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Consumer Behavior Notes: Part I Pathway to purchase process of arriving at a purchase decision Step 1: Consumer recognizes need Step

tep 2: Gather information to satisfy need Step 3: Evaluate brands Step 4: Make purchase Step 5: Post-purchase decision o Overall, greater information has given customer more choices and power Push Strategy: marketer controlled, more passive (ex/ TV ad) Traditional approach to consumer behavior brand to consumer interaction Consistent messaging across consumer groups Pull Strategy: consumer has majority of input and control (ex/ social, search) Newer approach to consumer behavior greater consumer to consumer interaction Custom created for each customer Article #1: Digital in Pathway to Purchase Consumers now seek out information for all goods, no matter price Greater level of pre-store decision making (search reviews online) Greater word of mouth pull than ever gives more feedback to company Why Some Brands Fail: Pepsi Am difficult to change ingrained product and market perceptions Kodak Organizational culture failed to embrace change and adopt digital Volvo little distinct brand appeal in new strategy, alienated core customers Marginal Utility of Information: opportunity cost of getting information in terms of time (low for complex decisions, high for limited decision making) * Customer should search for information until MV = MC Four Types of Consumer Decisions: High Invovlement Complex Decision Making Decision Making Brand Loyalty Habit Low Involvement Limited Decision Making Inertia

Complex Decision Making high cognitive activity and personal relevance o More risk and greater information processed Types of Risk Financial, Social, Performance, Psychological o High marginal utility of information Limited Decision Making moderate cognitive activity and low relevance o Little motivation to search, limited brand evaluation o Customer makes decision because of deviations from norm Ex: variety seeking, regular product isnt available Brand Loyalty low cognitive activity and high relevance o High level of commitment o Repeat buying based on reinforcement o Attempt to optimize selection process

Inertia low cognitive activity and low relevance o Consumer can be easily switched o Satisfice rather than optimize selection process o Give customer a stimulus the reminder effect

Decision Quicksand a rather simple decision becomes complex when there are a large number of choices available (information and choice overload) Goal for CPG is to reduce difficulty and increase importance The consumer confuses difficulty with importance The Apple Ecosystem: Seamless connection with cloud computing integration o Company is emphasizing consistency Decreasing switching costs within Apple but increased outside Should Companies Split Segments? Might be useful is behaviors of segments are radically differently When in doubt, market to the higher involvement segment o Low involvement segment will want to emulate higher one How Brand Loyalty and Inertia are Similar: Habit Routinized Buying Satisfaction based purchasing Minimal information search Low marginal utility to additional information Learning Reinforcement Curve: the more often you purchase an item, the greater the probability you will purchase that item again Satisfaction is based on reinforcement and conditioning Habits: Pros more efficient time allocation, minimal decision quicksand Cons encourages complacency, restricts choices, decision can be suboptimal Has The Web Increased or Decreased Information Overload? Increased search engines, greater customization, social networks Decreased filters and limits information, curates, comparison shopping Usually depends on the person and their experience with the web and making similar decisions in the past Advertising Product Place Shopping Complex Decision Information symbolic Differentiated Selective Craft Experience Habit Reminder Commodity Intensive Distribution Make Things Easier

Over time, products tend to move from informational to symbolic Ex/ Apple iPod Features vs. Feelings Process of High Involvement Decision Making:

