CH-10-12 Group and Interpersonal Influence – CB Consumer Behaviour Canadian : Chapter Notes

This Document Contains Chapters 10 to 12 CHAPTER 10 GROUP AND INTERPERSONAL INFLUENCE WHAT DO YOU THINK? POLLING QUESTION The groups I belong to have a great impact on how I see myself. Strongly disagree 1 2 3 4 5 6 7 Strongly agree Have students access www.icancb.com to answer the polling questions for each chapter of CB. Ask them to take the online poll to see how their answers compare with those of other students taking consumer behaviour courses across the country. Then turn to the last page of the chapter to find the What Others Have Thought box feature. This graph is a snapshot of how other consumer behaviour students have answered this polling question thus far. LEARNING OUTCOMES After studying this chapter, the student should be able to: LO1 Understand the different types of reference groups that influence consumers and how reference groups influence value perceptions. LO2 Describe the various types of social power that reference groups exert on members. LO3 Comprehend the difference between informational, utilitarian, and value-expressive reference group influence. LO4 Understand the importance of word-of-mouth communications in consumer behaviour. LO5 Comprehend the role of household influence in consumer behaviour. SUGGESTED LECTURE OPENER When we hear the term peer pressure we tend to think of the negative effects group behaviour can have on young adults. Well try this on for size—billionaires using peer pressure to increase philanthropic giving. The intent of the “giving pledge,” founded in the summer of 2010, is to encourage giving from America’s wealthiest citizens in order to address some of the world’s most pressing social issues. With an impressive list of names like Warren Buffett, Bill and Melinda Gates, Michael Bloomberg, Barron Hilton, Ted Turner, and George Lucas, the hope is to generate peer pressure among billionaires, encouraging them toward a large-scale approach to philanthropy. [Source: Andrew Clark, “U.S. Billionaires Club Together—To Give Away Half Their Fortunes to Good Causes,” The Guardian, August 4, 2010, http://www.guardian.co.uk.] KEY CONCEPTS WITH POWERPOINT® SLIDES Slide 1 Slide 2 LO1. Understand the different types of reference groups that influence consumers and how reference groups influence value perceptions. Reference Groups Slide 3 A reference group is a group of individuals that has significant relevance for a consumer and which impacts the consumer’s evaluations, aspirations, and behaviour. Even the decision to “like” a Facebook page can mean something special to a particular consumer because of the way it reflects membership with a group. Slide 4 What can I do in class? Have students consider the ways in which reference groups influence their daily lives. They might be really surprised. Reference groups typically exert great influence on their members. Within a university setting, there should be many groups for students to discuss. Group Influence Group influence refers to the ways in which group members influence the attitudes, opinions, and behaviours of others within the group. Consider the following aspects of group life: • Group members share common goals and interests. • Group members communicate with, and influence, one another. • Group members share a set of expectations, rules, and roles. • Group members view themselves as members of a common social unit. Slide 5 What can I do in class? Q: The book uses sorority sisters as an example of group influence. Sorority sisters share a common set of expectations that ultimately influences members’ decisions about activities, attire, and social involvement. What other groups exist on campus? A: Answers will include various clubs and organizations on campus. Determine how many groups students are familiar with. If you are not familiar with campus organizations, you can visit the school’s website or student handbook to view the full listing. Primary/Secondary Groups A primary group is a group that includes members who have frequent, direct contact with one another. An example of a primary reference group is the family unit. Secondary group interaction is much less frequent than primary group interaction. Professional organizations and social clubs are examples of secondary groups. A brand community is a special type of secondary group that does have a significant influence on consumers through shared interests or product usage. A popular example of a brand community is Harley-Davidson’s “HOG” (Harley Owners Group). Formal/Informal Groups A formal group is a group in which a consumer formally becomes a member. For example, a consumer becomes a formal member of a church congregation. An informal group is a group that has no membership or application requirements, and codes of conduct may be nonexistent. Examples of informal groups include groups that meet regularly to exercise together, have coffee, or go to sporting events together. Aspirational/Dissociative Groups An aspirational group is a group in which a consumer desires to become a member. Aspirational group membership often appeals to the consumer’s ideal self. A dissociative group is a group