Chapter 1

Consumer behavior: the study of consumers’ choices during searching, evaluating,

purchasing, and using products and services that they believe would satisfy their needs. It
explains how people spend their money, time and effort on the offerings of marketers.

The marketing concept was developed over time through 3 other important business
orientations: the production concept, the product concept and the selling concept.

Under the production concept, marketers focus on product availability at low prices. The
implicit marketing objectives are cheap, efficient production and intensive distribution, not
product variations. The product concept assumes that consumers will buy the product that
offers them the highest quality, best performance and the most features. The focus on the
product rather than the needs of the market is known as marketing myopia. The selling
concept ceates a focus on selling the products that the marketer has decided to produce.
The selling concept assumes that consumers are unlikely to buy the product unless they are
aggressively persuaded to do so – and the approach does not consider customer satisfaction
or customer retention
Marketing concept consists of satisfying consumers’ demands, creating value and retaining
customers.
Chapter 3
Motivation: the driving force within individuals that impels them to act. Unfulfilled needs
create psychological tension and drives that make people take action.
Needs are circumstances in which something is necessary or requires some course of action.
Unfulfilled needs form motivational desires that impel consumers to purchase goods and
services. Desired outcomes create tensions which consumers strive to relieve by forming
goals and acting in a way that will fullfill needs.

The motivation process.

Biogenic needs are innate or psycholigical needs (biogenic,primary), which sustain our
biological existence. They include the need for foor, water, air, protection of the body from
the outside environment( clothing, shelter), and seks.
Psychogenic needs are learned from our parents, social environment, and interactions with
others. Among many others, they include the needs fors elf-esteem, prestige, affection,
power, learning, and achievement.
Goals are the sought-after results of motivated behavior, and all human behavior is goal
oriented. There are two types of goals:
• Generic goals are outcomes that consumers seek in order to satisfy physiological and
psychological needs.
• Product-specific goals are outcomes that consumers seek by using a given product or
service.
When a consumer states they want a pair of jeans, they have stated a generic goal. When they
announce they really want a pair of Calvin Klein jeans, then they have stated product-specific
goals.
Substitute goals can be used to get rid of tension when a primary goal cannot be attained.
Over time, a substitute goal may become a primary goal.
Frustration is the feeling that results from failing to achieve a goal.
Defense mechanisms are cognitive and behavioral ways to handle frustration.
Defense mechanisms are used when people cannot cope with frustration. They are often
developed to protect one’s ego from feelings of failure when goals are not achieved. Perhaps
you can identify a time when you used a defense mechanism when reacting to a difficult
situation. Marketers often depict frustrating situations in ands and describe how their
products relieve them. Defense mechanisms:
• Agression
• Rationalization
• Regression
• Projection
• Daydreaming
• Withdrawal

Psychologist Abraham Maslow formulated a theory of human motivation based on the notion
that there is a hierarchy of human needs which rank in order of importance from lower-level
needs before higher-level needs. The needs appear to be mutually exclusive, but there is some
overlap.

