formed through a complex combination of genetics and experiences. While personality is
relatively consistent and enduring, it does change throughout life in response to social and environmental
influences and personal experiences.
Marketers are interested in understanding those aspects of personality that are linked to an individu-
al’s purchasing behaviour. A number of instruments exist to measure personality, but research has not
adequately established consistent links between particular personality attributes and consumer behav-
iour. It is quite possible that the absence of proven links is more to do with the limitations of the research
methods and the measuring ‘instruments’ (questionnaires) than with the absence of a link between per-
sonality and buying behaviour. Even without reliable scientific evidence, many marketers are convinced
of the relationship between personality types and certain purchases and devote considerable resources to
aiming marketing campaigns at particular personality types. For example, Lowes menswear’s marketing
campaigns are clearly aimed at the ‘man’s man’ (or ‘blokey bloke’).
Often, as with lifestyle, individuals choose to purchase products as an expression of their personality
(for example, fun‐loving and impulsive). This is related to the individual’s self‐concept, which is a com-
bination of how they see themselves and how they wish others to see them. Purchase decisions are both
134 Marketing
a cause and effect of self‐concept. For some individuals, purchases related to self‐concept are those that
reflect things such as individual achievement and material success. Many would argue this is a driving
factor behind the purchase of a Porsche sports car or a Rolex watch, besides the functional and other
benefits the products provide. For other individuals, their self‐concept may be tied to being socially and
environmentally responsible and fashionable, prompting the purchase of organic food, a bicycle or motor
scooter, bed linen made from hemp or bamboo, and canvas shoes. Self‐concept, then, can be linked to most
aspects of an individual’s purchasing behaviour. Again, while the rationale for the use of self‐concept is
undoubtedly sound, its reliable measurement, and subsequent management, is more problematic.
Psychological characteristics
Psychological characteristics describe internal factors that shape the thinking, aspirations, expectations
and behaviours of the individual. These characteristics are particular to the individual and independent of
their situational and social circumstances.
Motivation
The term motivation is used to describe the individual’s internal drive to act to satisfy unfulfilled needs
or achieve unmet goals. This internal force prompts behaviours that seek to move from an actual, current
state to a more desired state. Motivation is often made up of individual motives. A motive is specific to a
particular drive, such as hunger. Behaviours are usually the result of a combination of motives.
While motivation is often specific to the individual and situation, some motives are consistent over
time and across the population. For example, marketers can predict that consumers will be motivated
by hunger at breakfast time and that breakfast will usually be within a range of a few hours for almost
all of the population. Similarly, many people will feel a need for companionship and fun on Friday and
Saturday nights and holidays in summer. Understanding motives presents an opportunity for marketers
who wish to promote consumption of their products and brands, and also to social marketers who are
interested in discouraging consumption; for example, the misuse of drugs, gambling or alcohol. The
link between motivation and behaviour is direct, immediate and powerful. The challenge to marketers,
however, is in being able to consistently identify the particular motives at both the individual and group
levels.
The most widely recognised theory of motivation is Maslow’s hierarchy of needs which suggests that
people seek to satisfy needs according to a hierarchy that places lower-order needs before higher-order
needs. Only once lower-order needs are met will an individual seek to satisfy higher-level needs.9 The
hierarchy is shown in figure 4.3.
Lower-order, physiological, needs are the most basic: food, water, shelter, clothing, sleep and sex.
They are the fundamentals of survival. Marketers of fast food, drinks and condoms seek to capitalise
on these needs. Once these needs are reasonably satisfied, then the need for physical and emotional
safety and security will come to the fore. Marketers of medical and property insurance are most com-
monly responding to these needs. In turn, once the individual feels safe and secure, social needs such
as the desire for love, affection and belonging will be dominant. Marketers of holidays, internet dating
sites, nightclubs, entertainment, restaurants, champagne and perfume typically target these social needs,
often by portraying that purchasing or patronising these products will bring popularity and social suc-
cess. Social networking sites such as Twitter and Facebook also capitalise on individuals’ social needs.
Beyond social needs are the ego or esteem needs, which relate to self‐esteem and the individual’s need
to be recognised and respected by others. Owning a prestige car, living in a ritzy suburb, dining in a
fashionable restaurant, holidaying in a luxurious resort, being a member of an exclusive club, or win-
ning a recognised public award may all contribute to satisfying an individual’s esteem needs. At the top
of the hierarchy, self‐actualisation needs refer to an individual’s need for self‐improvement, achieve-
ment, fulfilment and success. Individuals pursuing self‐actualisation may choose to travel extensively,
learn another language, join particular religions, purchase services such as further and higher education,
personal coaching, meditation and even yoga.
Websites like Amazon and iTunes make product suggestions based on past purchases, or recommend similar
products that other users have bought.
FIGURE 4.3 Motivation: Maslow’s hierarchy of needs
Self-actualisation
(e.g. creative art,
service to others)
Esteem
(e.g. respect from peers)
Love or belongingness
(e.g. intimacy)
Safety
(e.g. housing, money)
Physiological
(e.g. hunger, thirst)
Maslow’s theory has been widely accepted, in part because of its logic and simplicity. It is particu-
larly widely recognised and used to explain motivation in the workplace, and in understanding an
individual’s attitudes to their work and their employer. In marketing, the track record of Maslow’s
theory is perhaps less convincing. While the motives identified by Maslow are universal, it is the
136 Marketing
ordinal and hierarchical structure and logic of the model that are often criticised. The presumption
that consumers will only pursue higher-order needs when all their lower-order needs are satisfied is
clearly questionable. In practice, a consumer’s behaviour, at any one time, is likely to be driven by a
range of motives.
Motives are of immediate interest and importance to marketers, as they can explain the reasons for
some key consumer behaviours, including:
•• choosing to buy a particular product
•• choosing to buy a particular brand
•• being willing to pay a particular price
•• preferring to shop through particular outlets.
Knowledge of these patronage motives is crucial to understanding and predicting consumer behav-
iour. For example, the marketers employed by a supermarket will seek to understand who among their
customers are motivated by location; who are shopping for the lowest price; and who are motivated by
convenience, the weekly shopping ritual or an enjoyable social experience.
Perception
A widely held view among marketers is that ‘perception is reality’. This recognises the central impor-
tance of perception in shaping a consumer’s behaviour. It also acknowledges that there is an objective
world of ‘facts’ and a subjective world of ‘perceptions’. Perception is the psychological process that
filters, organises and attributes meaning to external stimuli. Perception is particular to the individual, so,
for example, a television commercial may be interpreted by viewers to mean something quite different
to that which the advertiser intended. Further, different viewers may perceive the same commercial in
different ways.
An individual is exposed to a potentially limitless array of stimuli via their senses — sight, hearing,
touch, taste and smell. The first stage of the process of perception — filtering — enables the individual
to deal with only those inputs that are relevant to their particular needs and circumstances. In this sense,
perception is selective and can result in the following.
•• Selective exposure — the tendency to actively seek out messages with which the audience already
agrees or those that are pleasant and to avoid messages that are threatening or disagreeable. Con-
sumers may, for example, actively shut out messages from political parties with which the individual
disagrees, or from brands that the consumer dislikes.
•• Selective attention — the process by which an individual chooses to take in only those messages
which are relevant to their needs. Some consumers will only be interested in particular brands; some
only in price; some in appearance; and some in social acceptability. In these circumstances, mes-
sages that do not feature the particular brand, price, imagery, appearance or social success will be
disregarded.
•• Selective distortion — an individual’s tendency to perceive messages that are inconsistent with
existing beliefs or attitudes in such a way as to reduce the inconsistency. For example, an individual
who is highly loyal to a particular brand will seek to deny information that suggests the brand is
inferior.
•• Selective retention — the tendency to remember only that information which is consistent with other
beliefs and which is relevant to an individual’s needs. An individual will tend to remember infor-
mation which supports prior beliefs and feelings and to forget information which is not consistent
with these prior feelings or that is not relevant. It is natural to only remember the good times, and
marketers of ‘heritage brands’ such as Vegemite, Mortein, Heinz and Johnnie Walker can capitalise on
our selective retention of brand names.
The second stage in the process of perception involves organising new information and integrating it
with existing knowledge. This process often involves connecting new information with existing memo-
ries via familiar expressions, sights and sounds. Advertisers often seek to capitalise on this process by
leaving ‘gaps’ in their advertisements in a bid to have the audience connect the product on offer with
positive information they already have in memory. Commercial slogans, such as Nike’s ‘Just do it’, seek
to link the brand with the context of the problem and the application of the product.
The ultimate outcome of the perceptual process is the assigning of meaning. In general, an indi-
vidual will interpret new information in a way that is consistent with their expectations or with
their existing knowledge or beliefs. Individuals strive for cognitive consistency, so messages that are
unexpected or with which the individual disagrees are likely to be distorted or disregarded. An organ-
isation that changes a familiar product, logo, package or taste does so at its peril, especially when
the old product is highly recognised and regarded by loyal customers. In recent years VB (Victoria
Bitter) came under fire from consumers for reducing the alcohol content of its products. The com-
pany also changed its ‘for a hard‐earned thirst’ tagline to ‘the drinking beer’ (including changing the
product’s label). Customers campaigned against the change, with VB later reverting to its original
packaging and slogan.10
Unless a product or package change is accompanied by an educational and promotional program that
makes customers aware of the change and the reasons, valuable brand equity and customer loyalty may
be lost. This consideration is one of the reasons organisations tend to maintain existing branding when
they buy a portfolio of products from another company. Similarly, organisations should be careful when
changing familiar packaging, unless the new package offers obvious benefits to the consumer (and not a
‘disguised price rise’).
Beliefs and attitudes