Needs -> Brand Perceptions -> Brand Eval -> Purchase -> Post-Purchase Eval

Need-Gap Analysis the gap between what people need and whats available Cognitive Algebra can predict buying behaviors based on formula o Lowest score of Importance x (Ideal Brand) Importance how much does customer value attribute Ideal what level of the attribute is the customer looking for Brand Rating how does customer perceive brand on attribute Flaw is that it is only based on rational side of decision making o Doesnt take into account emotion (ex/ New Coke failure) Strategic Implications o Identifies benefit segments based on ideal ratings Mtn Dew Code Red o Use segments to guide new products ex/ Pepsi Max o Revitalize existing brands to get close to ideal New Coke, Diet Pepsi Perceptual Map: visual representation of need-gap analysis The larger the circle on the map, the larger the segment Marketers should look for large underserved segments and cater their products towards these groups of consumers o Hard to launch a product without defining the opportunity Decision Heuristics rules that can simplify decision-making Conjunctive Elimination eliminate if anything has too low of a rating Lexicographic select based on most important attribute, eliminate a choice each time, going down line of attributes In each situation, the heuristic leads to a suboptimal choice High Involvement cognitive algebra Evaluate brands across attributes Low Involvement decision heuristics Evaluate attributes across brands (Ir)rationality of Consumer Behavior: Decision Heuristics satificing vs. optimizing o But saves time and minimizes opportunity costs Framing Effect - suboptimal decision when using credit instead of cash o But credit card gives immediate gratification Endowment Effect a product is worth more to consumer after purchase o But represents time and effort in decision making Sunk Cost Effect use less satisfactory product (ex/ ATT vs. Verizon) o But high switching costs Choice Deferral Effect if two choices are close, delay decision o But customer is getting more information Two Types of Habitual Behavior: Inertia behaviorist approach o Conditioning stimulus and reminder Step 1: Unconditioned Stimulus (ex/ cowboy) Step 2: Unconditioned Response (ex/ macho association) Step 3: Conditioned Stimulus (ex/ transferred to Marlboro)

Step 4: Conditioned Response (ex/ make purchase) Low retention rate and thus lower consumer lifetime value Primary Effect stronger association is made first time symbol is used Repositioning is easier when there is a clean slate (ex/ Miller) o Strategic Requirements: Contiguity symbol, jingle, tagline Continuity frequent repetition and industry penetration Brand Loyalty cognitive approach o Learning and Reinforcement stress features and benefits (info) o o

When Does Stimulus Association Work Best? Primary Effect conditioned association is new Avoids Blocking Effect no other previous association with stimulus Avoids Pre-Exposure Effect stimulus isnt overly familiar Avoids Overshadowing Effect no other stimulus overshadows the conditioned I Like it but I Dont Know Why. Even highly motivated participants were unable to overcome conditioning Conditioning can neutralize negative information about products Advertising might not be as powerful as it was in the past o Limited forces outside rational control. Why Do Brands Bring Back Retro Ads? Rely on past stimulus and response associations o Ex/ VW Beetle Cheaper to rely on past brand equity and old ads have resonance Reminder of emotional nostalgia comfort marketing o Ex/ Honda CRV Ferris Bueller Ad Comfort Marketing Reading: Argues that in times of change, people are more likely to try new things than rely on past comforts and tendencies Study was isolated doesnt mean comfort marketing doesnt work o Might depend on size of change and demographics Why Is A Behavioralist Approach Harder To Implement: Contiguity tends to work best for a mass market o But today there are more fragmented, targeted markets As choice and info increases, consumers give more focus to brand evaluation Greater consumer savvy today than in the past o Greater reliance on WOM Marketing o Less reliance on ads for information Result of Shift From Behavioralist to Cognitive Approach: From mass to micro marketing o From TV and print ads to online and mobile o From Baby Boomers to Gen Y o From advertising to viral marketing focus When Is Conditioning Most Relevant?

Low involvement o But TV is still greatest part of advertising budgets Time poverty o Lends itself to decision heuristics More distractions today Frequent purchases In-Store decisions Reminder Effect o Putting product at eye level generates the best results

Strategic Implications of Switch To Cognitive: More focus on message content than peripheral cues Shift from repetition to focus on benefit delivery (dont use GRPs) o Gross Ratings Points = Reach x Frequency Create more frequent campaign changes More emphasis on viral marketing More focus on younger consumers Behavioralist Approach Is Less Effective with Gen Y: Proliferation of mobile technology and social media Gen Y is more skeptical of claims Young age group makes them likely to become influencers Learning: Behaviorist Approach Conditioning o Create learning through reminder effect Cognitive Approach Reinforcement o Create learning by associating with self-image Forgetting: Consumers still associate brand with benefits and features Ex/ Nestea Plunge Takes longer than extinction to remove Extinction: Brand satisfaction is quickly cut off Ex/ The BP Oil Spill Three Types of Learning: 1) Purposeful Learning High Involvement a. Brand Loyalty 2) Incidental Learning Low Involvement a. Inertia 3) Vicarious Learning Visibility a. Bottom Up: Children sharing learning with parents (ex/ iPhone) b. Top Down: Parents sharing learning with children (ex/ food brands) c. Acculturation: being in a new environment Involvement: personal importance of object to a consumer Greater if the product is o Tied to image (ex/ Clothing) o Has symbolic meaning (ex/ Hybrid) o Has an important functional or experiential role (ex/ Netflix)