Maslow maintained that physiological needs (primary needs which are required to sustain
biological life, including food, water, air, shelter, clothing and sex – all biogenic needs) at the
first and most basic level of human needs. After physiological needs been satisfied, safety and
security needs (physical safety, order, stability, routine, familiarity, and control over one’s life
and environment) become the driving force behind an individual’s behavior. The third level of
Maslow’s hierarchy consists of social needs, such as love, affection, belonging, and
acceptance. When social needs are more or less satisfied, egoistic needs (needs for self-
acceptance, self-esteem, succes, independence, and personal satisfaction, needs for prestige,
reputation, status, and recognition from others) become operative. The fifth level, self-
actualization needs, refers to an individual’s desire to fulfill his or her potential- to become
everything that he or she is capable of becoming.
Motivational research: a ‘’term of art’’ that refers to qualitative studies conducted by Dr.
Ernest Dichter in the 1950s and 1960s, which were designed to uncover consumers’
subconscious or hidden motivations in the context of buying and consumption.
Researchers usually rely on a combination of research techniques when trying to establish the
presence and/or the strength of various motives, e.g. responses to questionnaires or survey
data (self-reports of opinions and behaviors) and insights from focus group sessions and depth
interviews (to discover underlying motives)
Freudian theory suggests unconscious needs or drives are at the heart of human motivation.
Neo-Freudian theory suggests social relationships are fundamental to the formation and
development of personality. Trait theory takes a quantitative approach to personality as a set
of psychological traits. A trait is any distinquishing, relatively enduring way in which one
individual differs from another.
According to Freud, human personality consists of these three systems, the id, super ego and
the ego. The Id is the ‘’warehouse’’ of primitive drives, physiological needs such as hunger,
thirst and seks. The superego drives the individual to fulfill their needs in a socially acceptable
function. Finally, the ego is the internal monitor that balances the needs of the id and the
superego.
Neo-Freudians believe social relationships are fundamental to personality. These relationships
are formed to reduce feelings of inferiority (Adler) or tension (Sullivan). Furthermore, people
can be classified as to how they react with others – are they compliant, aggressive desires
admirations, and a detached person desires independence and freedom from obligation.
What is particularly interesting is how research has shown that these different personality
groups differ in their brand usage.
Underlying dimensions of brand personality:
• Excitement
• Sophistication
• Affection
• Popularity
• Competence
A product’s personality frequently endows products and brands with gender. Consumers
also associate some brands with geographic locations.
Possessions represent an extension of the self:
1. Actually, by allowing the person to do things that otherwise would be very difficult or
impossible to accomplish. (problem solving by using computer)
2. Symbolically, by making the person feel better ( being considered the ‘’best dressed’’
at work)
3. Conferring status or rank, for example, among collector of rare works of art because
of the ownership of a particular masterpiece.
4. Feelings of immortality, because of leaving valuable bequests after death.
Consumers use self-altering products to express their new selves or take on the appearances
of particular types of people (military person, physician, business executive, professor)
Researchers discovered two types of vanity: 1, physical vanity, which is excessive concern with
or inflated view of one’s physical appearance. 2, achievement vanity, which is excessive
concern with or inflated view of one’s personal achievements.
Vain consumers: 1,are a lucrative market for personal care and beauty products,2, welcome
promotional messages showing that they attract others’ attention and,3, are receptive to
promotional messages featuring personal achievement.
Chapter 4
Perception: the process by which individuals select, organize and interpret stimuli into a
meaningful and coherent picture of the world. It can be described as ‘’how we see the world
around us.’’
Sensation: the immediate and direct response of the sensory organs to stimuli (units of
input to the senses, as captured by the sensory receptors)
Examples of stimuli (sensory inputs) include products, packages, brand names,
advertisements and commercials. Sensory receptors are the human organs (eyes, ears, nose,
mouth, skin) that receive sensory inputs. As sensory input decreases, however, our ability to
detect changes in input or intensity increases, tot he point that we attain maximum
sensitivity under conditions of minimal stimulation.

New style
• Ambush marketing-placing ads in places where consumers do not expect to see
them and cannot really avoid them.
• Experiental marketing-allows customers to engage and interact with offerings in
sensory ways in order to create emotional bonds between consumers and marketing
offerings.

The lowest level at which an individual can experience a sensation is called the absolute
threshold. The point at which a person can detect a difference between ‘’something’’ and
‘’nothing’’ is that person’s absolute treshold fort hat stimulus.
The minimal difference that can be detected between two similar stimuli is called the
differential treshold or the just noticeable difference (JND). Weber’s Law suggests the
minimum amount of change that can be detected depends on the size of the initial stimulus.

Sensory adaptation is becoming accommodated to a certain level of stimulation and

becoming less able to notice a particular stimulus. Marketers care because consumers stop
paying attention to their communications when they adapt tot hem.

Physical stimuli that affect consumers’ perceptions of products and evoke attention include
the product itself, its attributes, package design, brand name, advertisements, and
commercials, and placement of promotional messages within the advertising space. Ads that
contrast with their environments are very likely to be noticed. Contrast is one of the most
attention-compelling attributes of a stimulus. Shocking and unrealistic images provoke
attention.

Perceptions are affected by: expectations, motives and selective perception

Expectations: people usually see what they expect to see, and what they expect to see is
usually based on familiarity, previous experience, or a preconditioned set of expectations. In
a marketing context, a person tends to perceive products and product attributes according
to his or her own expectations.
Motives: people tend to perceive the things they need or want: the stronger the need, the
greater the tendency to ignore unrelated stimuli in the environment.
The consumer’s selection of stimuli from the environment is based on the interaction of
expectations and motives with the stimulus itself. Selective exposure occurs when
consumers tune out messages that they find pleasant or with which they are sympathetic,
and they actively avoid painful or threatening ones. They also selectively expose themselves
to advertisements that reassure them of the wisdom of their purchase decisions. Selective
attention is consumers’ heightened awareness of stimuli that meet their needs or interests
and minimal awareness stimuli irrelevant to their needs. Thus, consumers are likely to note
ads for products that would satisfy their needs and disregard those in which they have no
interest. People also vary in terms of the kinds of information in which they are interested
and the form of message and type of medium they prefer. Perceptual defense takes place
when consumers subconsciously screen out stimuli that they find psychologically
threatening, even though exposure has already taken place. Furthermore, individuals
sometimes unconsciously distort information that is not consistent with their needs, values
and beliefs. Consumers often protect themselves from being bombarded with stimuli by
simply ‘’tuning out’’ – blocking such stimuli from conscious awareness. They do so out self-
protection, because of the visually overwhelming nature of the world in whcih they live.