Beliefs and attitudes make up the ‘mental map’ that a consumer relies upon when making judgements
about problems that require solutions (e.g. the need to purchase appropriate clothing and equipment for
an overseas skiing holiday) and products for which there is no readily apparent need (e.g. new high‐
technology products for which consumers do not generally perceive an immediate need). The mental
map provides the context in which decisions are made. This positive, neutral or negative context has
significant implications for marketing campaigns and initiatives trying to introduce new products or
communication concepts.
Beliefs comprise descriptive or evaluative thoughts that an individual holds regarding their knowl-
edge or assessment of a person, idea, product and so on. Beliefs may be based on objective knowledge,
opinions or faith. They may be accurate or inaccurate. When they involve a judgemental or emotional
component, they can form the basis of a strong brand image.
An attitude describes an individual’s relatively stable and consistent thoughts, feelings and behav-
ioural intentions towards an object or idea. People hold attitudes regarding politics, ideas, food, clothing,
art, music, religion and other people — in fact, almost everything. Attitudes, along with beliefs, there-
fore form the background against which new products or ideas are evaluated. Attitudes clearly relate to
reputation, brand image and brand equity and negative attitudes can destroy reputation, brand image and
brand equity, especially through negative word‐of‐mouth.
Attitudes and beliefs also display inertia — they do change, but usually only gradually. They also
exist as, and within, a gestalt (i.e. as a sum total or configuration), and it is natural for individuals to
strive for consistency in the pattern of their attitudes and beliefs. This instinct for consistency will often
lead consumers to reject new ideas that are not consistent with their existing beliefs or attitudes. In this
sense, new products need to overcome this instinctive defence against new ideas. Brand loyalty is a par-
ticular, and important, manifestation of this generalised psychological tendency. Apple, for example, is a
brand that inspires significant brand loyalty among many consumers, and the organisation has managed
to capitalise on this by extending its product range from its initial offering of desktop computers to port-
able devices such as iPods, iPhones and iPads. Many loyal customers own multiple Apple products, and
upgrade regularly as new models and versions become available.
138 Marketing
Apple is a brand that inspires significant brand loyalty among consumers.
The three components that make up an attitude are:

•• the cognitive component, which comprises the person’s awareness of and knowledge about the object
or issue
•• the affective component, which refers to feelings towards, or approval of, the object or issue
•• the behavioural component, which reflects the individual’s actions or intentions towards the object or issue.
It is important that marketing campaigns address all three components of attitudes in a strong and
positive way. It is also too easy to create a campaign that changes just one component of an attitude. An
advertising campaign that creates very high levels of awareness regarding a new product will leave the
advertiser very disappointed if the cognitive change is not accompanied by an affective and, especially,
behavioural change. Even some award‐winning advertising campaigns suffer this fate.
To effectively manage attitudes towards an organisation’s product, marketers need to use marketing
metrics related to all elements of their marketing mix. Data for metrics related to issues such as brand
awareness is commonly gathered through consumer surveys in which respondents indicate their degree
of awareness of, and agreement with, attitudinal statements about the organisation and its products. For
example, a bank might ask its customers to indicate the extent to which they believe a bank is modern,
friendly, efficient or ethical. Tracking studies ask the same set of questions regularly over an extended
period, enabling organisations to measure long‐term changes in consumer attitudes and to ‘benchmark’
these attitudes against competitors.
Because attitudes are relatively stable, it is difficult to change attitudes towards an organisation in
the short term, especially when that company or brand is already very familiar. For example, Australia
Post has succeeded in improving and updating its image, but this process has taken over 20 years, but
recent controversy over CEO Ahmed Fahour’s $5.6 million salary — and his ultimate resignation —
suggest that the organisation’s challenges are not behind it. In so doing, they resisted the temptation to
‘over promise and under deliver’, a shortcoming common among long‐established companies. Changing
attitudes successfully therefore typically requires a heavy investment in information campaigns directed
at all three aspects of attitudes, by creating high levels of awareness and positive images of the product
or brand, and by offering customers or consumers a reason why they should try, buy or return to a brand.
Learning
Learning is the process by which individuals acquire new knowledge and experience that they can apply
to future problems, opportunities and behaviour. In the context of consumer behaviour, learning relates
to acquiring knowledge about new products, ideas or problems that have some potential application to
fulfilling a need or want. The topic of learning theories is as extensive as the theories are complex. In
general, however, we can distinguish two major schools of learning theory:
•• behavioural learning theories
•• cognitive learning theories.
Behavioural learning theories stress the role of experience and repetition of behaviour. At the simplest
level, ‘classical conditioning’, originally identified by Russian physiologist Ivan Pavlov, describes learning
in which behaviour that results in a pleasant experience is likely to be repeated. If a brand can be consistently
associated with a pleasant experience in the mind of the consumer over an extended period of time, then,
eventually, the brand itself will provoke a pleasant experience. For example, Coca‐Cola has established an
indelible place in the minds of consumers by being regarded as synonymous with good times. In this way,
drinking Coke itself comes to be regarded by its loyal consumers as the essence of good times. For classical
conditioning to be effective, long‐term repetition of a consistent, simple message is required. In this sense,
response to advertising takes on the nature of a ‘knee‐jerk’ reaction. Classical conditioning is therefore most
relevant in low‐involvement purchases; that is, where the product is relatively unimportant to the consumer
and the cost of being wrong is equally minimal. With products like ice creams or soft drink, there is little
risk involved, and the consumer is often willing to ‘try anything once’ and to buy on the basis of trial and
error, although force of habit make it less likely that they would contemplate changing long‐established
and satisfying consumption behaviour. Beyond classical conditioning, ‘operant’ or ‘instrumental’ con-
ditioning, pioneered by American psychologist B.F. Skinner, is distinguished by the overt use of reward and
punishment to stimulate appropriate behaviour. In behavioural learning, consumers learn from experience,
frequently with very little deliberate thought or reflection. Nevertheless, learning occurs when the consumer
associates a rewarding experience with the product. This rewarding experience is likely to be physiological in
nature, such as through a rewarding taste, smell, sight, emotion or experience. Such immediate gratification
can lead to long‐term loyal consumption behaviour, such as among loyal beer drinkers, for whom the ritual of
a cold beer after a hard day’s work can become a lifelong habit. Beer brands such as VB (Victoria Bitter) have
built their success on such operant conditioning.
In contrast, cognitive learning theories describe learning that takes place through rational problem
solving, and that emphasises the acquisition and processing of new information. As such, cognitive
learning theories are generally more relevant in the case of complex problems for which the consumer
needs to develop a rational solution. Cognitive learning theories therefore place a high reliance on the
provision of information and guidance to enable the consumer to arrive at his or her desired solution.
In cognitive learning theories, the emphasis is on reasoning (rather than experience), and so decision
making is likely to be protracted, deliberate, rational and well informed. Cognitive learning is generally
more relevant in high‐involvement purchasing decisions, which are typically for high‐cost, important and
infrequent purchases that involve significant levels of uncertainty and risk for the consumer in the event
of making a wrong decision. For example, the consumer’s decision regarding a new mortgage, super-
annuation or investment product, purchase of a new car or home, or choice of school or university are
all typically high‐involvement decisions with high levels of attendant risk. Marketers of such products
should seek to develop a dialogue with potential purchasers to provide them with adequate information
and advice to enable or assist the buyer to arrive at a satisfactory resolution of the problem. Such pur-
chases place a heavy emphasis on provision of information through such means as brochures, newspaper
and magazine advertising, websites and personal selling.
140 Marketing
SPOTLIGHT
Why we all need to feel good about ourselves