o o o

Tied to group norms (ex/ Blackberry) High visibility (ex/ Hair Products) High perceived risk (ex/ New Piano) Low Involvement Attention Oriented, Peripheral Cues Problem Minimization Elastic Shop To Live

Strategic Importance of Involvement: High Involvement Benefit Oriented, Central Advertising Cues Benefit Maximization Product Positioning Inelastic Price Live To Shop Segmentation

Central Cues: message-oriented (meant to evoke benefits) Elaborate on message through support argumentation (in favor), counter argumentation (against), and source derogation (question credibility) Peripheral Cues: stimulus oriented (meant to evoke feelings) Brand Extensions: Most successful when there is concept consistency Ex/ Bic Perfumes didnt work because disposability is low involvement concept Segmenting By Involvement: 1) Separate Products a. Ex/Cereal Nutrition vs. Taste 2) One Product, Separate Ad Campaigns a. Ex/Starbucks Fast Food vs. Experiential b. Potential Problems i. Alienating High Involvement Products ii. Confusing Customers iii. Undermining Brand Equity 3) One Product, Same Ad Campaigns a. Ex/Harley Davidson Reasons For Increasing Involvement: Increase brand equity Increase emotional bond engagement Increase loyalty increased profits Increase involvement viral effects Easier to leverage brand can transfer brand equity for new products Strategies for Increasing Involvement For High Involvement Products: Create an experiential context for the product o Ex/AMD make people care about specs Get consumers to generate content o Ex/Mastercard Priceless campaign contest Increase level of customization o Ex/Nike ID Establish Community of Users: o Ex/ Harley Social Networks Strategies to Increase Involvement for Low Involvement Products:

Link the product to an involvement issue o Ex/Clorox - Salmonella Create an emotional context for the product o Ex/Tide Father and Son Ad Change the focus of benefits o Ex/Kelloggs Crunchy Nut focus on taste over health Create community o Ex/Pampers Mom Bloggers Enhance the importance of product by associating with social responsibility o Ex/Pepsi Refresh Product Successful when cause and product are linked Use high involvement media to increase involvement o Ex/ Facewash Dispensers gave to bloggers, preorders on Amazon

How to Expand Primary Demand: changing industry behaviors 1) Find new users 2) Get existing users to use more Secondary Demand brand specific Three Categories Of Decisions: 1) Low Involvement - Inertia 2) High Involvement Utilitarian Needs a. Functional Attachment benefits and characteristics 3) Highest Involvement Hedonic Needs a. Emotional Attachment The goal of brands is to move from number two to number three Maslows Hiearchy of Needs: from bottom to top Physiological, Safety, Love, Esteem, Self-Actualization In Time Of Scrimping, Fun Stuff Is Still Selling: During recessions, people are more likely to buy luxury, hedonic items o Comfort Marketing overcome future uncertainty o Brand matters more value is more well-known Utilitarian Needs Functional Attributes Informational Focus (product features) Focus on Purchase Process Appease Financial and Performance Risk Hedonic Needs Emotional Benefits Symbols and Imagery Focus on Consumption Process Appease Social and Psychological Risk

Enduring Involvement: continuous interest in product on day to day basis Keep by emphasizing product line, using social networks, & brand differentiation Ex: An avid video game player Situational Involvement: process and evaluate information when you only have to Ex: Buying a new computer Characteristics of High Involvement Media: Purposeful

Under Consumer Control Encourages Interaction With Medium Encourages Interaction With Other Customers