Gestalt psychology suggests the whole is greater that the sum of its parts, and it looks for
patterns and configurations that affect the interpretention of information. Three principles
that affect how patterns are perceived are figure and ground, grouping, and closure.

• Figure and ground refers to the interrelationship between the stimulus itself and the
environment or context within which it appears. Contrast is an application of figure
and ground. Product placement triest o obscure the difference between figure and
ground.
• Grouping refers to people’s instinctive tendency to group stimuli together so that
they become a unified picture or impression. The perception of stimuli as groups or
chunks of information, rather than as discrete bits of informtion, facilitates memory
and recall.
• Closure is people’s instinct to organize pieces of sensory input into a complete image
or feeling. Individuals need closure, which means that if they perceive a stimulus as
incomplete, they are compelled to figure out its complete meaning. If a message they
receive is incomplete, they consciously or subconsciously fill in the missing pieces.

Individuals carry biased pictures in their minds of the meanings of various stimuli, which are
termed stereotypes. Sometimes, when presented with sensory stimuli, people ‘’add’’ these
biases to what they see or hear and thus form distorted impressions. Generally, people
stereotype because it makes the processing of sensory input quicker and easier.
The triggers of stereotyping are physical appearance, descriptive terms, first impressions,
and the halo effect. We often make decisions based on how people or products appear. A
beautiful spokesperson might be perceived as possessing expertise for beauty products. a
certain color to a food might make us think it is healthier. Stereotypes are often reflected in
verbal messages/descriptive terms. First impressions are lasting so a marketer should be
careful how they advertise new products. the perceiver is trying to determine which stimuli
are relevant, important or predictive. The Halo effect refers to the overall evaluation of an
object that is based on the evaluation of just one or a few dimensions. In marketing, the
term refers to a prestigious image of a product ‘’rubbing off on’’ other products marketed
under the same brand name.

A reference price is any price that a consumer uses as a basis for comparison in judging
another price. Reference prices can be external or internal. Internal reference prices are
those prices retrieved by the consumer from memory. People make inferences about the
quality of products based on their prices when they do not have eperience with the
product. The desired outcome of effective positioning is a distinct ‘’position’’ that a brand
occupies in consumers’ minds. This mental ‘’position’’ must be unique and represent the
core benefit the brand provides. Occasionally, a brand’s image must be updated. Consumers
often view products that have been around for a long time as boring, especially when newer
alternatives are introduced. Packaging, corporate advertising, retail partnerships, and service
quality can impact image.

Perceived risk: the degree of uncertainty perceived by the consumer as to the consequences
(outcome) of a specific purchase decision.
Functional risk, deals with the risk that the product will not perform as expected.
Physical risk is the risk to self and others.
Financial risk is that the product will not be wort hits costs and social risk is that the choice
of the product might lead to social embarrassment.
Psychological risk is that a poor product choice will hurt the consumer’s ego and time risk is
that the time has been wasted in purchasing this product.
High-risk perceivers are often described as narrow categorizers because they limit their
choices to a few safe alternatives. They would rather exclude some perfectly good
alternatives than chance a poor selection. Low-risk perceivers have been described as broad
categorizers because they tend to make their choices from a much wider range of
alternatives. They would rather risk a poor selection than limit the number of alternatives
from which they can choose.

How consumers handle risk will differ by their own individual strategy. The first is to seek
information so that they have more knowledge when they purchase. Consumers can also
stay brand loyal, thereby avoiding risk by sticking with a known product. Consumers can
select by brand image to reduce their risk because they already kno wand trust the brand.
Some consumers will rely on store image to help them reduce risk. Some customers buy the
most expensive model assuming that the price/quality relationship will safely deliver the
the best product.

Chapter 5

Intentional learning is acquired as the result of a search for information, while incidental
learning is acquired by accident or without much effort.
Learning consists of 4 elements: motives, cues, responses and reinforcement.
Unfilled needs lead to motivation, which spurs learning. Cues are stimuli that direct
motivated behavior. Response is an individual’s reaction to a drive or cue. Reinforcement is
the reward – pleasure, enjoyment and benefits – that the consumer receives after buying
and using a product or service.
Classical conditioning is viewed as a ‘’knee-jerk’’ (automatic) response that build up through
repeated exposure and reinforcement. The unconditioned stimulus occurs naturally in
response to given circumstances, the conditioned stimulus becomes associated with a
particular event or feeling as a result of repetition, and the conditioned response is a
response to the conditioned stimulus. The strategic applications of classical conditioning to
consumer behavior are associative learning, the need for repetition, stimulus generalization
and stimulus discrimination.