When did you last purchase a product not because
you needed it, but instead out of a sense of embar
rassment or, worse, shame? Does your personal or
your social life suffer because your skin is blemished,
your hair is thinning, your weight is excessive or your
breath is less than fresh? Would your problem be
immediately solved with the purchase of a (usually)
expensive consumer product sold in the ‘health and
beauty’ section of your local supermarket? This is
arguably a common tactic used by many marketers
and advertisers who see the consumer’s self‐concept
as something to be manipulated and exploited.
In his book Winning the Story Wars, Jonah Sachs talks about inadequacy marketing — the tactic
of creating anxiety in a consumer and then introducing a solution through consumption of a product.
Sachs gives the example of advertising for Listerine in the 1920s, which featured a miserable woman,
who we are told at age 30 had often been a bridesmaid but never a bride. The ad warned that if you had
halitosis you wouldn’t know — and, clearly, nobody with bad breath ever got married (unless, of course,
they used Listerine).
In the almost century since, little appears to have changed, especially when it comes to appealing
to women’s feelings of inadequacy. Think about current advertising campaigns for wrinkle creams
that commonly feature glamorous celebrities. Such campaigns clearly exploit the anxiety that we all
feel in ageing. The most recent version of inadequacy marketing assumes that we’re so well used to
having our anxieties solved by brands that the brands themselves become the most important thing,
Sachs says. The tactic is to portray the target consumer as a ‘loser’, and is so ubiquitous that we
rarely think about it (much less, take offence). Think about how advertising frequently targets women
(and men, but to a lesser degree) in these ways — often they serve up impossible‐to‐achieve images.
When they don’t (for instance in the case of Dove’s ‘Campaign for real beauty’), it’s seen as contro
versial and revolutionary.
The issue will continue to be debated, but Sachs argues that marketing messages relying on making
people feel bad about themselves will increasingly be scrutinised and criticised in the online world in
which consumers will share opinions — both good and bad — about products that are important to
them. ‘If your message isn’t delivered in the form of a positive empowering story, people will be less
motivated to share it.’ And, if they share it, social media can, just as easily, work against you.
The two‐way online world, in this sense, is fundamentally different to the old world of conventional
advertising — in which messages were scripted and delivered to anonymous, passive, compliant audi
ences. Social media, at its best, is honest and trustworthy, and designed to mimic personal social
groups.11
QUESTION
Provide an example of a current advertising campaign that relies on ‘inadequacy marketing’. Do you think
the ad is likely to be successful, and why (or why not)? How could the product be portrayed differently, or
better?

1. Briefly describe how your actual lifestyle and your preferred lifestyle differ. Identify which aspirational
purchases you might make to express your preferred lifestyle.
2. Critically discuss the PALS psychographic (lifestyle) market segmentation scheme presented in
table 4.2. Do you think it is a useful approach? What are its strengths and shortcomings?
3. Discuss how accurately Maslow’s hierarchy of needs reflects your own consumer decisions. Can
you identify examples in your own life, the lives of your friends or through media reports where
individuals appear to have chosen to satisfy a higher-order need before lower-order needs have
been met? How do you explain this?
4. Briefly explain the three stages in the process of perception. Choose an advertising campaign and
analyse how it has taken into account the perceptual process of its target market.
5. Research a marketing campaign that effectively appeals to the three components of attitude. Explain
the appeal to each component.
4.4 Consumer involvement and the

decision‐making process
LEARNING OBJECTIVE 4.4 Explain the general steps in the consumer decision‐making process.
Now that we have discussed the broad influences on the consumer, we will examine a general model
of consumer decision‐making behaviour. The consumer decision‐making process involves five stages,
illustrated in figure 4.4. These stages are typically present in all consumer buying decisions, but the rela-
tive importance and duration, and in some instances, the sequence of each varies considerably from one
decision to another.
FIGURE 4.4 The consumer decision‐making process
● Consumer is aware of unsatisfied needs or wants

Need/want
● Marketer stimulates or creates awareness
recognition
of a new need or want
Information ● Seek information from known, trusted sources

search ● Seek information from all convenient sources
● Develop evaluative criteria

Evaluation of
● Rank alternatives
options
● Consider not purchasing/other uses of money
● Choose product and brand

Purchase ● Decide to purchase (or not purchase)
● Purchase
● Continue to evaluate product