to which a consumer does not want to belong. For example, a Conservative might want to avoid being perceived as belonging to an NDP group (and vice versa). Slide 6 Conformity Conformity is a result of group influence whereby an individual yields to the attitudes and behaviours of others. Peer Pressure Peer pressure refers to the extent to which group members feel pressure to behave in accordance with group expectations. Consumers of all ages feel peer pressure. In fact, very young children often desire to wear the appropriate clothing and brands that will allow them to feel accepted. Negative Peer Pressure Negative peer pressure is a topic that receives much media attention and refers to peer pressure involving unethical or illegal behaviours, such as illegal alcohol consumption or underage smoking. Adolescents are particularly susceptible to peer pressure, but even adults may adopt negative behaviours such as movie piracy if they see their friends doing so. Slide 7 What can I do in class? Ask students to relate an occasion when they felt peer pressure. Many students feel peer pressure to wear brand labels, drink, smoke, and use fake IDs. LO2. Describe the various types of social power that reference groups exert on members. Social Power Slide 8 Types of Social Power Social power refers to the ability of an individual or group to alter the actions of others. Social power is classified into five categories. These power bases are discussed in the following list and are presented in Exhibit 10.1. 1. Referent Power—A new resident desires to join the local Rotary club. 2. Legitimate Power—Bosses have legitimate authority over their employees. 3. Expert Power—Consumers seek out groups that have health-related information, such as the Canadian Dental Association. 4. Reward Power—Sports teams give “MVP” honours to a team member. 5. Coercive Power—A university football player is kicked off a team for using illegal substances. Slide 9 LO3. Comprehend the difference between informational, utilitarian, and value-expressive reference group influence. Reference Group Influence Slide 10 Reference group influence generally falls into one of three categories defined in the following list: 1. Informational Influence—Consumers use the behaviours and attitudes of reference groups as information when making their own decisions. 2. Utilitarian Influence—Consumers conform to group expectations to receive a reward or avoid punishment. 3. Value-Expressive Influence—Consumers internalize a group’s values or join groups to express their own values and beliefs. Slide 11 Value and Reference Groups There are many ways in which reference groups and values are related. • Utilitarian value—Group membership becomes a means to a valued end state. • Hedonic value—Value is an end in and of itself. • Information obtained directly impacts consumer expectations, which then affects value perceptions and satisfaction. Slide 12 The success of Facebook has allowed opportunities for marketers to interact with consumers in new ways. Consumers can also join online groups like Groupon that deliver benefits right to the consumer. The electronic coupons and offers not only cut down on administrative costs associated with distribution, but also allow marketers an easy opportunity to grow their fan base. Slide 13 Reference Group Influence on Product Selection Reference groups can influence product selection. First, the situation in which the product is consumed must be considered. “Public” products are easily seen by others (e.g., a purse), whereas “private” products are not (e.g., a toothbrush). Second, the extent to which the product is considered to be a necessity or a luxury affects the level of reference group influence. Social Media and Group Influence Social media and the Internet are radically changing consumer behaviour and group influence. • Social Media—Refers to media through which communication occurs • Social Networks—Consumers connecting with one another based on common interests, associations, or goals • Social Networking Websites—Facilitate online social networking Popularity of Social Networking Websites Facebook, MySpace, and Twitter highlight the popularity of online social networking. Through these sites, consumers realize the benefits of maintaining connectivity with friends and social groups. There are many additional websites that offer social networking and media. Value, Social Media, and Social Networking These sites offer both hedonic and utilitarian value by allowing consumers to make connections with others, join groups, gather information, buy products, participate in causes, and spread information through word-of-mouth. Here are a few examples: • SocialVibe.com—Allows users to connect with brands and empowers them to share content with others to benefit a cause of their choice. • Kaboodle.com—Offers a social shopping community where people recommend products. • Freerice.com—Invites visitors to answer a series of questions with each right answer leading to a donation of rice to hungry consumers worldwide. • Foursquare.com—Centres around geolocation and mobile technologies, allowing users to inform their friends of their location, earn rewards, and leave tips about locations. Slide 14 What can I do in class? Ask students about their online groups and favourite social networking websites. Have they used any of the above examples on a regular basis? Individual Differences in Susceptibility to Group Influence Not all consumers conform equally to group expectations. Individual difference variables play an important role in the extent to which consumers conform to the expectations of others. Three important variables to consider are: 1. Susceptibility to Interpersonal Influence—Assesses consumers’ needs to enhance their image with others by acquiring and using products, conforming to the expectations of others, and learning about products by observing others. 