Chapter Four: Consumer Behaviour TOOLS FOR INSTRUCTORS • Learning Objectives • Annotated Chapter Outline with Instructor’s Notes/Teaching Tips • Answers to End of Chapter Learning Aids Concept Review Marketing Application Questions Net Savvy Chapter Case Study • Video Activities Learning Objectives 1. Describe the steps in the consumer buying decision process 2. Identify what determines how much time consumers will search for information before buying a product or a service 3. Summarize how psychological, social, cultural, and situational factors influence consumers’ buying behaviour 4. Explain how involvement influences the consumer buying decision process Annotated Chapter Outline PowerPoint Slides Instructor Notes Chapter 4 will focus on consumer behaviour and in particular the consumer buying decision process and factors that influence these decisions. The chapter objectives and roadmap are intended to help students understand the content to be discussed. Opening Vignette: Dell Social Media Listening to customers enables Dell to identify needs and trends. Sentiment analysis helps Dell monitor more than 25,000 conversations a day. From this analysis, the company can tap opinion leaders to involve them in the design and evolution of its products and services. Ask Students: Do you follow Dell on any social media platforms? If so, does it make you feel more involved with the company? Possible Answers: Some students may follow Dell on Twitter since this is where it offers special deals on products. While students may not necessarily have their opinions sought, their level of involvement may be higher because they feel they get access to deals that other consumers don’t. LO1: The Consumer Decision Process This slide introduces the entire consumer decision process. Instructors may use this single slide if time is limited. Otherwise, the following slides will cover each of the steps in the process in further detail. 1. Step 1 - Need Recognition A. Consumers with an unsatisfied need or want attempt to move from their needy state to a different, desired state. B. The greater the discrepancy between these two states, the more salient the need recognition. • Functional needs mean that the consumer absolutely must obtain the performance of the product or service. • Psychological needs pertain to the personal gratification consumers’ associate with a product and/or service. Ask students: Think about the difference between functional and psychological needs. Consider an example similar to the shoe example in the text. Many basic products (e.g. bleach) represent commodities, but many consumers go beyond their functional needs and purchase Clorox bleach specifically. Another example might address the functional need for water versus the psychological need for Evian or Perrier. 2. LO2: Step 2 - Information Search A. Consumers seek information about how best to satisfy the need they have identified. B. The length and intensity of the search depend on the degree of perceived risk associated with the purchase. C. During an internal search for information, the consumer examines his or her own memory of, knowledge about, and experiences with the product or service. D. During external search for information, consumers seek information beyond their personal knowledge base to make the buying decision. Information Search can be internal or external. Many factors affect search including: perceived benefits versus cost, locus of control, actual or perceived risk, type of product or service (specialty, convenience, shopping) and are discussed in more detail in the slides that follow. Ask students: As consumers, how have you or your family members gathered information related to the following purchases? - A restaurant for a first date. - Whether to take a class from a particular instructor. - A diamond engagement ring. - A new computer. - A washing machine. - A security system for your home. E. Various factors affect consumers’ search processes: • Perceived benefits of search versus its perceived costs. Ask students: Which purchase situations merit the expenditure of extra search costs? Personal preferences often play crucial roles in how much time and effort consumers are willing to incur. • The locus of control can be internal or external. a. An internal locus of control means consumers believe they have control over the outcomes of their actions. b. An external locus of control means they believe fate or other external factors control outcomes. Locus of control actually indicates how much control people think they have over the outcomes of various activities, such as purchasing a product or service. Some people sense their own extensive control, whereas others feel virtually powerless. The former engage in more search activities. • Risk includes actual or perceived factors and can be classified into several categories. a. Performance risk involves the perceived danger inherent to a poorly performing product or service. b. Financial risk is associated with a monetary outlay and includes the initial cost of the purchase, as well as the costs of using the item or service. c. Psychological risks entail the way people will feel if the product or service does not convey the right image. Risk and risk perceptions play crucial roles in determining the extent of consumer search. Ask students to compare the risk levels associated with the following purchase situations: - A gift for the grab bag for the office holiday party. - A gift for your mother’s birthday. - A gift for your future mother-in-law’s birthd Ask students: What type of risk is associated with each decision? All involve increasing degrees of psychological risk. Ask students: What type of risk is associated with each decision? All involve increasing degrees of psychological risk. Answer D; see page 113 3. Step 3 - Alternative Evaluation A. Evaluative criteria consist of a set of salient, or important, attributes about a particular product. B. Determinant attributes are the product or service features important to the consumer and on which competing brands or stores are perceived to differ. Group activity: Walk students through the example of planning a vacation. Have students list all possible choices, and then organize them into categories (e.g. beach versus mountain, domestic versus international, inexpensive versus luxury). Continuing the group activity, ask students to indicate their favourite destinations. Ask: What evaluative criteria and determinant attributes did you use to determine the list of options? What are some of the features of a vacation that would be in your evaluative criteria? If you have a student who recently went on a vacation, you may focus on his or her specific purchase experience. Social & Mobile Marketing 4.1 looks at an innovative way to bring along friends while shopping on-line. C. When evaluating alternatives, consumers often rely on decision rules. • A compensatory decision rule assumes that the consumer, when evaluating alternatives, trades off one characteristic against another, such that good characteristics compensate for bad characteristics. • No compensatory decision rules cause consumers to choose a product or service on the basis of a subset of characteristics, regardless of the values of other attributes. Ask students: Did you use a decision rule similar to the ones in this chart? How did you weigh your vacation alternative choices? Go to the Toolkits on Connect. Click on consumer decision rules. Work through one of the three problems provided. The other two could be assigned to students to do. D. Decision heuristics are mental shortcuts that help consumers narrow down the choices. 