Post-purchase ● Deal with post-purchase cognitive dissonance
evaluation ● Assess attitude towards product, brand and
seller in relation to future purchases
142 Marketing
As has been suggested earlier, consumer decisions can involve varying levels of involvement. They
can be categorised as falling along a continuum from habitual at one end to extended decision‐making
behaviours at the other.
•• Habitual decision making involves little involvement with the purchase. Typically, the consumer
minimises search and shopping efforts for purchases that are routine and habitual; for example, many
supermarket and convenience store purchases.
•• Limited decision making involves seeking limited information to evaluate options for infrequent pur-
chases within familiar product categories such as clothing, books, music, inexpensive appliances and
restaurants.
•• Extended decision making involves a high level of involvement with the purchase decision in a
protracted, deliberate and detailed way. In such purchases, consumers will seek to gather comprehen-
sive information concerning the nature of their need or want, the product category, the available
brands, their relative merits and the specific details of the purchase. Such decision making is typical
for high‐involvement products, which are usually those that are high-priced and infrequently pur-
chased. Examples include cars, prestige home furniture and decoration, holidays, home entertainment
systems, new information technology, mortgages and investment products.
A further category of decisions — namely, impulse purchases — are made with very little involve-
ment and, arguably, no planning or even forethought. In such instances, the purchase decision is taken
before the buyer has even recognised a need. For example, the purchase of a snack, fast food or a maga-
zine may be triggered solely by a passing smell or the ready availability of a product at a supermarket
checkout. Such purchases are generally driven by low prices and ready availability.
The level of involvement is fundamentally important to the type of marketing that will be effective.
The following paragraphs describe each of the five stages of the decision‐making process, recognising
that the process can vary according to the nature of the product, the circumstances of the purchase and
the individual consumers involved.
Need/want recognition
Consider a jaded young professional lawyer or investment banker whose work has demanded long hours,
punctuated by regular and ‘impossible’ deadlines and a personal responsibility for ambitious revenue
and billings targets. She may arrive at the conclusion that she cannot indefinitely maintain this pace of
living or normal personal relationships in these circumstances. She might become aware that she has
become physically and emotionally run down, is lacking a close relationship partner, and needs a change
or a break. The young professional has thus recognised a problem.
Need/want recognition typically occurs when a buyer becomes aware of a discrepancy between a
desired state and the actual state. It can occur in a range of ways. Often an individual, like our pro-
fessional, will become aware of an unsatisfactory state of affairs such as poor physical or emotional
wellbeing. Alternatively, marketers can stimulate recognition of the need or want by highlighting the inci-
dence of the problem in the population; for example, loneliness or hypertension (high blood pressure).
Marketers can use advertising, public information campaigns, salespeople or packaging to highlight the
problem in the minds of the public. (Of course, such campaigns might also be partly responsible for
adverse social consequences, such as the increasing incidence of depression and eating disorders. Mar-
keters need to closely monitor the effects of such campaigns.) According to research by DoubleClick,
awareness is driven principally by:
•• websites in the travel sector
•• direct mail in the credit card and retail banking sector

•• internet ads in the mortgage and investment business
•• print ads in the personal and home products sectors.12
Information search
Having recognised the problem, the buyer searches for information about how to solve the problem. Our young
professional will search for information that will help her overcome the problems of being tired and lonely.
Typically, an information search will begin with the individual examining their knowledge and memory for
appropriate solutions. The young professional may resolve to investigate an internet dating site or to take a
holiday in western Europe. Because of the potential of embarrassing or unhappy dating experiences, she may
reject the internet dating option and, because she wants to retain her job position, she may conclude that an
organised tour would enable her to make best use of her available leave time. She might also resolve to fur-
ther explore internet dating sites (unless, of course, she meets a suitable companion or partner in her travels).
Once this first stage of the information search has been done, decision makers look externally for more
information. For example, if our young professional does not know of any suitable tours or tour operators,
she will search for information from external sources, which may involve communication with friends,
relatives or colleagues, use of an internet search engine or the reading of travel magazines. In engaging in an
external search, the consumer will prefer sources that are reliable and efficient. In this sense, friends, family
members and associates are the most highly valued sources, as the person trusts or respects them. This
explains why ‘word‐of‐mouth’ is highly influential and so appealing to marketers, but is not easy to manage.
On the other hand, the internet has become the most preferred information source for many categories of
purchases such as expensive consumer durables and travel. In this case, the young professional searches
local travel agents and the internet for a range of suitable tours to her preferred travel destinations. (Although
she has travelled overseas before, she is more interested, on this occasion, in visiting more exotic and out of
the way destinations.) She also discusses her professional and personal situation with her work colleagues
and social acquaintances to identify tour companies and destinations which might match her needs.
Evaluation of options
A successful information search will usually yield a range of alternative solutions for consideration. For
example, following her enquiries, the young professional may identify three tours that seem to match her
requirements. To evaluate the options, the buyer uses a combination of objective criteria, such as price, and
subjective criteria, such as style, image or feeling about a product. In the case of an organised (‘package’)
tour, a critical consideration will be a judgement about the kinds of people who will also be taking the
same tour. These criteria will likely vary in importance. For example, destination, duration and the stan-
dard of hotel rooms may be more important to our young professional than price. From the range of
evaluative criteria, the potential buyer rates and eventually ranks the alternative solutions. From her list
of three tours, the young professional may reject one tour because it mostly stays at camping sites and
youth hostels, or because the price does not include hotel breakfasts, side tours and/or evening meals.
Marketers can influence consumers’ evaluations by presenting their products’ features and benefits in
a way that reflects consumers’ needs and evaluative criteria, and hence influences their decision making.
Marketers tend to feature those attributes of their products that are strongest and seek to convince the
consumer that those features are the most important. In this way, marketers can shape the consumer’s
decision, particularly in unfamiliar needs, wants or product categories.
It is important to remember that the consumer is also likely to consider completely different uses
of their money. Because consumers have limited resources, not only will they compare a few different
brands and styles when choosing a new dining room suite, for example, but they will also make a judge-
ment as to whether a new dining room suite offers more value than other possible uses of their money,
such as a holiday or just saving the money.
Purchase
Once the evaluation of options is complete and the decision to purchase is made, the consumer moves
to the purchase stage, in which the particular product and specific brand are chosen. It is important to
recognise, of course, that the purchasing decision may, in fact, be to not purchase. At the purchase stage,
144 Marketing
our young professional may choose to purchase from a local travel agent after discussing her needs with
a travel consultant. She may be influenced by the personal style, expertise or charm of the consultant.
It is also likely that she will choose the tour package which offers the mix of destinations, attractions,
facilities and inclusions that best meet her needs, is available over a suitable starting date and duration,
and for which the price is reasonable. The actual purchase takes place when she chooses an individual
tour and the travel agent accepts her credit card payment (which is linked to her frequent flyer card, and
so she receives frequent flyer miles, which she regards as a minor but worthwhile bonus). Product avail-
ability (in the form of a suitable departure date and location) can often make a crucial difference at this
stage, particularly when consumers are undecided between brands of packaged tours.
Post‐purchase evaluation
It is a common mistake for marketers to assume that the consumer decision‐making process ends
with the purchase. This is rarely the case for the consumer. After the purchase, the buyer continues to
evaluate their purchase decision. In fact, once the purchase is made, the consumer is in a much better
position to evaluate their choice, and so they will continue to assess whether the product matched their
expectations.
Our young professional, for example, is conscious that in choosing one tour, she has rejected other —
possibly better — alternatives, and she needs to be reassured that she has made the right choice. She is also
uncertain about her choice of travel destinations, and she is nervous, because a number of tour companies
have folded in the past, leaving members who have prepaid without a service. The young professional also
needs to be reassured that she is receiving good value for money. Under such circumstances, like many
buyers of expensive products, she may experience post‐purchase or cognitive dissonance.
Cognitive dissonance occurs when a purchaser has second thoughts or doubts about the wisdom of
the purchase. It is most probable when a person has recently purchased an expensive, high‐involvement
product, the features of which are shared with other acceptable alternatives. In these circumstances, there
is a danger that the buyer may feel they have made the wrong choice. Consequently, a buyer will actively
seek out information from personal or commercial sources, which will reassure them about their decision.
In these circumstances, marketers may seek to communicate with their recent customers to ensure
their experience has been satisfactory and they have no regrets. For this reason, car companies and
dealers write to their new customers to receive feedback on the purchase and service experiences and
to provide evidence to customers that they have made a wise choice. In the case of the car companies,
travel agents and tour companies, the objective in the post‐purchase phase should be the same; that is,
to ensure the customer is satisfied and is likely to continue the relationship by their loyalty to the tour
company and the local travel agency when the consumer next purchases, or by recommending them to
others who are contemplating travel. This forms the basis of a continuing, profitable customer relation-
ship. Another strategy for reducing cognitive dissonance is the use of bonuses or rebates via redemption,
which provide the consumer with additional value at some time after the purchase. Apple regularly uses
this approach, inviting buyers of its computers to send in a form and their barcode to receive cash back
or a bonus product, such as an iPod.
SPOTLIGHT
What’s made Pokémon GO such a viral success?