2. Attention to Social Comparison Information (ATSCI) —Assesses the extent to which consumers are concerned with how other people react to their behaviour. For example, a consumer who has a strong degree of ATSCI might buy an imported beer when he is shopping with others. 3. Separateness–Connectedness—Some consumers simply feel more “connected” to others than do other consumers. Culture plays an important role in how separate or connected consumers feel. A consumer with a sense of connectedness sees him or herself as an integral part of a group. A consumer with a sense of separateness perceives him or herself as distinct and separate from others. 4. Social Influence and Embarrassment—When buying personal products, consumers can feel uneasy or even embarrassed. Slide 15 What can I do in class? Ask students to provide examples of situations when they have felt uncomfortable. Answers may be similar to those provided in the book, but others may include purchasing personal hygiene items or dancing in a club. LO4. Understand the importance of word-of-mouth communications in consumer behaviour. Word-of-Mouth Slide 16 Word-of-mouth (WOM) refers to information about products, services, and experiences that is transmitted from consumer to consumer. Two types of WOM influence can be distinguished: 1. Organic—Occurs naturally when consumers truly enjoy a product or service and want to share their experiences with others. 2. Amplified—Occurs when marketers attempt to launch or accelerate WOM in existing customer circles or when marketers develop entirely new forums for WOM (such as discussion boards on Web pages). Slide 17 Positive and Negative WOM The more satisfied consumers are with a company or product, the more likely they are to spread positive WOM. Marketers realize that negative WOM can be extremely damaging to a company because this form of WOM is especially influential. In general, negative word-of-mouth is more influential than positive word-of-mouth. Value and Word-of-Mouth WOM is affected in large part by the perceived value that consumers receive from products and services. Word-of-Mouth in the Digital Age The rapid adoption and acceptance of the Internet has had a major impact on WOM. One estimate revealed that as many as 80% of all Internet users have sought online advice for health issues. Slide 18 Buzz Marketing Buzz marketing is one form of what is called guerilla marketing, or the marketing of a product using unconventional means. Marketing efforts that focus on generating excitement are called buzz marketing. Viral marketing is a buzz marketing tactic that uses online technologies to facilitate WOM by having consumers spread marketing messages through their online conversations. Slide 19 Stealth Marketing Stealth marketing is a guerilla marketing tactic that is similar to buzz marketing. A key difference between the terms is the degree to which consumers realize that they are being targeted by a marketing message (hence the term “stealth”). The Word of Mouth Marketing Association (WOMMA) is opposed to stealth tactics. In fact, WOMMA has developed several categories of what it considers to be “unethical” marketing practices, including the following types of marketing techniques: • Stealth marketing—Deceiving consumers about the involvement of marketers in a communication. • Shilling—Compensating consumers for talking about, or promoting, products without disclosing that they are working for the company. • Infiltrating—Using fake identities in online discussions to promote a product. Slide 20 Opinion Leaders Opinion leaders are consumers who have great influence on the behaviour of others relating to product adoption and purchase. An example is BCBGirl, a perfume marketed by BCBG Fashion. BCBGirl was introduced when the company sent bottles of the fragrance to teen trendsetters along with 100 samples that each teen was expected to share with friends. The tactic was a success, and the perfume became the best-selling product in selected cities during the week of its full product launch. Market Mavens and Surrogate Consumers A market maven is a consumer who spreads information about all types of products and services. The key difference between an opinion leader and a market maven is that the market maven’s influence is not category specific. A surrogate consumer is hired by another consumer to provide input into a purchase decision. Interior decorators, travel consultants, and stockbrokers are all considered to be surrogate consumers. Slide 