1. Price. Consumers can choose the more expensive option, in the belief that they will get better quality along with the higher price 2. Brand. Always buying brand name goods allows some consumers to feel safe with their choices. 3. Product presentation. The manner in which a product is presented often influences the decision process. Ask students: Do you use a particular heuristic when purchasing certain merchandise? What heuristics do you use, and when do you use them? For example, some students will always buy the same brand of personal care products (e.g. deodorant, soap, shampoo.) Ask students: What benefits do you gain from using this heuristic? Answer A; see page 116 4. Step 4: Purchase Decision A. Value is a strong driver of consumers’ purchase decisions. Customers seek out and purchase the products and services that they believe provide them with the best value. B. Consumption: The act or process of using something. C. Ritual consumption pertains specifically to consumption for symbolic cultural purposes or to habitual consumption, such as stopping at Starbucks every day on the way to work. Consumption experiences vary greatly. A haircut requires consuming the service, whereas eating a candy bar involves consumption of a tangible product. Other consumption experiences, such as eating in a restaurant, mix tangible products (e.g. food) and intangible aspects (e.g. service, décor, other patrons.) All these factors contribute to the consumption experience. Ritual consumption refers to a pattern of behaviours tied to life events that affect what & how we consumer. These behaviours tend to have symbolic meanings & vary greatly by culture. They might take the form of someone going to Tim Hortons every morning, or brushing your teeth, or special holiday rituals. 5. Step 5 - Post purchase A. Customer satisfaction relates to customers’ expectations. Therefore, to increase satisfaction, firms must: 1. Build realistic expectations, not too high and not too low. 2. Demonstrate correct product use, because improper usage can cause dissatisfaction. 3. Stand behind the product or service by providing money-back guarantees and warranties. 4. Encourage customer feedback to minimize negative word of mouth. 5. Periodically make contact with customers and thank them for their support. Customers appreciate human contact, though it is more expensive than e-mail or postal mail contacts. Remind students that post purchase satisfaction is particularly important to marketers because it involves actual rather than potential customers. Discuss how firms set customer expectations. Ask students: What are the dangers of setting expectations too high or too low? WestJet offers a good example because it keeps its promises simple: low cost, on-time arrivals, and friendly service. Ask students: What other firms do a good job of managing customer expectations? B. Post purchase dissonance, also known as buyers’ remorse, is the psychologically uncomfortable state produced by an inconsistency between beliefs and behaviours that in turn evokes a motivation to reduce the dissonance. C. Loyalty can be solidified in the post purchase stage. D. Undesirable consumer behaviour sometimes occurs as well. Although firms want satisfied, loyal customers, sometimes they fail to attain them. 1. Passive consumers do not engage in repeat purchase or recommend the product to others. 2. More serious and potentially damaging is negative consumer behaviour, such as negative word of mouth and rumours. 3. Some consumers spread negative information about a product, service, or store to others. 4. When firms meet or even exceed consumers’ expectations, they often do not tell anyone about it, but when consumers believe they have been treated unfairly, they often complain. Virtually everyone has experienced post purchase dissonance. Ask students: Recall a purchase that resulted in a dissonant experience for you. Did the retailer or manufacturer help resolve your dissonant state? Think about ways dissatisfied customers threaten businesses. Which is higher, the number of acquaintances people tell about a positive experience or those they tell about a negative experience? By far, dissatisfied customers tell more people about their negative experience than about any positive experiences. Why is managing this consumer-to-consumer communication so important? Answer B; see page 118 LO3: Factors Influencing Consumer Buying Decisions After examining the five steps in the consumer decision process, students should begin to focus on the aspects that influence that process. This slide can be used to introduce the topic. More detailed slides follow if desired. Remind students that every unique person views a purchase situation differently. 1. Psychological Factors Influence Decisions A. Motives are needs or wants that are strong enough to cause the person to seek satisfaction of them. B. Maslow’s hierarchy of needs comprises five categories - physiological, safety, love, esteem, and self-actualization. 1. Physiological needs refer with the basic biological necessities of life. 2. Safety needs pertain to protection and physical well-being. 3. Love needs relate to interactions with others. 4. Self-esteem needs allow people to satisfy their inner desires 5. Self-Actualization occurs when you feel completely satisfied with your life and how you live. Remind students of the discussion in Chapter One related to needs and wants. Ask students: How many times have you experienced a need or want but, for whatever reason, lacked the motivation to act on it. For example, the need for a drink of water at 3:00 am often is not sufficient motivation for people to get out of a warm bed to meet their physiological need. Ask students: What other types of needs psychological needs have they experienced, how they might fill them, and when they are motivated to do so. C. An attitude is a person’s enduring evaluation of his or her feelings about and behavioural tendencies toward an object or idea. Attitudes are learned and long lasting, and they might develop over the long term, though they can also abruptly change. There are three components to attitudes: 1. The cognitive component reflects what people believe to be true. 2. Affective components pertain to what people feel about the issue at hand (i.e., likes and dislikes). 3. The behavioural component comprises the action(s) people undertake with regard to that issue. Ask students: Imagine your car breaks down on the way to a date. You are panicked but luckily see a garage right on the same street. The mechanic assists you immediately, and you leave after paying only a $50 charge. The next day, you complete a survey about auto mechanics in the area. How do you rate the mechanic? Ask students: Have you had experiences similar to this scenario? Did it result in a perceptual change about the retailer or service provider? How did that change affect your subsequent purchase decisions? D. Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. Perception influences acquisition and consumption because it assigns meaning to such things as color, symbols, taste, and packaging. Just as your perception of the mechanic changed, societies’ perceptions can change. For example tattoos used to be only considered acceptable for unsavoury individuals. There were clearly NOT main stream, yet today people from a variety of demographic backgrounds get tattooed. Even some parents and children with matching tattoos. E. Learning refers to a change in a person’s thought processes or behaviour that arises from experience; it takes place throughout the consumer decision process. F. The way consumers spend their time and money to live By experiencing lots of people with tattoos, we learn that they are “OK”. Learning changed our perception. Consumers generally tend to buy products that suit their lifestyles. Those with an outdoorsy and adventurous lifestyle tend to buy sporting goods and luxury items Entrepreneurial Marketing 4.1 Socks that Start Businesses Cole + Parker sells socks with a One for Many approach. For every pair of socks purchased, the company donates money to help entrepreneurs in developing countries start businesses. Working with Kiva, a microfinance organization, they ensure that 100% of sock revenue goes directly to entrepreneurs. Owners Diana and Jeff House pitched their business on Dragons’ Den and attracted funding from David Chilton. The socks are now sold in over 100 retail outlets as well as via their website. Show the Dragons’ Den video that accompanies this box. Ask Students: How do you think Cole + Parker can use other factors influencing consumer buying decisions to sell more socks? Possible answer: Students may say that social factors are important. For example, if students grow up in families where philanthropy is important and disposable income is high, that could impact their willingness to spend $24 on a pair of socks. Cole + Parker could use situational factors by having a sale, or special deal, buy three pairs get one for half price which would influence some people to buy more. 2. Social Factors Affect Decision Making • Family. When families make purchase decisions, they often consider the needs of all family members. Group activity: Ask the students to think about and list the factors that went into their decision about where to go to college. Have one volunteer read his or her list, which likely will include factors such as price, distance, ratings, friends, family recommendations, or suggestions from guidance counsellors. Ask students: How many of these factors are social? • Reference group. One or more persons whom a decision maker uses as a basis for comparison in terms of his or her beliefs, feelings, and behaviours. The reference group: 1. Offers information. 2. Provides rewards for specific purchasing behaviours. 3. Enhances a consumer’s self-image. Ask students: How was your choice of college influenced by your reference groups? • Culture. The shared meanings, beliefs, morals, values, and customs of a group of people. Most weddings have four elements: gathering, ritual, vows, and celebration. The expression of these elements, however, varies dramatically. In parts of India, for example, weddings are extremely elaborate and span several days. Even within Canada, different religions and regions embrace unique ceremonial traditions. Group activity: Ask students to consider how these differences affect the way the bride and groom make decisions. Discuss differences they may have observed in various wedding ceremonies they have attended. What effect did these differences have on their behaviour? 3. Situational factors. Specific to the situation, these factors override or at least influence various psychological and social issues. • Depending on the purchase situation, customers may be predisposed to purchase certain products or services because of some underlying psychological traits or social factors that change in various purchase situations. • Depending on the shopping situation, consumers who seem ready to purchase can be completely derailed once they arrive in the store, or vice versa. a. Store atmosphere. Some retailers and service providers have developed unique images based at least in part on their internal environment, also known as atmospherics. b. Salespeople. Well-trained sales personnel can influence sales at the point of purchase by pointing out the advantages of one item over another or encouraging. c. In-store Demonstrations. The taste and smell of new food items may attract people to try something they normally would not buy. d. Promotions. Retailers employ various promotional vehicles to influence customers once they have arrived in the store. e. Packaging. To make their product stand out, marketers spend millions to design and update packages that appeal to and catch the eye of consumers. • Temporal state. A person’s state of mind at any particular time can alter his or her preconceived notions of what to purchase. Ask students: How many of you have walked into a store and immediately felt uncomfortable? What made you uncomfortable? For some, the store may have seemed too expensive, whereas others may have perceived themselves as too masculine or feminine, too young or old. Ask students: Now recall a positive experience you have had when you first walked into a store and felt immediately comfortable. What factors made you feel comfortable? Ask students: How many of you have had retail sales or wait staff positions? What training did you receive? How did you contribute to the purchase decisions of the customers? Were you taught ways to influence customers? Many training programs feature “up-selling,” such as offering dessert or suggesting the special entree. In retail settings, many salespeople are trained to suggest accessories or additional pieces that go with a particular outfit or item. Infomercials offer a good example of product demonstrations that attempt to motivate purchase. Ask students: Why do infomercials influence consumers? How? Answer B; see page 128 LO4: Involvement and Consumer Buying Involvement is the consumer’s degree of interest or concern in the product or service. Consumers may have different levels of involvement for the same type of product. A. Extended problem solving is common when the customer perceives that the purchase decision entails a great deal of risk. B. Limited problem solving occurs during a purchase decision that calls for, at most, a moderate amount of effort and time. A common type of limited problem solving is impulse buying , a buying decision made by customers on the spot when they see the merchandise C. Habitual decision making describes a purchase decision process in which consumers engage with little conscious effort. Ask students: What drives them to make impulsive purchases. And, if they ever bought anything expensive impulsively. Answer: B Concept Review: Generally, the concept questions are designed to achieve a single purpose – to encourage students to test their knowledge and understanding of the theoretical content of the chapter. These questions encourage recall and reflection, which will better prepare students to answer the marketing applications questions based on their understanding of the theory. 1. Give three reasons why it is important for marketers to understand the factors that influence consumers’ purchasing decisions. Answer: Understanding consumer behaviour means that firms can 1) influence their purchase decisions at all stages of the buying decision process, 2) design products that better meet the needs and wants of consumers, 3) allocate and use its resources more efficiently and effectively, and 4) communicate more effectively with customers in an inefficient way, e.g., – design better advertisements and choose appropriate media and message (i.e. message strategy and execution). 2. List the five steps of the consumer buying decision process. What should be the primary focus of the marketing strategy at the alternative evaluation stage? The purchase stage? Answer: The five steps in the consumer buying decision process are 1) Need recognition, 2) Search for information, 3) Evaluation of alternatives, 4) Purchase and consumption, 5) Post purchase. The key focus of marketing at the alternative evaluation stage is to provide sufficient information for consumers to properly evaluate the company’s products and services compared to competing products. Providing comparative information that shows a company’s product in a positive light is a commonly used approach. Companies also try to differentiate their products at this stage, highlight the reasons why consumers should purchase their product. At the purchase stage, marketers focus on simplifying and facilitating the customer purchase decision. Commonly used strategies include (1) offering various payment option (credit card, cheque, cash, financing), (2) offer free or low-cost delivery and installation, (4) offer discounts or some incentives, and (5) stress their no-hassle returns policy. 