The consumer who tries several brands and styles of jeans before finding a style that fits her
figure has engaged in instrumental learning. Presumably, the brand that fits best is the one
she will continue to buy.

Instrumental conditioning
Hemispheric lateralization (split-brain theory) stems from medical research done in the
1060s; its premise is that the human brain is divided into two distinct cerebral hemispheres
that operate together, but ‘’specialize’’ in processing different types of cognitions. The left
hemisphere is the center of human language; it is the linear side of the brain and primarily
responsible for reading, speaking and reasoning. The right hemisphere of the brain is the
home of spatial perception and nonverbal concepts; it is nonlinear and the source of
imagination and pleasure.

A research suggested that when consumers watch advertising on TV, they ‘’passively’’
process right brain, pictorial information, but tekst in print ads were primarily processed
using left brain. The researcher considered TV a primarily pictorial medium, and TV viewing
as a right brain activity, consisting of passive and holistic processing of images viewed on the
screen. He also maintained that TV is a low-involvement medium. Cognitive learning models
suggest that behavior follows the cognitive processing of information. Advocates of passive
learning maintain that repeated exposure to TV commercials, which is low-involvement
information processing, induces purchases prior to consumers’ information processing and
the formation of attitudes.

The degree of brand loyalty depends on 3 factors: 1, the consumer’s risk aversion or variety
seeking. 2, the brand’s reputation and availability of substitute brands. 3, social group
influences and peers’ recommendations.

Chapter 9

Reference groups: groups that serve as sources of comparison, influence, and norms for
people’s opinions, values and behaviors.
They help shape people’s opinions, values and behaviors because they serve as sources of
comparison, influence and norms. Families are the most important reference groups
because they provide children with the skills, knowledge, attitudes and experiences
necessary to function as consumers, a process called consumer socialization.

Source credibility: a source’s persuasive impact, stemming from its perceived expertise,
trustworthiness and believability.
When the source of a message about a product is well respected and credible, the message
is more likely to be believed. On the other hand, a message from an unreliable or
untrustworthy source will probably be dismissed or rejected.

Source types and influence

A formal source is a person or medium providing consumption-related information and
hired and paid by an organization.
An informal source is a person whom the message receiver knows personally, such as a
parent or friend who gives product information or advice, or an individual met and respected
online.
Reference groups serve as comparative and normative frames of reference for a person’s
values and behaviors. Normative influence consists of learning and adopting a group’s
norms, values and behaviors. The most pertinent normative influence comes from groups to
which people naturally belong, such as family, peers and other members of one’s
community. Comparative influence arises when people compare themselves to others
whom they respect and admire, and then adopt some of those people’s values pr imitate
their behavior.

The consumption-related groups that influence consumers’ attitudes and behavior include
friends, fellow shoppers, virtual communities and advocacy groups.

Endorsers and spokepersons

1. The synergy between the endorser and the type of product or service advertised is
very important. The greater the fit between the celebrity and the product endorsed,
the higher the persuasiveness of the message.
2. Endorsers whose demographic characteristics (age,ethnicity) are similar to those of
the target audiences are viewed as more credible and persuasive than those whose
characteristics are not.
3. Although consumers may like an ad featuring a famous endorser, they will buy the
product advertised only if they trust the marketer as well.
4. Merketers who use celebrities in testimonials or endorsements must ensure that the
message contents are congruent with spokespersons’ qualifications.

Marketers must ensure that there is a synergy among the celebrity’s trustworthiness,
expertise, physical attractiveness and the product or brand endorsed. They must also take
into account the celebrity’s number of prior endorsements, because consumers perceive
celebrities who appear in commercials too often as less credible than celebs with lesser
commercial exposure.

Characteristics of opinion leaders

1. Opinion leaders are highly knowledgeable regarding a particular product category,
follow new products that come into markets, and are often consumer innovators in
their area of expertise.
2. Opinion leaders are self-confident, outgoing and sociable. They readily discuss
products and consumption behaviors with others.
3. Opinion leaders read special-interest publications and regularly visit websites
devoted to the specific topic or product category in which they specialize. They have
specialized knowledge that enables them to make effective recommendeations to
relatives, friends and neighbors.
4. Usually, opinion leaders and receivers belong to the same socioeconomic and age
groups.