Types of Media (from high to low involvement): Social Networks Internet and Mobile Magazines and Newspapers Cable and Network TV Help For Watching TV: More television networks are using second screens to engage with viewers o 65-70% of smartphone/tablet users use their device while watching Research has concluded that when utilized correctly, second screens can increase engagement and loyalty by as much as 30% o Community fosters engagement over distraction Ultimate question is whether the second screen enhances or distracts o TV might ultimately be the second screen for millennials Media Multi-Tasking Is Really Multi-Distracting: Unlike other article, emphasizes that people who multitask lose concentration During a 20 minute show, people look back and forth between screens 127 times Perceptions: the attention to organization and interpretation of marketing and nonmarketing stimuli Marketing Stimuli The Four Ps o Completely determined by brand Nonmarketing Stimuli Neutral Sources, Consumer Generated, WOM o Not completely determined by brand Place Perceptions: Ex/ Target Store Image Bigger emphasis on design and experience o Quality perceptions Can a salesperson really promote an image? Selective Perceptions: Perceptual Defense Select information to confirm to past beliefs o Consumers reject inconsistent info that violates preconceptions Ex: Pepsi AM, Bic Perfume, VW Phaeton o Also reject inconsistent concepts or threatening information Ex: Smokers and anti-smoking ads, Global Warming Perceptual Vigilance Select information most relevant to needs o Avoid information and choice overload Confuses consumer and delays decision making o Information Overload decision curve is an inverted U o Choice Overload decision curve is a backwards squiggle o Post-Purchase Dissonance decision curve is a U Coke or Pepsi: Its In The Head Different parts of the brain light up if we are drinking Coke or Pepsi

o Reward and Performance come from two different parts of the brain Why is disparity between taste and selection bigger with Coke? o Pepsi is sweeter o Coke has been able to develop a consistent brand image

Confirmation Bias Shapes How We Read Online: We cope with information overload through selective viewing o Parse out information we dont want to see o More likely to accept negative information when there is no overload Brand Image the total perception of brand consumer forms by processing information from various sources Schema positive associations with a brand Strong schema requires consistent image over time and an image that relates to the product Ex: McDonalds Ronald, Im Loving It, Arches, Gold, Big Mac Perceptual Generalization: Brand Leveraging generalize perceptions from one brand to another extension o Need strong brand equity, concept consistency, and company loyalty o Ex: iPhone, iPad, and iMac Anchoring associations from attributes or benefits to product o Ex: Red Cars are faster than other colored cars Family Branding using company name as an umbrella o Create a halo-effect o Ex: Colgate, Heinz Cannibalization too much generalization, little differentiation o Ex: Diet Pepsi Drinks Generalizing from Brand to Category brand become a common term o Harder for brand to maintain its unique advantage. Less likely to use when it reflects the company name itself o Ex: Kleenex, YoYo Perceptual Discrimination: ability to notice changes in marketing stimuli Just Noticeable Difference (JND) point where customer does not notice changes in price o Webers Law the JND is a constant ratio o Brands shouldnt increase prices above JND but should decrease prices below the JND for customers to notice Adaptation Level repeated exposures reduce ability to perceive stimuli o Advertising Wearout additional advertising doesnt increase recall Law of diminishing returns o Duration of Promotion customers get used to permanent price decreases and resent increases When Marketers Dont Want Stimulus Noticed: o Price Increases (Reading 13) JND is around 10% for retail. Customers mostly accepted the price increases. But what if not luxury goods? o Decreases In Product Size (Reading 14) Marketers hiding increasing food costs by increasing prices or decreasing content. Brings up question of what is the best way to hide from consumers? Changes in Information Search In Past Decade:

Greater Variety o Ex: Mobile Advertising Increased Cross-Platform Exposure sequential exposure generates more retention than simultaneous exposure o Ex: ESPN and World Cup Better Comparison Shopping o Ex: BOTS More Access to Buzz o Ex: Viral Marketing Search Engines o Ex: Google