3. What are the primary factors that affect consumers’ search processes? What marketing strategies can marketers employ to ensure that customers get the information they need in order to make their shopping decision? Answer: The factors affecting the extent of consumers’ search process include the nature of the goods – a convenience good that requires little or no problem solving or a shopping good that requires extended problem solving. The consumer’s knowledge and experience with the product will also determine the extent of their search process. Other related factors include perceived benefits, actual or perceived risk and locus of control. Marketing strategies that can be employed will vary depending on the type of product offering, but may include offering detailed information and expert opinion for large or risky purchases requiring extended problem solving, providing information in a variety of locations and formats aimed at the target market, educating the customer about the product uses and limitations, providing comparative information, and emphasising their warranty, guarantee, and returns policy. 4. Briefly explain the types of consumer buying behaviour and describe strategies marketers could use to facilitate consumer purchasing in each case. Give examples of products you would classify as complex buying and dissonance-reducing choices. In what ways are they a different or related? Answer: Extended problem solving – high involvement, high risk, big differences between brands. A good strategy for this type of decision is to understand the information search process and provide high levels of detail and expert information in order to relieve fear and assist the decision. Knowledgeable salespersons that can explain the uses, specifications, and performance of the products are required for this type of purchases. Examples: car, house, university. Limited problem solving – moderate amount of effort and time, high risk, small differences between brands. In some cases consumers may engage in impulse buying. A good strategy here is to locate your product near the point of purchase and attractively display it. Other purchases will be the result of habitual decision making, where consumers give little thought to the purchase, for example, picking up bread, milk or toothpaste. For a marketer to break through the barriers other brands have built, they need to get consumers to think about the reasons they buy one brand versus another and convince them the new brand has significant benefits. 5. Identify and briefly explain the four psychological factors that influence consumer buying decisions. Answer: The four psychological factors are 1) Motives – the want or need driving the search. 2) Attitude – a person’s feelings and behavioural tendencies towards an object. 3) Perception – the process used to select, organise and interpret information to form a meaningful conclusion. 4) Learning – Thoughts and behaviour arising from previous experiences. 6. What marketing tactics could be used to break through customers’ selective perception i.e., selective exposure, selective attention, selective comprehension, and selective interpretation? Answer: Marketers must target their communications in those media that maximise exposure to their target market and create messages that are consistent with consumers’ beliefs and attitudes so that they will pay attention to the messages and interpret them in the intended way. This also includes using alternative media and interesting messaging. 7. How can marketers use Maslow’s Hierarchy of Needs model to develop successful marketing programs for their target market? Answer: Maslow’s model explains the different levels of motivation for needs. By understanding not only how the hierarchy works but also where their product or service fits, marketers can choose the best type of communication. For example, restaurant marketers must decide if they are fulfilling a basic physiological need – food to provide energy, like McDonalds – or fulfilling a higher level need – to belong and fit in with others, like a trendy downtown restaurant. A fast food restaurant may only need to remind consumers of physiological satisfaction, whereas the fine dining restaurant must instead paint the picture of social needs being met. 8. Briefly explain how social and situational considerations influence customer buying decisions. Answer: Social and situational factors have a profound influence on buying decisions. Social factors, like family preference, reference group recommendations and cultural motivators can be stronger than personal attitudes and opinions. Often decisions are made to purchase items that the entire family can use, or children can often persuade their parents to choose something they recommend. Situational factors like purchase situation, shopping situation and temporal state are critical as well. They can be the main reason for a change in behaviour, and may be a result of the occasion, specific marketing communications, or a persuasive argument. Music, lighting, store layout and overall atmospherics have strong influences on consumers purchase decisions. 9. Perceived risks are a key determinant of consumer buying decisions. Explain what is meant by perceived risks and identify tactics marketers could use to mitigate these risks. Answer: A perceived risk is how much risk the consumer believes is inherent in the decision. The higher the perceived risk, the more likely the consumer will spend more time searching for information. There are three main types of perceived risk: performance risk, financial risk and psychological risk. Perceived risk can be mitigated by justifying every aspect of the purchase perhaps by showing the benefits over a competitor, by showing many other satisfied customers, and by paying special attention to tailoring a package, product or service to meet the specific needs of a customer. If they feel the product or service will best meet their needs they will perceive less risk. As well, post purchase follow up to ensure satisfaction will help reinforce the customer’s decision i.e. the decision made was the correct decision. 10. Culture is one of the most important but least understood influences on consumer buying decisions. Explain how marketers can ensure that their marketing efforts are suited to their culturally diverse target market. What are the challenges involved in developing such efforts? Answer: Marketers must work hard to understand how culture differs among different groups of customers because it will affect which way they should market their products. The main challenge besides wide diversity is truly understanding the motivating factors for different cultures as it is not just the products that differ but the thought process behind these choices. Involving cultural experts in the planning stages is a great way to glean true insights into different cultural groups. It is important to truly understand the cultural implications because consumers prefer to do business with marketers who truly understand their culture and needs rather than those who have very superficial ways of acknowledging their community. A major challenge for many marketers is first recognising and understanding the different cultural needs of its customers. A second challenge is trying to appeal to different cultural groups with separate