THUONG HOANG AND STEVEN BAKER, UNIVERSITY OF MELBOURNE
Technology often needs a ‘killer app’ to gain mass market appeal. For the touch screen, it was the
iPhone; for wearables, the Fitbit. Augmented reality games have been around for more than a decade,
so what was it about Pokémon GO that allowed it to become a global phenomenon? We believe it can
be attributed to three core social components of the game: the blending of the virtual and the real, geo‐
location and the success of existing Pokémon culture.
Smile for the camera
The first time we heard about Pokémon GO was via
a few Facebook posts with screenshots of Pokémon
on the streets or sitting beside friends. This is the
core strength of augmented reality apps, the ability to
alter the physical world by adding virtual components.
Millions of dollars have been spent on technology
for aligning the physical world and virtual contents.
Tracking issues have taken up 20 per cent of the
research effort in the augmented reality community
around the world for the past decade.
Microsoft’s latest augmented reality headset,
the Hololens, uses a series of cameras to physically
map out the entire environment around the user to
accurately place virtual objects. Pokémon GO does not have this level of sophistication. When players
come across a Pokémon character in Pokémon GO, the game superimposes it over the camera view.
We tested the feature and noticed we needed to play around with the phone to get the perfect angle
for the screenshot. So although the tracking may not be sophisticated, a user can, with minimal effort,
quickly make the Pokémon appear as if they are part of the physical world. Some players get creative
with these poses, which are shared widely on social media platforms. We believe the ‘shareability’ of
these images contributes hugely to the success of the game.
Snapchat, the phenomenally successful messaging application with more [than] 100 million users,
also taps into the social ‘shareability’ of images that blend the virtual and the real. Gather some teen
agers in a room together and it will not be long before the room will be filled with giggles and cries as
they swap ‘snaps’ with augmented features overlaid over theirs via Snapchat Filters.
Although there has been keen research interest in augmented reality as a means of treating pho
bias and the pain associated with phantom limbs, to date there has been little research focus on the
psychological aspects of our fascination with blended imagery.
Researchers studying the customisation of avatars, a graphical representation of a person’s alter ego or
character in computer games, have found that the ability to manipulate physical features such as hair colour,
or to superimpose animal features over human forms, is critical for an avatar to appeal to a user. There are
clear parallels here to the success of augmented reality app features such as Snapchat filters. Pokémon GO
screenshots also seemingly tap into this desire for a personal connection to the virtual world.
Pokémon GO, you go!

Pokémon GO requires you to walk around to hunt down Pokémon. This aspect of the game is not new,
as similar games in the past have utilised this, including Niantic’s own Ingress. In fact, Pokémon GO
uses the same Ingress platform. Many see this as a positive example of games that encourage people
to exercise. We see it more as a social success as it highlights the power of an augmented reality plat
form as a shared, social experience. The success of this aspect of the game can be gauged by following
the various reports of organised Pokémon GO events with thousands of registered participants.
Virtual reality, by comparison, is a very personal experience. There have been many previous attempts
at introducing social interactions into a virtual reality environment. Second Life was released in 2003 and
after a decade had more than 1 million users. Pokémon GO has already dwarfed this user count within
48 hours of release. Reports suggest it has eclipsed the daily user counts of major social network and
dating services such as Tinder and Twitter.
A money earner
A final aspect of the success of Pokémon GO is undoubtedly its ability to tap into an established
pop culture phenomenon. According to Nintendo, as of the end of May 2016, it had sold more than
280 million units of Pokémon‐related software, earned box office revenue of 76.72 billion yen (about
A$967 million), and shipped over 21.5 million cards (as of September 2015). The company estimates
the total worldwide market size of the Pokémon franchise to be more than 4.8 trillion yen (about
A$60 billion). With a market this big, there was an eager community of Pokémon fans waiting for an
app such as Pokémon GO to launch.
146 Marketing
There are clear parallels here to another smash hit smartphone game, Kim Kardashian: Hollywood.
This game traded on the celebrity credibility of the Kardashians and used social gaming methods and
the promise that you might even become one of Kim’s friends, at least within the confines of the game.
A March Forbes article estimates that Kim Kardashian: Hollywood has earned the star around
US$20 million (about A$26 million). Given the success of Pokémon GO, Nintendo executives can be
assured that the Pokémon franchise’s level of success, and its share price, is set to continue upward.
This ability to tap into the established worldwide community of Pokémon fans was the final ingredient
necessary to establish Pokémon GO as the ‘killer app’ for augmented reality gaming. So to make a killer
app, just add social.
QUESTION
Do you agree that to make a killer app, you just need to add social? Why or why not?
1. Briefly explain the five stages in the consumer decision‐making process.