Twitter and Advertising Reading: Most of Twitters advertising revenue is generated from mobile Time and place utility from mobile Greater visibility but harder to get a true ROI Offline Sources of Consumer Information: Personal - Salespeople Marketer Controlled - CRM - Viral Marketing (guerilla marketing, opinion leaders, and referrals) Non-Marketer Controlled - Word of Mouth (most influential element in marketing) Impersonal - Media Advertising - Sales Promotions - Packaging

- Publicity - Neutral (ex/ review sites)

Online Sources of Consumer Information: Marketer Controlled Personal - Viral (Youtube, Facebook, Twitter) - Buss Agents (enlisting brand advocates) - Social Networks - Independent Blogs Impersonal - Web Advertising (can be based on sites visited, customer info) - Search Engines - Content Aggregators - BOTS

Non-Marketer Controlled

When Do Marketer Controlled Influences Outweigh Social Influences? First Adopters/Innovators o Educational Process make sure consumer understands product Low Involvement Products o Motivated primarily by price, promotions, and advertising Diffusion Curve: Innovators (4%), Early Adopters (16%), Early Majority (32%), Late Majority (32%), Laggards (16%) Why Youtube Is Getting More Important:

More active medium o Television is more passive Helps complement television advertising o Access to exclusive information o Generates buzz

Remember: Greater access to information has empowered consumers but increases choice and information overload, delaying the decision process Marketer Empowerment Through Online Media: Social Media o Get feedback, determine regional preferences, anticipate trends Conduct Online Surveys o Test pilots, recruit participants, track reactions Keep A Pulse On Market o Anticipate market trends and manage negative information Social Media Are Giving A Voice To Taste Buds Reading: Benefits: o Social networks are helping brands get feedback about products, both positive and negative o Helps retailer make informed, just in time decisions about inventory Possible Downsides: o Get extreme opinions online o Self-selection/less opinion depth o Youth bias Implications of Changes In Information Sources In Past Decade: Changes in media mix shift from TV to web o Silos to Synergy media isnt comprised of individual entities anymore Whole is greater than sum of parts o Decrease in live viewing but same content is being consumed o TV to Web is more effective than Print and Web Combination of a visual and a static medium Targeting recommendations and rules based o Offline demographic information (ex/ income) o Online behavioral information (ex/ past sites visited) Customization and Narrowcasting Relationship Marketing Single-Source Data: getting both exposure and behavior to household Opportunity to see with an opportunity to act When is multi-tasking interactive (instead of distractive)? Results/Contest Based American Idol, Superbowl, Oscars, etc. Collective Experience care about opinions of others Second Screen complementary viewing Live Viewing non-DVR, current Using Google Data To Reach Customers Reading:

Vicks targeted its product to moms who lived within two miles of a store carrying its product based on flu data Brings up question of when microtargeting is too invasive?

Reasons for Limited Information Search: Learning Cognitive Economy continue search only as long as value of last unit of information is greater than the cost Utilitarian vs. Hedonic o Utilitarian focus on the importance of the information o Hedonic enjoy browsing the internet Information & Choice Overload Complexity of Search Cost of Information Search o Times o Monetary o Delays o Frustration o Product Trial How to Reduce Costs of Information Search: Recommendation Systems Free Trials Mediated Shopping (ex/Ebay) BOTS Information retention is more likely if there is a consistent message that is related to product benefits -> helps facilitate multiple schema What factors inhibit retrieval from memory? Forgetting Extinction Ambiguity ex/ Volvo Inconsistent Info ex/ Burger King Strategic Roles of Attitudes: 1) Predictive what attitude needs shifting? 2) Diagnostic develop strategies from predictions 3) Evaluative how effective was the brand in changing attitudes? Positive attitudes dont always lead to purchase (difference between followers and owners) Perceptions Cognitive I think Advertised through product attributes (TD Ameritrade) Attitudes Affective I like Advertised through emotion or humor (E-Trade) Intentions Conative I plan to Advertised by showing product in use (ex/ if a day trader was shown making trade) Google Advertisements Reading: Google is trying to create an affective emotional connection to increase customer loyalty and minimize differentiation

Wanted to stand out against Apple, Bing, etc. in a rather undifferentiated market o Generalization strategy umbrella products