messages targeted to each group whilst still trying to maintain a consistent message about the company and its products and services. A third challenges is marketers’ willingness to adapt their product or service offering to different cultural segments. Marketing Applications 1. Does buying Kashi cereal satisfy a consumer’s functional or psychological need? How might this information help a Kashi brand manager better promote the product? Instructor’s Notes: This question gets students to think about the differences between psychological and functional needs. Example answers: Kashi cereal satisfies a consumer’s psychological need. While cereal might provide a basic functional need (to satisfy a consumer’s hunger), Kashi cereal appeals to more psychological needs, including the need to eat healthy or a social desirability need. Some consumers might choose to eat Kashi to fit in with a certain lifestyle or social group. Understanding why customers choose Kashi will help Kashi in its efforts to promote its brand as a lifestyle brand rather than just a basic cereal. Buying Kashi cereal primarily satisfies a consumer’s functional need by providing a healthy, nutritious breakfast option. It can also address a psychological need by aligning with health-conscious values and lifestyle choices. A Kashi brand manager could use this information to promote the product by emphasizing its health benefits and how it supports a wellness-oriented lifestyle, appealing to both functional needs for nutrition and psychological needs for personal health and self-care. 2. When consumers buy a new notebook, what sort (internal vs. external) of information search would they conduct? If you were a marketing manager for Sony, how would you use this information? Instructor’s Notes: The focus of these questions is to help students understand that they likely start with an internal search and only resort to external search when they don’t have enough experience to make a decision. Example answers: An internal search for information might include: understanding how they might use the laptop, previous experiences with other laptop brands, and personal budget. An external search for information might include: online reviews, reference groups, input from store sales associates, and consumer reports. The marketing manager for Sony should understand the various sources, both external and internal, that customers use in their decision making. Marketing managers want to make sure that customers have good experiences with a brand so that when customers do a future internal search, they will immediately think of that brand as an option. The Sony manager should also monitor online review sites and reports to understand how the brand is being portrayed in the marketplace as that will influence the customer’s search process. When consumers buy a new notebook, they typically conduct external information searches, such as comparing reviews, features, and prices from various sources. As a marketing manager for Sony, you could use this information to focus on building strong online presence through reviews, comparisons, and detailed product information. This approach ensures that Sony's notebooks are well-represented and stand out in the external search process. 3. Explain the factors that affect the amount of time and effort that a consumer might take when choosing an oral surgeon to get his or her wisdom teeth removed. How would your answer change if the consumer were looking for a dentist to get a cleaning? How should the office manager for a dental practice use this information? Instructor’s Notes: Students must analyze the different information-gathering processes consumers use for related but different purchases. They should recognize that the length and degree of intensity of consumers’ information search often depend on the degree of perceived risk associated with a purchase. Example answers: Students must analyze the different information-gathering processes consumers use for related but different purchases. They should recognize that the length and degree of intensity of consumers’ information search often depend on the degree of perceived risk associated with a purchase. Office managers for dental practice should understand that consumers searching for an oral surgeon might engage more in information search and evaluation of alternatives than those consumers just interested in a cleaning. In choosing a doctor for oral surgery, consumers likely worry about his or her reputation, how long he or she has been practicing, other clients, the cost of the service, the location of the oral surgeon, and whether the office accepts the consumer’s insurance. The primary concern of the consumer therefore is to mitigate any perceived risk associated with the oral surgeon. For dental cleaning, however, consumers likely engage in less intensive, less time-consuming search for information, because the perceived risk is lower. When choosing an oral surgeon for wisdom teeth removal, a consumer typically invests more time and effort due to the procedure's complexity, potential risks, and the need for specialized expertise. Factors include the surgeon's qualifications, reviews, cost, and recommendations. For a routine dental cleaning, the consumer’s search is generally less intensive as it’s a more straightforward, lower-risk service. Factors include convenience, cost, and basic reviews. An office manager should highlight the practice’s expertise, positive reviews, and patient testimonials for oral surgeries and emphasize convenience and affordability for routine cleanings to address the varying levels of consumer concern and effort in their search. 4. When evaluating different alternatives for a Saturday night outing at a fine restaurant, explain how a consumer would use decision heuristics to narrow down the choice of restaurants. Give examples such as price, brand and presentation in your answer Instructor’s Notes: Alternative evaluation often occurs as the consumer engages in information search and decision heuristics – mental short cuts –are often used to make their decisions. Students must understand how decision heuristics function during an alternative evaluation process. Example answers: When considering fine restaurant alternatives, the decision heuristic around price might be, for example, let’s go for the most expensive restaurant since we will likely get the best food and service or let’s go to a restaurant that is not too expensive but not too cheap either so that we can get good food and quality at reasonable prices. In terms of brands, let’s choose a restaurant that is well-known for the quality of its food and service. In terms of presentation, let’s go to a restaurant where the atmospherics or ambience is really sophisticated, warm, and inviting and the staff and waiters are well-trained and courteous. When evaluating alternatives for a Saturday night outing at a fine restaurant, a consumer might use decision heuristics such as: • Price: Filtering out restaurants that are too expensive or too cheap relative to their budget. • Brand: Choosing well-known or highly-rated restaurants based on reputation and past experiences. • Presentation: Considering the ambiance and decor of the restaurant to match their desired dining experience. These heuristics help simplify the decision-making process by focusing on key factors, making it easier to narrow down options quickly. 