Social networks: virtual community where people share information about themselves with
others, generally with similar interests, with whom they had established relationships that,
for the most part, exist only in cyberspace.

3 dimensions underly consumers’ engagement in Word of Mouth Online (WOM):

1. Tie strenght – the degree of intimacy and frequency of contracts bewteen the
information seeker and the source.
2. Similarity among the group’s members in terms of demographics and lifestyles.
3. Source credibility – the information seeker’s perceptions of the source’s expertise.
The concept of adopter categories is a classification that depicts where consumers stand in
relation to other consumers in terms of the first time they purchase an innovation (new
product,model).
Sociologically, the model assumes that all members of a given society would, eventually,
adopt innovation. Thus, the number of people belonging to each category was calculated in
a manner resembling a statistical normal distribution: innovaters – the first 2.5% to adopt;
early adopters – the next 13.5%; early majority – the next 34%; late majority – the following
34%; and the laggards – the last 15%

Chapter 13

A global marketing strategy consists of selling the same product using the same positioning
approach and communications globally. A local marketing strategy consists of customizing
both the product and the communications program for each unique market. Within this
continuum are two hybrid marketing strategies, which consists of standardizing the product
or advertising message (but not both), while customizing the other one. Marketers must
conduct cross-cultural consumer analysis to obtain consumer reactions to alternative
product and promotional executions, in order to choose the best strategy.

Characteristics
1. Quality Signal: consumers believe that the more people who purchase a brand the
higher the brand’s quality (which often results in a global brand being able to
command a premium price). Furthermore consumers worldwide believe that global
brands develop new products and breakthrough technologies at a faster pace than
local brands.
 2. Global Myth: consumers view global brands as a kind of ‘’cultural ideal’’; their
purchase and use make consumers feel like citizens of the world, and give them an
identity.
3. Social Responsibility: global companies are held to a higher level of corporate social
responsibility than local brands, and are expected to respond to social problems
associated with what they sell.

In this 12-nation study, the importance of these 3 dimensions was consistent, and the
insights revealed by the research accounted for more than 60% of the variation in the overall
brand preferences. The study also identified intracountry segments with respect to how a
country’s citizens view global brands:
1. Global Citizens: (55% of total respondents) use a company’s global success as an
indication of product quality and innovativeness, and are concerned that the firm
acts in a socially responsible manner.
2. Global Dreamers: (23%) view global brands as quality products, and are not
particularly concerned about social responsibility issues.
3. Antiglobals: (13%) feel that global brands are higher quality than local brands, but
they dislike brands that preach U.S. values and do not trut global companies to act
responsibly. Generally, they try to avoid purchasing global brands.
4. Global Agnostics: (8%) evaluate global brands in the same way they evaluate local
brands.

Cross-cultural analysis: a form of marketing research that examines the difference and
similarities among consumers in different countries. It determines the extent to which the
consumers of two or more nations are similar or different.

Acculturation is a dual learning process:

1. Marketers must learn everything that is relevant to the product and product category
in the society in which they plan to market.
2. Then marketers must persuade or ‘’teach’’ the members of that society to break with
their traditional ways of doing things and adopt the new product.

To gain acceptance for a culturally new product in a foreign society, marketers must develop
a strategy that encourages members of that society to modify or even break with their own
traditions.

Customization examples:
McDonalds:
• Japan: com sou pand green tea milkshakes
• Sweden: softer design and woodcut packaging
• France: McBaguette
• Philippines: rice and spaghetti as side dishes
BurgerKing black burgers in Japan
Starbucks coffee in Europe

Reasons to pursue global market:

• Multinational fever – attractive multinational markets, products and services
 • Overseas markets offer future growth when home markets reach maturity
• Consumers around the globe are eager to try ‘’foreign’’ products.

Overall teenagers (young adult segment) appear to have quite similar interests, desires and
consumption behavior no matter where they live. Therefore, in response tot his perspective,
consumer researchers have explored the makeup, composition and behavior of this
segment.

Roper Starch Worldwide interviewed 35.000 consumers in 35 countries in order to identify

shared values, irrespective of national borders. The research sought to uncover the bedrock
values in peoples’ lives so as to understand the motivations that drive both attitudes and
behavior. After completing the interviews in North and South America, Asia, and Europe, 6
global value groups were uncovered:
1. Strivers – ambitous and materialistic
2. Devouts – responsible, respectful and conservative
3. Altruists – unselfish in their concern for others, society and future
4. Intimates – focus on social relationships and family
5. Fun Seekers – young in age and outlook, value adventure and good times
6. Creatives – seek knowledge and insight, and have a keen interest in books and new
media.