Predictive Role of Attitudes: Based on likability and effectiveness (ex/ Bristol Meryers) Based on exposure (ex/ CBS surveys in LV and online) Attitudes Best Predict Behavior When: Involvement is high (ex/ Reality TV vs News) Measuring change in attitudes (ex/ same audience) Measuring attitudes towards ownership rather than brands themselves o Theory of Reasoned Action (ex/ BMW and College Students) Combat by advertising product in context of usage Value Expressive Role: focus on me Ex/ Nike Just Do It Empowerment Campaign Ego-Defensive Role: focus on we Ex/ Listerine and Bad Breath Fear Appeals and Social Consequences Why Attempts At Change Are Often Difficult: Hard to change long-held beliefs without alienating core customers o Ex: Oldsmobile, Kodak, Volvo Hard to change if contradict societal norms o Ex: Kelloggs attempt to get Asian consumers to eat cereal o Easier when there is a similar enough anchor (adults and cereal) Going Against Cultural Tide o Ex: Eat Beef Campaign o But Got Milk was successful because it rode tide Only advertise your negatives when you refute those claims in the same ad Post-Purchase Evaluation: where the money is Focus on retention over acquisition o Determines loyalty and profitability A 1% decrease in retention lowers profits by 5% o But most marketing strategy is primarily focused on acquisition Most brand managers are evaluated on market share misaligned Satisfaction: o High Involvement reinforcement (brand loyalty) o Low Involvement conditioning (inertia) Dissatisfaction: disconfirmation of expectations o Reduces purchase likelihood and increases post-purchase dissonance Dissonance: o Most likely to occur when conflicting information, close call between choices, high risk and involvement, peer pressure How Customers Can Reduce Dissonance: Accept dissonant information Rationalize the negative Lower expectations

Seek positive information Seek support of others Convince others to make same choice Endowment effect

Exchange vs. Communal Relationships Reading: Exchange Relationships: relationship primarily based on economic factors and the balance of inputs and outcomes o Ex: Walmart o Respectful treatment means more when there is fair deal in terms of input and output o To make an unfair outcome right, give discount Communal Relationships: draw consumers in based on caring, trust, and partnership o Ex: State Farm o Respectful treatment means more in general o To make unfair outcome right, give a written, sincere apology Strategic Imperitives: Increase Involvement (degree of association with product or person) Increase Engagement After Purpose (degree of interaction McKinsey Video: Emphasis on consumer experience o Is spend in line with the pathway to purchase? Social media is a pull strategy -> engaging with brand by digital media Strategies to Increase Consumer Engagement Post-Purcahse: Encourage feedback and interaction o Ex: Ford Instant Cars Personalize communications o Ex: Remind of Service Needs Create community o Ex: Nike Running App, Harley Owners Club Satisfaction surveys Encourage consumer generated content o Ex: Facebook Contest Loyalty programs Mini-Coopers Strategy: Ads to reinforce purchase (retention over acquisition) o Ex: Mini Decoder Customer relationship management post-purchase o Emails on product care o Buyer education Establish ownership community How to Reduce Dissonance on Web: Easy Returns Home Try On

Communication with Company

Demographics: geography, income, etc. Psychographics: lifestyle and personality information Strategic Applications of Demographics: Target identify segments by demos o Ex: Avon Media select media with some profile as target o Ex: Scion IQ advertising on media Advertising use norms associated with demo group o Ex: Pepsi generation Product: separate product lines to targeted segments o Ex: Old Navy and Banana Republic Buyer Profile: what percentage of brand owners are in target population Buyer Concentration Index: % brand owners/ % population Any index over 100 is a strong score Disparity in Media: Most money is allocated for TV o TV has a greater reach Less money is spent on Web/Social o But digital can have a higher ROI More targets and precision More engaging medium Potential multiplier effect Age Cohorts: age groups with similar values and shared memories Ex: Gen Y 9/11, Obama Election, Social Media, Lady Gaga Main Cohorts: Mature Market born before 1948 (65+) o About 59 million people o Three cohorts within market: depression era (80+), WWII (71-80), older boomers (65-70) Baby Boomers born between 1948-1964 (48-65) o About 76.5 million people in US Generation X (at crossroads) born between 1965-1976 (36-48) o About 50 million people in US Generation Y (coming together) born between 1977-1993 (19-35) o About 77.2 million people in US Generation Z (finding a path) born after 1994 (under 18) o Echo Bust Strategies to Target Gen Y: Positioning Strategies benefit oriented, trying to evoke lifestyle o Ex: Scion, Nissan Cube Repositioning Strategies from inertia to more brand loyalty