5. What can retailers do to make sure they have satisfied customers after the sale is complete? Instructor’s Notes: Customer satisfaction is not limited to the experience leading up to and including the actual purchase event; it often extends beyond the purchase to user experiences after purchase. Companies that want to ensure consumers have positive experiences with their products offer after-sales service to deal with any potential issues, so that the consumer thinks positively of the company and the product. In this way, companies can build their overall brand equity by mitigating the purchase risk for consumers. Example answers: Retailers can do a variety of things to ensure customers are satisfied after the sale. They can start by setting realistic expectations of the product before the customer even purchases it, demonstrate how to use the product properly, provide money-back guarantees and warranties, encourage customer feedback, and periodically contact customers to thank them for their continued support. Retailers can ensure customer satisfaction after the sale by: • Offering excellent post-sale support: Providing clear instructions, easy returns, and responsive customer service. • Following up: Sending satisfaction surveys or thank-you messages to check on the customer’s experience. • Addressing issues promptly: Resolving any problems or complaints quickly and efficiently. • Providing loyalty programs: Offering rewards or incentives for future purchases to build ongoing customer relationships. 6. Tazo blends exotic green teas, spearmint, and rare herbs into a tea called Zen. Using Maslow’s hierarchy of needs, explain which need(s) are being fulfilled by this tea. Instructor’s Notes: A motive is a need or want that is strong enough to cause a person to seek satisfaction. Back in the 1970s, social researcher Abraham Maslow developed the PSSP hierarchy of needs, which postulates that people are motivated to satisfy higher-level human needs when their lower-level needs are addressed. That is, as people’s more basic needs (physiological and safety) are fulfilled, they turn to satisfying their more advanced needs (social and personal). Example answers: Based on the hierarchy, the Zen tea helps satisfy consumers’ basic physiological need for one of the necessities of life: liquid to drink. It also helps satisfy consumers’ personal needs, because they can meet their desire to live a healthy lifestyle and experience a sense of refinement while doing it. Tea does not, however fulfill a safety need. Tazo’s Zen tea primarily fulfills esteem needs and self-actualization needs in Maslow's hierarchy. It provides a sense of esteem by offering a refined and exotic experience that enhances the consumer's self-image and sophistication. It also satisfies self-actualization needs by allowing consumers to enjoy a unique and mindful ritual, aligning with their personal values and pursuit of well-being. 7. Identify and describe the three social factors that influence the consumer decision process. Provide an example of how each of these might influence the purchase of the necessary products and services for a family vacation. Instructor’s Notes: This exercise reminds students that the consumer decision process is not influenced just by psychological factors but also by the external, social environment that consumers inhabit. Example answers: The three social factors that influence the consumer decision process are family, reference groups, and social class. A family generally makes decisions about vacations, which affect all members of the family, together, so firms must appeal to all family members to some extent (e.g., emphasize child-friendly services). In a vacation purchase context, a consumer’s reference group likely offers information about possible vacation locales, rewards decisions that meet their approval, and reaffirms the consumer’s self-image (e.g., as an adventurer who travels to exotic locales). Social class affects a vacation decision because consumers often trade-off the cost of a vacation with the type of amenities it might offer (e.g., Monte Carlo versus Las Vegas). The three social factors influencing the consumer decision process are: 1. Family: Family members' preferences and needs shape decisions. For a family vacation, parents may prioritize destinations that offer activities suitable for all family members, such as kid-friendly resorts. 2. Reference Groups: Influences from friends, colleagues, or social circles impact choices. Recommendations or shared experiences from friends might lead a family to choose a particular vacation spot or resort. 3. Social Class: Socioeconomic status affects purchasing power and choices. A higher social class might lead a family to opt for luxury accommodations and exclusive experiences, while a middle or lower class might seek budget-friendly options. 8. Nike has developed a new shoe for long-distance runners designed to minimize wear and tear on the joints and tendons. Develop a theme for an advertising strategy that covers all three components of attitude positively. Instructor’s Notes: The cognitive aspect reflects what people believe to be true, the affective component refers to what they feel about the issue at hand, and the behavioural component consists of the action(s) people undertake. By considering all three components to create an advertising campaign, students should perceive how all three come together in a single theme meant to influence the attitudes of potential consumers. Example answers: For a new long-distance running shoe designed to minimize wear and tear on the joints and tendons, the cognitive aspect could be that joint and tendon damage is detrimental to a person’s long-term health. The affective component could emphasize an emotional aversion to doing what is unhealthy, especially for long-distance runners who pursue the sport in part for its health benefits. The behavioural component could encourage them to buy the new shoe to avoid the negative effects—both physiological and psychological—that might occur if the consumer does not buy the shoe. The theme then could be something along the lines of “Better Health for the Long Haul.” Theme: "Run Further, Stronger, and Healthier" • Cognitive Component: Highlight the shoe’s advanced technology and benefits for joint and tendon protection, emphasizing its innovative design and features. • Affective Component: Appeal to the runner’s desire for comfort and injury prevention, creating an emotional connection by showcasing improved performance and confidence. • Behavioral Component: Encourage trials and purchases by promoting endorsements from athletes, offering satisfaction guarantees, and providing easy access through various retailers. 9. What can a marketer do to positively influence a situation in which a consumer is ready to buy but has not yet done so? Instructor’s Notes: Student must think of ways marketers can affect consumers’ buying decisions during the shopping experience. Thus, the question illustrates that the buying decision is not just a function of product attributes. Example answers: A marketer can enhance a consumer’s willingness to buy by creating a positive store atmosphere, ensuring salespeople act in a friendly and helpful manner, organizing the store to avoid customer crowding, providing in-store demonstrations of the product, running promotions of the product to make consumers believe they are getting a good deal, and packaging the product to attract the consumer’s attention and interest. A marketer can: • Provide Incentives: Offer limited-time discounts or promotions to encourage immediate purchase. • Highlight Urgency: Use scarcity tactics like "Only a few left!" to create a sense of urgency. • Simplify the Process: Ensure a smooth and easy checkout process to remove barriers to completing the purchase. • Use Testimonials: Showcase positive reviews and testimonials to build confidence and reinforce the decision. 