2. Outline two examples of habitual, limited and extended purchasing decisions you have made.
3. To what extent do you think ‘need/want recognition’ is generated internally versus externally? Explain
your answer using a variety of examples.
4. Imagine you are about to purchase a new smartphone (e.g. an iPhone or an Android device). Explain
how you would progress through the stages of the decision‐making process. Which stages were
more or less important?
5. Choose a recent non‐habitual purchase that you have made. Analyse the situational, group and
individual factors that affected your decision‐making process. Map the factors to each stage of the
decision‐making process. How important were the various factors to your decision?
SUMMARY
4.1 Explain why marketers require a thorough understanding of consumer behaviour and its
major influences.
‘Consumer behaviour’ is the study of the behaviour of individuals and households who buy products
for personal consumption. It forms the basis of an understanding of the reasons behind the decisions
consumers make, which is central to creating an effective marketing mix. Consumer behaviour is
influenced by situational factors, group factors and individual factors.
Situational factors are simply the circumstances in which a person finds themselves when making
a consumption decision. They relate to the influence of physical, social, time, motivational and
mood factors.
4.2 Understand the major group factors that influence consumer behaviour.
Group factors comprise cultural influences and social influences. Cultural influences affect behav-
iours that operate at the level of the whole society or of major groups within society, and include
culture, subculture and social class. Culture is the system of knowledge, beliefs, values, rituals and
artefacts by which a society or other large group defines itself. National cultures can be described
according to Hofstede’s cultural dimensions: power distance, uncertainty avoidance, individualism,
masculinity and long‐term orientation. A subculture is a group of individuals who share common
attitudes, values and behaviours that distinguish them from the broader culture in which they are
immersed. A social class is a grouping defined by similar social ranking within the social hierarchy.
Social influences are those that impinge on the individual to behave in a way that reflects group
norms. A reference group is any group to which an individual looks for guidance, including member-
ship, aspirational and dissociative reference groups. Within a reference group, some individuals take
on the role of opinion leader on issues about which they are particularly knowledgeable. Opinion
leaders are influential over the attitudes and behaviours of other group members. Family influences
are also important in consumer behaviour and many consumption decisions are traditionally made
by particular members or combinations of members of the household.
4.3 Analyse the major individual factors that influence consumer behaviour.
Personal and psychological factors influence consumer behaviour independently of social circum-
stances. Personal characteristics include demographic, lifestyle and personality factors. Marketers
consider all of them to have a close link to consumer behaviour, but it has proven notoriously diffi-
cult to demonstrate a reliable and predictable link between particular personal characteristics and
consumer behaviour.
Psychological characteristics are internal factors that shape the thinking, aspirations, expectations
and behaviours of the individual. They include motivation, which is the internal drive to satisfy
unfulfilled needs. According to Maslow’s hierarchy of needs, individuals generally try to satisfy
lower-order needs such as food and sleep ahead of higher-order needs such as learning. Another
psychological characteristic is perception, which describes how an individual filters, organises and
attributes meaning to external stimuli, including marketing communications. Beliefs and attitudes
are also an important personal influence on consumer behaviour, as they determine the context in
which product evaluations are made. Effective marketing needs to appeal to the cognitive, affective
and behavioural components of consumer attitudes. A final personal influence is the way in which
an individual learns. Marketers can ‘teach’ individuals to have particular awareness of and attitudes
towards their products using cognitive and behavioural learning approaches.
4.4 Explain the general steps in the consumer decision‐making process.

The consumer decision‐making process typically comprises need/want recognition, information
search, evaluation of options, purchase and post‐purchase evaluation. These steps are common to
most purchase decisions, but the extent to which each is used depends on the level of involvement
in the purchase. Habitual purchases are made with little decision‐making involvement; infrequent,
148 Marketing
but familiar, purchases are made with limited involvement; and rare, large, important or risky pur-
chases are made with extensive involvement.
It is a common mistake for marketers to overlook the last stage of the decision‐making process:
post‐purchase evaluation. It is after the purchase that the consumer can evaluate whether or not they
made a wise choice. Effective marketers take steps to ensure they continue to build their relation-
ship with consumers after the purchase to reduce cognitive dissonance (second thoughts about the
purchase) and increase the likelihood of repeat purchase and brand loyalty in the future.
KEY TERMS
aspirational reference groups Groups to which the individual would like to belong.
cognitive dissonance A purchaser’s second thoughts or doubts about the wisdom of a purchase they
have made.
consumer behaviour The analysis of the behaviour of individuals and households who buy goods and
services for personal consumption.
consumer decision‐making process The process of need/want recognition, information search,
evaluation of options, purchase and post‐purchase evaluation that are common to most consumer
buying decisions.
culture The system of knowledge, beliefs, values, rituals and artefacts by which a society or other
large group defines itself.
demographic factors The vital and social characteristics of populations, such as age, education and
income.
dissociative reference groups Groups with which the individual does not wish to be associated or
which the individual may wish to leave.
extended decision making High‐involvement purchasing decisions involving high‐price, high‐risk
and/or infrequent, unfamiliar products.
family life cycle A series of characteristic stages through which most families pass.
habitual decision making Low‐involvement purchasing decisions, usually involving small, routine,
low‐risk products.
individualism The extent to which people focus on their own goals over those of the group.
indulgence The extent to which a relatively free gratification of basic and natural human drives related
to enjoying life and having fun is allowed.
involvement The level of engagement undertaken by a consumer when considering perceived
consequences of a purchase.
limited decision making Limited‐involvement purchasing decisions, usually involving infrequently
bought, but familiar, products.
long‐term orientation The extent to which a pragmatic, long‐term orientation is valued over a short‐
term focus.
masculinity The extent to which traditionally masculine values are valued over traditionally feminine
values within a culture in Hofstede’s cultural dimensions.
Maslow’s hierarchy of needs A theory of motivation that suggests that people seek to satisfy needs
according to a hierarchy that places lower-order needs before higher-order needs.
membership reference groups Groups to which the individual belongs.
motivation An individual’s internal drive to satisfy unfulfilled needs or achieve goals.
multiculturalism The existence of diverse cultures within a society.