o Ex: Levis Jeans Dual Targeting With Several Age Cohorts o Ex: Honda Element (adventure to Gen Y, Roomniness to Boomers) o Can either be trickle up or trickle down

Ford and Zipcar Reading: Ford and Zipcar agreed to deal to include Ford Zipcars on college campuses o Less college students own cars than before Move by Ford to introduce vehicle to this cohort, influencing buying decisions o But will be difficult to change existing brand perceptions Gen Ys Conventional Wisdom on Values: Most desirable target based on LTV o But less brand loyal Greater reliance on social networks for WOM o But dont use every network equally More willing to buy new products o But depends on category (ex/ technology vs. CPG) Less focus on traditional media o But decrease in traditional media is overstated and still consuming content Greater control over technology More secure and optimistic in American Dream Opinion leaders in fashion and technology o But role of parental influence cant be discounted Themes of Generation X: New Reality more financial insecurity More conservative and pragmatic Less homogeneous (called Gen X because of lack of commonalities) Fewer defining events Value Segments for Gen X: Pessimists new reality Materialists more optimistic Anti-Institutional capture lifestyle of the 1960s Implications of Enter Mature Market: Increased discretionary income Focus on youthfulness rather than youth More techno-savvy mature market Dimensions of Youth Bias: Mature market controls 77% of net assets but disproportionally higher cost of media to those targeted under the age of 35 Only 6-7% of TV commercials are targeted to mature market o If targeting mature market, focus on portraying youthfulness rather than youth CBS Strategy (From Reading): Target the older demographic go where the money is

Follow the baby boom generation More likely to buy items advertised on TV

Rationale For Youth Bias In Marketing: Younger customers represent greater potential over time o But category dependent Easier to get younger consumers to switch brands Youth are trend setters trickle up effect o Early adopters parents follow them for some categories o If target younger, older will follow Generation Z: Children of Gen X Most tech and social media savvy cohort o Lifelong users of the web Less brand loyal Most racially diverse little homogeneity Why Has Gen Z Gotten Little Attention From Marketers? Wants change constantly at younger ages Resemble Gen Y closely in behaviors o Also influenced by older siblings Make few purchase decisions on own o Mostly determined by their parents Privacy issues parents hesitant for their kids to be marketed to Psychographics: measurements of personality and lifestyle variables Personality enduring and consistent patterns of behavior o Ex: detached, passive, Lifestyle mode of living and tastes in day to day activities o Ex: Group oriented, innovators Important to make distinctions when demographic profile is same o Ex: SUV vs MiniVan Self-Concept Theory: three selves Actual Self buy products consistent with self image ego o Ex: Ikea Ideal Self be a better person superego o Ex: Nissan save the planet Ideal Self #2 unrestrained by social norms, fantasy self, freedom to or from ID o Ex: Harley Davidson Self Esteem is lowest when there is the greatest disparity between the actual self and the fantasy self Beauty Ads and Reading: Females consider themselves in a less positive light when viewing advertisements o Depends on medium and type of ad does it reflect you or them? Makes you think about product and context differently o Dove Campaign For Real Beauty tried to squash trends Aspirational vs. Relatable