10. You were recently hired by a retail and catalogue company that promotes itself as a Canadian firm selling only Canadian-made goods. The products featured in advertising and in the catalogues tell the stories of the firms that produced the goods in Canada. The sales response to the firm’s Made in Canada position has been incredible, and growth has been impressive. One day while speaking to a vendor, you find out a shipment of merchandise will be delayed because the product is late coming from overseas. A few days later, you hear a similar story. As it turns out, the firm just barely earns its Made in Canada labels. Although technically the products meet the standard to be classified as Canadian-made, you worry that the firm is not being truthful to its customers. You decide to write a letter to the vice president of marketing to detail your concerns. What information do you include in the letter? Instructor’s Notes: This ethical scenario forces students to trade off protection of consumers with ethical standards of privacy and confidentiality. If they use the ethical decision-making framework from Chapter Three, students can evaluate their ethical position and thereby determine the appropriate information to include in the letter. Example answers: According to the ethical decision-making framework: • “Have you thought broadly of any ethical issues associated with the decision to be made?” I have thought broadly about the ethical issues. In this case, I have concerns about keeping the customers in the dark about where the products are actually made and worry about what consumers might think if they find out the company’s “Made in Canada” advertising is not entirely truthful. • “Have you involved as many possible people who might have a right to offer input into or have actual involvement in making this decision and action plan?” At this point, the customers are not involved at all, and they are likely the most important stakeholder to keep in mind. It might be beneficial to commission a study of consumers’ attitudes toward mixed product sourcing. • “Does this decision respect the rights and dignity of the stakeholders?” No, because customers likely will feel their trust has been violated. The company has not been entirely upfront about the standard it uses to determine what is “Made in Canada.” • “Does this decision produce the most good and the least harm to the relevant stakeholders?” Consumers are not really buying what they think they are, so even though the product might be perfectly fine, the firm is misleading them. One of the reasons consumers might choose this product over another is its Made in Canada label. So this practice helps the company but hurts customers buying the product on the basis of false claims. • “Does this decision uphold relevant conventional moral rules?” It likely violates the community’s standard for what is appropriate regarding product advertising and sourcing. Most people likely would find the company’s practice dishonest. • “Can you live with this decision alternative?” At this point, because the Made in Canada labelling and advertising misleads customers about products that are not completely made in the country, I cannot live with it and believe I must take action. The letter should include strong objections to the practice of misleading customers this way, concerns about how it might look if the information got out to the public, how the company’s sales and subsequent future might be affected by this disclosure, and how the situation could be remedied by actually engaging in Canadian product sourcing rather than continuing to use components from overseas. In the letter, include: 1. Summary of the Issue: Describe the discovery that some products, while technically meeting "Made in Canada" standards, involve significant overseas production. 2. Concerns: Express concern about potential misalignment between the company's marketing claims and the actual origin of the products. 3. Impact: Highlight the risk of customer trust and brand integrity if the discrepancy is revealed. 4. Recommendation: Suggest reviewing and potentially revising marketing claims to ensure transparency and align with the firm's commitment to Canadian-made goods. Net Savvy 1. Visit the Harley-Davidson Web site (www.harley-davidson.com) and review the information provided about its Harley Owners Group (HOG). Describe the efforts the company makes to maintain customer loyalty through its programs. What are the benefits to HOG members? Discuss how these measures might be effective in creating value for members. Instructor’s Notes: Why would a company like Harley-Davidson create the HOG group in the first place? Students should recognize that marketing tries to create value to address consumers’ needs and wants, and HOG do so by extending the customer experience beyond the purchase of the base product, a motorcycle. Example answers: The Harley-Davidson Web site shows how programs like HOG help the company create a positive brand and customer experience. The focus is on making Harley owners feel like part of a community, with all the benefits associated with that community. Membership in HOG offers monthly newsletters to keep riders up to date on events within the company and in the motorcycle riding community, programs to allow people to rent motorcycles in a variety of vacation locations, special discounts, logo merchandise, and social events geared to motorcycle enthusiasts. Such measures make consumers feel like part of something bigger than themselves, allow them to live a certain lifestyle through their group affiliation, and save them money. Harley-Davidson’s Harley Owners Group (HOG) maintains customer loyalty through several initiatives: 1. Exclusive Events: HOG members get access to exclusive rallies, events, and local chapter meetings. 2. Special Discounts: Members receive discounts on merchandise, parts, and services. 3. Insider Information: Access to a members-only magazine and online content with updates and stories about the brand. 4. Recognition Programs: Opportunities to earn rewards and recognition through participation and engagement. Benefits to HOG Members include a sense of community, special perks, and personalized experiences. These measures effectively create value by enhancing the ownership experience, fostering a strong brand community, and reinforcing members' emotional connection to the brand. 2. Customers use a variety of methods to provide feedback to companies about their experiences. Planetfeedback.com was developed as one such venue. Visit its website (www.planetfeedback.com) and identify the types of feedback that customers can provide. Look over the feedback about Ford, and summarize some of the most recent comments. What is the ratio of positive to negative comments about Ford during the last year or so? Describe the effect these comments might have on customer perceptions of Ford. Instructor’s Notes: This exercise illustrates how customer satisfaction—or dissatisfaction—can be expressed in different ways and what effects such expressions might have on a major company like Ford Motor Co. Example answers: Consumers provide four types of feedback on planetfeedback.com: compliments, complaints, questions, and suggestions. The most recent comments include positive feedback about vehicle safety and customer service, but the negative feedback describes poor credit account management, suspect dealerships, and product defects. The ratio of negative to positive comments in the last year is approximately 30 to 4, or about 8 negative comments for every positive comment. If potential consumers see that there are more criticisms of Ford than praise, they might consider purchasing a vehicle from another company. On Planetfeedback.com, customers can provide feedback in the form of: 1. Complaints: Express dissatisfaction with products or services. 