opinion leader A reference group member who provides relevant and influential advice about a
specific topic of interest to group members.
perception The psychological process that filters, organises and attributes meaning to external stimuli.
pester power The influence of children on their parents’ purchasing decisions.
power distance The degree of inequality among people that is acceptable within a culture.
psychological characteristics Internal factors, independent of situational and social circumstances,
that shape the thinking, aspirations, expectations and behaviours of the individual.
reference group Any group to which an individual looks for guidance.
restraint The extent to which gratification of needs is suppressed and regulated by means of strict
social norms.
situational influences The circumstances a consumer finds themself in when making purchasing
decisions.
social class A group comprising individuals of similar rank within the social hierarchy.
social risk The belief by a consumer that a particular choice of product may have potentially negative
social consequences.
subculture Groups of individuals whose members share common attitudes, values and behaviours that
distinguish them from the broader culture in which they are immersed.
uncertainty avoidance The extent to which people in a culture feel threatened by uncertainty and rely
on mechanisms to reduce it.
CASE STUDY
ANYONE FOR BUBBLE TEA?
Since the beginning of European settlement, Australian culture has been shaped by the successive waves
of immigration, and our culinary culture is much the richer for it. From the stodgy and predictable Anglo
cuisine that dominated our eating habits well into the 1960s, Australians now enjoy some of the most
diverse, exotic and interesting food and beverage choices available anywhere in the world — and the
options are continually expanding. One of the interesting beverage options available are Asian ‘bubble’
teas (so‐called because the fruit‐ and milk‐based drinks are recognisable by the chewy tapioca ‘pearls’
or ‘bubbles’). Originating in Taiwan, the bubble tea craze spread throughout Asia before arriving in
Australia. Among the fastest growing of the competing franchises is Chatime.
Founded in Taiwan in 2003, Chatime is an international franchise with over 800 stores worldwide.
From its launch in Australia in 2009, the chain has grown to over 45 stores across Australia, with fur-
ther ambitious growth planned. Chatime is not alone in this regard — the market leader in the Asian
tea market is EasyWay, but other brands such as GongCha have recently opened stores. Chatime’s local
master franchisor Charlley Zhao would be happy for the company to emulate the Australian success of
Boost Juice and the international success of Starbucks. Chatime’s business model and its success have
much in common with the Starbucks and Boost approaches:
Chatime tea is brewed fresh in store using the highest quality natural ingredients with no added pre
servatives. It is against the company’s policy to use pre‐made tea or tea powders and we are proud to
support Australian farmers, with fresh milk delivered to Chatime stores daily by Dairy Farmers and
Pura. Freshly brewed tea has more flavour and fragrance. Chatime draws from traditional Taiwanese tea
concepts to create their delicious fusion of flavours and continuously develop many new and innovative
drinks, while keeping true to the delicious Taiwanese tea flavour.13
To date, Chatime has concentrated its marketing on Asian–Australians and focused in geographic
locations with high concentrations of Asian residents. The first store opened in the Sydney suburb of
Hurstville, which has a population of 47.5 per cent Chinese according to the 2011 Census. Chatime’s
marketing has focused on Mandarin‐language media and sponsoring concerts by Chinese pop stars.
Zhao has also targeted Asian franchisees. ‘Obviously if we were targeting mainstream in the beginning,
it would be a lot harder than targeting Asians. We used the strategy to go that way,’ he says.14
For Chatime, however, there are currently limitations and challenges typical of any business that
has expanded to the practical limits of its ‘natural’ market niche. Now Zhao wants to open more
outlets — but he needs to expand beyond the traditionally Asian suburbs populated by first‐ and second‐
generation immigrant families together with international (mostly Chinese) students. He is confident that
150 Marketing
a mainstream audience will embrace the tea brand, but the franchisees are not easily convinced. Many
of the 29 franchisees are keen to open additional outlets but are not convinced that Anglo–European
suburbs and towns are ready for the product. Zhao says:
We do all the research to tell them that the other areas may be good but . . . they’re maybe not confident
in thinking that local mainstream markets will love this drink.15
For Chatime, the current limits to growth are the size and geographic concentration of the Chinese–
Australian population and the issue is whether this niche will provide sufficient revenue and growth to satisfy
the aspirations of the parent company, Zhao and franchisees. To expand beyond the current customer base
will inevitably require Chatime to capture a viable share of the mainstream (predominantly Anglo–European)
Australian market. The challenge is not insurmountable, however. After all, no Australian suburb or town
would be complete without its local Chinese restaurant, although this assimilation occurred over decades,
which wouldn’t suit Zhao’s ambitious plans. Australian appetites for introduced and exotic cuisines and bev-
erages give encouragement that ‘pearl teas’ will eventually become as much a part of the vernacular as ‘skim
caramel mochacino latté’ (if such a drink exists!). Zhao is confronting three common, and related, problems:
First, he needs to ensure Chatime’s product fits the local, mainstream market. Then he needs to focus on
an educative marketing campaign that changes consumers’ perceptions about the brand. Finally, he needs
to persuade franchisees to open outlets outside the Asian‐heavy suburbs.16
In relation to the first issue, the challenge is in recognising the distinctive characteristics of the local
market and in deciding how far the local product should be adapted to local tastes. Zhao says:
Just as McDonald’s introduced the Aloo Tikki burger when it expanded to India, catering to locals’
taste for the spiced potato patty snack of the same name, franchises need to be prepared to adjust their
products to fit new markets. Chatime has introduced skim and soy milk and also allows consumers to
customise their sugar levels.17
Although premium pearl milk tea is Chatime’s bestseller globally, fruit‐based teas and smoothies per-
form more strongly in Australia than they do in Taiwan. This is because the Australian marketplace likes
‘more fresh and more healthy’ products, Zhao says. Of course, modifying mass‐market fast foods and bev-
erages to suit the tastes of local markets is both sensible and widely practiced. McDonald’s, Hungry Jack’s
(Burger King), KFC and Pizza Hut have all specially developed and marketed ‘Aussie’ versions of their
staples, although typically only for brief promotional periods (such as leading up to Australia Day).
In a move that is similar to Australian fresh juice providers and taps into a broad‐based perception of
‘freshness’, Zhao has overhauled the look of Chatime. A bright, cartoonish purple was the launch colour,
but now the store interiors are a pale green with bamboo details. ‘Purple doesn’t give people any feeling
of fresh’, he says. Tea leaves are on display to show the ‘natural’ side of the brand. Zhao wants to court
a mature customer and leave the teenagers to his competitors, so he avoids the moniker of ‘bubble tea’.
He also wants Chatime to be known as the ‘tea experts’. ‘We really want to focus on people who are
well educated, who know the benefits of drinking tea,’ he says. ‘That’s why our branding and wording
is quite mature and serious. We’re trying to tell people, “Yes, we are the experts, trust us, drink our tea,
you’ll get healthy”.’
This repositioning should see Chatime better attuned to both its original Chinese and local non‐Chinese
customers. At the same time, Chatime must be careful not to radically adapt its core ‘bubble tea’ product
offering and service experience so that it alienates its core customer groups. After all, these customers
have several alternative providers such as EasyWay and GongCha, who can still provide the ‘authentic’
product. It’s a juggling act that often challenges companies seeking to capture more of the mainstream
market.
Expert marketing opinion, however, is not universally in favour of the logic of broadening and
adapting niche products to meet the needs of ever‐wider markets. Rod Young, franchise guru and man-
aging director of DC Strategy, has sober advice for such plans. ‘I think that these niche markets are
creating terrific opportunities and I would encourage any organisations to not be all things to all people,’
he says. ‘There’s nothing invalid about focusing on a particular ethnic market and maximising the market
penetration in those markets.’18
Having resolved the issues of product adaptation, there is clearly also a need to create product aware-
ness, particularly among the new mainstream Australian target customers who may have noticed the new
stores at their local shopping malls but are unaware of the pleasures and health benefits of ‘pearl teas’.
This suggests the need for a product and brand awareness campaign, which may demand an increased
marketing communications budget to capture the attention of the targeted new users. Of course, word-of-
mouth, enhanced by social media, can also play a central role in this campaign.
Expanding beyond major Australian cities and suburbs with large Chinese populations will be cen-
tral to the aspirations of Chatime, who wants to become the ‘Starbucks of tea’. However, the Starbucks
experience in Australia, and elsewhere, also demonstrates that such aspirations are not always enough,
and that competition and the diverse tastes of the local market can frustrate ambitious and optimistic
plans. The challenge for Chatime and its competitors is to move the product from being a fad and a
craze — albeit an exotic and pleasurable one — to being a product of universal appeal and a permanent
fixture in the Australian beverage landscape. The keys to success will be the attractive idea, a sufficient
budget, excellent execution and patience.
QUESTIONS
1 What are the key elements that have contributed to Chatime’s success in Australia to date?
2 What issues might limit the appeal of ‘bubble tea’ to non‐Chinese Australians? (You might like to
sample the product at your local shopping centre or mall.)

3 What product attributes should Chatime emphasise in its promotion to maximise its appeal?
4 Beyond their current penetration of Australian suburbs with a high proportion of Chinese residents,
where might you expect to find additional Chatime outlets?
5 Do you believe Chatime should target ‘non‐Chinese’ locations at this stage of its development, or
should it stick to its existing location strategy? Why/why not?
152 Marketing
ADVANCED ACTIVITY
Having read this chapter, research and describe the likely group and individual influences on the consumer
behaviour of online shoppers. Then, choose a product that is likely to be suited to online purchase and out-
line how each of these influences could potentially impact on the consumer decision‐making process.
MARKETING PLAN ACTIVITY