The Extended Self: identified by constellation of products we own Influenced by how we see ourselves and how others see us Implications co branding (ex/ Mountain Dew Code Red), product placements (Outdoors gear), logical acquisition strategies Motivational Theory: determines hidden needs and motives through depth interviews and projective techniques Depth Interviews - interviewed individually to find deep-seeded motives Projective Techniques - open-ended questions to solicit responses to sticky or hard to answer situations When is Qualitative Research Most Relevant? Consumer is not aware of need or motive Consumer has difficulty communicating When product is either related to self-identity, fantasy oriented, related to childhood, or risk oriented (more anxiety) Why Shift From Motivational To Lifestyle Research? More actionable More easily determined and measurable More closely related to purchases More empirical Sources of Lifestyle Information: AIO Inventories activities, interests, and opinions o Use factor analysis to reduce questions through coorelation Narrow down what is relevant to that specific audience o Opinion leaders, information seekers, etc. VALS based on annual surveys of ideals, achievements, resources, self-expressions o Thinkers, innovators, achievers, strivers, survivors, etc. Importance of Personal Influence: Friend and family influence over 50% of purchases Word of mouth is estimated to be six times more powerful than paid media Types of Personal Influence: Expert seeking knowledge o Early Adopter o Most important for new product ex/ 3DTV Comparative/Referent looking for confirmation, emotional reinforcement o Majority o Most important for mainstream product ex/ iPhone Normative pressure to abide by norms, group oriented o Late Adopter Reading 28: More likely to pay more for a product used by someone you like o Benign Envy But also you will pay more for another product if you dont look up to them

Malicious Envy

Reading 29: People dont like being copies Resent emulation when put in a lot of effort or tied to their self image Dimensions of Comparative Influence: Social Multiplier Effect keeping up with the Joneses o Requires visibility and diffusion Comparative Consumption seeking shared experiences Conspicuous Consumption badge value o If a product is very cheap or extremely expensive, there is a lower likelihood a brand name is shown Dimensions of Normative Influence: Product Advertising o Rewards of Using ex/ Sure (social acceptance) o Risks of Not Using ex/ Bad Breath Spray (fear appeal) Social Responsibility Advertising o Risks Of Using ex/ Anti-Smoking o Rewards Of Not Using ex/ Above The Influence Reactance rejection of normative influence o Questions about effectiveness of social responsibility advertising exist Use of Spokespersons In Advertising: Expert Celebrity Knowledgeable Spokesperson directly tied to product (ex/ Lebron James for Nike) Non-Celebrity Unbiased Source (ex/ Rite Aid) Referent Symbolic (ex/ Sam Waterson for TD Ameritrade) or Aspirational (ex/ Jennifer Hudson for Weight Watchers) Typical Consumer (ex/ Jet Blue Experience)

Advantages of Non-Celebrity Referents: Dont have to worry about the negative consequences of the spokespersons actions o Ex: Tiger Woods, Lance Armstrong Minimal saturation More relevant and relatable Elements Of Word Of Mouth In Groups: Opinion Leaders who influences the others in the group Connectors diffusion of influence, acts as opinion leader among groups o All connectors are opinion leaders but not all opinion leaders are connectors Webs Effect On Word Of Mouth Communications: Hypothesis A: Web enhances word of mouth o Because of interactivity, anonymity (more free to express opinion), number of vehicles for word of mouth, viral multiplier effect, the e-fluential generation (16% of internet users generate 75% of the content)

Hypothesis B: Influence of WOM on web is overstated o Online conversation isnt always two-way, web population is not representative of total population, only 10% of word of mouth comes from online (vs 73% which comes from face to face conversations)

Reading 32: Internet has become panopticon online influence is so great that consumers are becoming marketers (brand advocates) through referrals, sharing, etc. Negative Word Of Mouth: Dissatisfied consumers are three times as likely to communicate their experiences Consumers pay more attention to negative word of mouth o 80% chance consumer will follow through after hearing Diffusion Process: Strength of Weak Ties connectors that tie groups together help push a product or innovation into mass adoption Leapfrogging multiplier effect of reaching multiple connectors

Characteristics That Encourage Diffusion: Relative advantage Compatibility with past usage Simplicity of use Observability Trailability Some characteristics that discourage diffusion include value barrier, usage barrier, complexity, lack of information, and a lack of usage experience Rate of Diffusion: tipping point accelerates diffusion (need a factor or event) Ex: Email triggered by 40% adoption level, Car triggered by pass production Rapid Rate of Diffusion triggers a quick increase in use o Slow and No Diffusion situations either see constant increases or no increases

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