2. Suggestions: Offer ideas for improvement. 3. Compliments: Praise positive experiences. Recent feedback about Ford shows a mix of positive and negative comments. Examples include appreciation for vehicle performance and complaints about customer service or reliability issues. The ratio of positive to negative comments appears to be roughly balanced, with both positive and negative experiences being highlighted. These comments can influence customer perceptions of Ford by shaping the public's view of the brand’s strengths and weaknesses, potentially impacting consumer trust and purchase decisions. Positive comments enhance the brand's reputation, while negative feedback could lead to concerns about reliability and customer service. Chapter Case: Weight Watchers vs. Jenny Craig Questions: 1. Trace how you might go through the steps in the consumer decision process if you were thinking of going on a diet and using either of these diet programs. Instructor’s Notes Need Recognition: "I think I need to lose some weight. Perhaps I will search the Internet, visit chat rooms, and ask friends about their experiences." Information Search: "I need to find out what kind of options are out there." Alternative Evaluation: "Should I go with Weight Watchers, Slim-Fast, or Jenny Craig? Which one fits my lifestyle? Which one is more convenient for me? Which one will help me best achieve my weight loss goals?" Purchase: "I will join Weight Watchers." Post-Purchase: "I was able to lose 20 pounds with Jenny Craig." Here’s how you might go through the consumer decision process for choosing a diet program: 1. Need Recognition: Realize the need for a diet to achieve health or weight goals. 2. Information Search: Research various diet programs, including their features, benefits, and reviews. 3. Evaluation of Alternatives: Compare diet programs based on criteria like effectiveness, cost, and ease of adherence. 4. Purchase Decision: Choose the diet program that best meets your needs and preferences. 5. Post-Purchase Evaluation: Assess the diet’s effectiveness and satisfaction with the program, and decide whether to continue, modify, or switch programs based on results and experiences. 2. How have Weight Watchers, Slim-Fast, and Jenny Craig created value? Instructor’s Notes Weight Watchers • Encourages members to track their daily information. • Dieters record in a paper or electronically based journal. • All foods are assigned point values and members have a daily points allotment. • Weekly group sessions and attend meetings. • Prepared or endorsed dinners, snacks and desserts at most grocery stores. • Other Weight Watcher products, such as food scales, cookbooks, and water bottles, are sold online and at meetings. Jenny Craig • A unique and comprehensive plan for food, body, and mind. • Prepared and packaged by Jenny Craig. • Controlled portions that accommodate busy schedules. • Members meet weekly on a one-on-one basis with a personal counselor. • Customized programs for those who prefer to lose weight on their own. Slim Fast • Convenient and accessible for most consumers • No meetings or representatives to visit • No points to record Weight Watchers: Created value by offering a flexible, points-based system that allows users to eat a variety of foods while managing weight. The program also provides support through meetings and online communities. Slim-Fast: Added value through convenient meal replacement shakes and snacks, which simplify calorie control and portion management for users with busy lifestyles. Jenny Craig: Provided value by offering personalized meal plans, one-on-one coaching, and pre-packaged meals that take the guesswork out of dieting, focusing on convenience and tailored support. Each program addresses different aspects of dieting and weight management, catering to diverse needs and preferences. 3. Identify the determinant attributes that set the Weight Watchers’, Slim-Fast, and Jenny Craig’s programs apart from each other. Use those attributes to develop a compensatory purchasing model like the one found in Exhibit 5.2. Instructor’s Notes Daily Tracking Group Sessions Prepared Meals Price Overall Score Importance Weight 0.10 0.30 0.40 0.20 1.00 Weight Watchers 10 9 9 7 8.7 Jenny Craig 8 10 10 8 9.4 Slim-Fast 5 5 10 8 7.6 4. How can Weight Watchers, Slim-Fast, and Jenny Craig increase the probability of customer satisfaction? Instructor’s Notes All companies must attain what is most important to the customer and then find ways to deliver the value desired. Each customer may desire something different. Weight Watchers, Slim-Fast, and Jenny Craig can increase customer satisfaction by: 1. Personalization: Offering tailored plans and support based on individual needs and preferences. 2. Customer Support: Providing accessible, responsive, and empathetic customer service. 3. Transparency: Clearly communicating program details, costs, and results. 4. Engagement: Utilizing technology for interactive tools, tracking, and community support. 5. Flexibility: Allowing adjustments in programs to fit changing lifestyles and goals. 6. Education: Offering resources on healthy eating, exercise, and behavior change to empower customers. 5. Which factors examined in the chapter do you think would have the most impact on consumers’ propensity to go on a diet and choose either of these diet programs? Instructor’s Notes Student answers will vary. Some may chose the psychological factors that affect the way people receive marketers’ messages. These factors (Motives, Attitudes, Perceptions, Learning, and Lifestyle) can all have an important impact of the why of choosing a weight loss program. Students might also suggest that societal pressures, like culture, reference groups, and family might also motivate customers to participate in these weight loss programs. The most impactful factors on consumers’ propensity to go on a diet and choose a program are: 1. Perceived Effectiveness: Belief in the program’s ability to deliver results. 2. Social Influence: Recommendations from friends, family, or social media. 3. Cost and Value: Affordability and perceived value of the program. 4. Ease of Use: Simplicity and convenience of following the program. 5. Support and Motivation: Availability of encouragement and accountability. 6. Brand Reputation: Trust and credibility of the program’s brand. Video Activities Video: Cole + Parker – Socks that Start Businesses (CBC’s Dragon’s Den) Learning Objective: LO3 Description: This video provides a real world pitch by two entrepreneurs on CBC’s Dragons’ Den. Diana and Jeff House successfully attracted investment from Dragon, David Chilton. The video demonstrates how many factors influence consumers purchase consideration, especially psychological factors. Key Words: Need recognition, psychological need, alternative evaluation, factors affecting consumer decision process, psychological factors, learning, attitude , motives, lifestyle, personality, reference groups influence, family and friends Activity: Ask students to view the video and then (1) identify the various strategies and tactics Cole + Parker uses to help consumers through the buying decision process, and (2) identify other factors that might influence customers’ decisions to buy Cole + Parker socks. A challenging but interesting and valuable exercise that could be assigned is for students to relate to Step 3 in the buying decision process, evaluation of alternatives. Students could be asked to develop evaluative criteria, determinant attributes, and develop a compensatory versus a non-compensatory choice model as illustrated in Exhibit 4.2. Solution Manual for Marketing Dhruv Grewal, Michael Levy, Shirley Lichti, Ajax Persaud 9781259030659, 9781259104312
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