Based on this chapter and the information you have been compiling for your chosen organisation’s
marketing plan in chapters 1 to 3 (situation analysis, SWOT analysis and any market research you have
or will be conducting), outline the buying behaviour of potential purchasers of your product that you will
need to understand.
Bearing in mind that you will be refining and revising this information as you gather market research
and your marketing knowledge increases in subsequent chapters, be as specific as you can at this stage
in relation to the following:
•• the major group/sociocultural factors that may influence the buying behaviour of potential purchasers
of your product
•• the major individual — personal and psychological — factors that may influence the buying behav-
iour of potential purchasers of your product
•• the level of involvement a potential purchaser may have with your product
•• the stages of the decision‐making process a potential purchaser may go through in relation to your
product, including how much time and effort may be spent at each stage.
As with the marketing plan activities in previous chapters, the above analysis is likely to inform your
overall and ongoing market research requirements. Such detailed analysis and understanding of con-
sumer behaviour in relation to your chosen product will be crucial to the marketing strategies you will be
developing in later chapters for your marketing plan.
A sample marketing plan has been included in the appendix to give you an idea where this type of
information fits in an overall marketing plan.
WEBSITES
Changing consumer behaviour of millennials: www.goldmansachs.com/our-thinking/pages/millennials-
changing-consumer-behavior.html
Weight Watchers and inadequacy marketing — where did they go wrong?: www.smh.com.au/lifestyle/
news-and-views/opinion/weight-watchers-has-completely-missed-the-body-positive-memo-20161019-
gs5hv1.html
Ten ways to use Snapchat for business: www.socialmediaexaminer.com/10-ways-to-use-snapchat-for-
business
ENDNOTES
1. G. Hofstede (1994), ‘Management scientists are human’, Management Science, vol. 40, no. 1, January, pp. 4–13.
2. M. Kotabe, A. Riege, K. Griffiths, G. Noble, S.H. Ang, A. Pecotich and K. Helsen (2008), International Marketing, 2nd edn,
John Wiley & Sons Australia, Brisbane, pp. 140–1.
3. Geert Hofstede (n.d.), ‘Dimensions of national cultures’, www.geerthofstede.com/dimensions-of-national-cultures;
G. Hofstede, G.J. Hofstede and M. Minkov (2010), Cultures and organisations: software for the mind, revised and expanded
3rd edition, McGraw‐Hill, New York.
4. Data from Geert Hofstede — Cultural dimensions, www.geert-hofstede.com. Note: The vertical placement in figure 4.2 is
not meaningful; it is for clarity only.
5. See, for example, Australian Bureau of Statistics (2012), Australian Social Trends 2012, cat no. 4102.0, www.abs.gov.au.
6. E.M. Rogers (2003), Diffusion of innovations, 5th edn, The Free Press.
7. ‘Marketers plug into pester power to target parents’ (2002), B&T, www.bandt.com.au.
8. Nielsen Panorama: Survey 7 September 2007 – 1 March 2008 – February 2009, 12 month database.
9. A.H. Maslow (1943), ‘A theory of human motivation’, Psychological Review, vol. 50, no. 4, pp. 370–96; A. Maslow (1954),
Motivation and personality, Harper, New York.
10. A. Devic and J. Nash (2012), ‘Melbourne beer drinkers cheers Victoria Bitter’s return to full‐strength brew’, News.com.au,
19 October, www.news.com.au.
11. Winning the story wars website, www.winningthestorywars.com; ‘The Dove campaign for real beauty’, Dove website,
www.dove.us/social‐mission.
12. R. Le Pla (2005), ‘Too slow? Are your customers leaving you behind?’, NZMarketing Magazine, February.
13. ‘About Chatime’, Chatime website, www.chatime.com.au/about_us.php.
14. J. Gardner (2012), ‘A taste for rapid growth’, BRW, 13 September, www.brw.com.au.
15. ibid.
16. ibid.
17. ibid.
18. ibid.
ACKNOWLEDGEMENTS
Photo: © ISebyI / Shutterstock.com
Photo: © ZUMA Press, Inc. / Alamy Stock Photo
Photo: © Chris Pavlich / Newspix
Photo: © Volkova Vera / Shutterstock.com
Photo: © antoniodiaz / Shutterstock.com
Photo: © Inna Churikova / Shutterstock.com
Photo: © KingWu / iStockphoto
Photo: © robert cicchetti / Shutterstock.com
Photo: © The Advertising Archives / Alamy Stock Photo
Photo: © enchanted_fairy / Shutterstock.com
Photo: © Maridav / Shutterstock.com
Table 4.2: © Nielsen Consumer & Media View
Text: ©The Conversation, Jyotirmoyee Bhattacharjya and Adrian B. Ellison, 6 April 2016, https://
theconversation.com/online-retailers-yet-to-harness-big-social-data-56362
Text: ©The Conversation, Nives Zubcevic-Basic, 5 October 2016, https://theconversation.com/us-election-
what-impact-do-celebrity-endorsements-really-have-66204
Text: ©The Conversation, Park Thaichon, 5 August 2016, https://theconversation.com/fast-food-companies-
use-social-networking-sites-to-target-children-63189
Text: ©The Conversation, Thuong Hoang and Steven Baker, 13 July 2016, https://theconversation.com/
whats-made-poke-mon-go-such-a-viral-success-62420
154 Marketing

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CHAPTER 4 Consumer Behaviour

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CHAPTER 4

After studying this chapter, you should be able to:

Online retailers yet to harness big social data

CHAPTER 4 Consumer behaviour 117

4.1 What is consumer behaviour?

Influences on consumer behaviour

•• related to group (social or cultural) factors

FIGURE 4.1 Factors influencing consumer behaviour

Situational Group Individual

Cultural Social Personal Psychological

The principal situational influences may be classified as:

US election: what impact do celebrity endorsements really have?

CHAPTER 4 Consumer behaviour 119

people’s opinions and decisions.

CONCEPTS AND APPLICATIONS CHECK

1. In your own words, define consumer behaviour.

4.2 Group factors

CHAPTER 4 Consumer behaviour 121

FIGURE 4.2 Hofstede’s dimensions of culture

WORLD AVERAGE WORLD AVERAGE

South Africa South Africa

New Zealand Japan Malaysia Singapore Japan

0 10 20 30 40 50 60 70 80 90 100 110 0 10 20 30 40 50 60 70 80 90 100 110

WORLD AVERAGE WORLD AVERAGE

South Africa South Africa

Malaysia Japan Malaysia Japan

0 10 20 30 40 50 60 70 80 90 100 110 0 10 20 30 40 50 60 70 80 90 100 110

CHAPTER 4 Consumer behaviour 123

CHAPTER 4 Consumer behaviour 125

be of greatest influence in product categories

CHAPTER 4 Consumer behaviour 127

Stage Description Example of marketing consequences

Roles and status

CHAPTER 4 Consumer behaviour 129

Fast food companies use social networking sites to target children

behaviour and demographics.

CONCEPTS AND APPLICATIONS CHECK

4.3 Individual factors

CHAPTER 4 Consumer behaviour 131

financial services products, it is a very

TABLE 4.2 PALS (Personal Aspiration Lifestyle Segments) psychographic data

Balance seekers • More likely to have a young family

Health‐conscious • Heavily skewed to couples with no children

Harmony seekers • Singles/couples, no children in the household

CHAPTER 4 Consumer behaviour 133

Fun seekers • A sense of fun in their life is their main priority

Success driven • Career is a top priority

Source: Nielsen Consumer and Media View.

CHAPTER 4 Consumer behaviour 135

FIGURE 4.3 Motivation: Maslow’s hierarchy of needs

CHAPTER 4 Consumer behaviour 137

Beliefs and attitudes

The three components that make up an attitude are:

CHAPTER 4 Consumer behaviour 139

Why we all need to feel good about ourselves

CONCEPTS AND APPLICATIONS CHECK

CHAPTER 4 Consumer behaviour 141

4.4 Consumer involvement and the

FIGURE 4.4 The consumer decision‐making process

● Consumer is aware of unsatisfied needs or wants

Information ● Seek information from known, trusted sources

● Develop evaluative criteria

● Choose product and brand