21 Diffusion Processes The diffusion process refers to the way in which new products are adopted and spread throughout a marketplace. Five categories of consumers have been identified, and these groups are presented in Exhibit 10.4. The groups include: 1. Consumer Innovators 2. Early Adopters 3. Early Majority 4. Late Majority 5. Laggards Slide 22 Slide 23 LO5. Comprehend the role of household influence in consumer behaviour. Household Decision Making Slide 24 Consider the many ways in which the family impacts consumer behaviour. Household decision making refers to the process by which decisions are made in household units. Traditional Family Structure Traditionally, the family household has been viewed as at least two people who are related by blood or marriage who occupy a housing unit. Other definitions of a family include the nuclear family, which consists of a mother and father and a set of siblings. The extended family consists of three or more generations of family members including grandparents, parents, children, and grandchildren. Slide 25 Emerging Trends in Family Structure In the United States 31% of households are defined as nonfamily households, which means consumers who share the same living quarters with others who are not related by blood or marriage. With divorce rates hitting 40% in Canada, trends in family structure include: • Blended families • Single-parent households • Same-sex-marriage households • Traditional households Slide 26 Household Life Cycle The household life cycle (HLC) represents a segmentation technique acknowledging the fact that changes in family composition and income alter household demand for products and services. Product expenditures vary greatly by stage in the HLC, and at each stage consumers often try to obtain the most value they can from their purchases. See Exhibit 10.6 for traditional household life cycle categories. Slide 27 What can I do in class? Q: Ask students about their families. How many come from a traditional family? How many come from a nontraditional family? A: Answers will vary. Middle-Aged Consumers: Boomerang Kids and the Sandwich Generation Boomerang kids are young adults aged 1834 years who graduate from university and move back home with their parents. Some have suggested the term “adultolescence” to describe this stage. The sandwich generation consists of those consumers who must take care of both their own children and their aging parents. The number of consumers who fall into this category is expected to grow dramatically in the coming decades. Household Purchase Roles The following list details five important roles in the household purchase process: 1. Influencer—The person in the household who recognizes a need and provides information about a potential purchase to others. 2. Gatekeeper—The person who controls information flow into the household, such as a mother who blocks unwanted email solicitations from her child’s email account. 3. User—The actual user of the product under consideration. 4. Decision maker—The person who makes the final decision regarding product purchases. 5. Purchaser—The person who actually buys the product under consideration. Slide 28 Gender Roles and Household Decision Making A family’s sex role orientation (SRO) influences the ways in which household decisions are reached. Families that have a traditional SRO believe that it is the responsibility of the male head of household to make large purchase decisions, while families with a “modern” SRO believe in a more democratic approach. Kid Power The role of children in household decision making is also evolving. One recent study reveals that 36% of parents with children between the ages of 6 and 11 reported that their children significantly influence their purchasing decisions. Slide 29 VIDEO CLIP PowerPoint Clip from Peet’s Coffee and Tea Run time 1:30 minutes Slide 30 Peet’s Coffee and Tea has focused on building relationships and forming a community since its founding. In 1966 Alfred Peet opened a coffee shop in Berkeley, California where he roasted coffee beans using techniques he learned in his native Holland. The shop soon became a place for the community to gather as well as a place for consumers to purchase and learn about Peet’s products. Now a large-scale chain, Peet’s developed the Peetniks member program to develop and maintain a sense of community that will enhance consumers’ experiences as well as bolster sales. Ask your students: 1. How does the Peetniks program create a sense of group influence? Answer: Members benefit from a sense of exclusivity through a member community as well as member-only offers and information. Even the name of the program, Peetniks, reinforces the sense of community because it is actually the term Peet’s Coffee and Tea uses for its employees. 2. What hard benefits do members get from belonging to the Peetniks program? Answer: Members receive convenience, discounted shipping, and special limited-edition merchandise. CHAPTER 11 CONSUMERS IN SITUATIONS WHAT DO YOU THINK? POLLING QUESTION I never let anything get in the way of preparing for my consumer behaviour class. Strongly disagree 1 2 3 4 5 6 7 Strongly agree Have students access www.icancb.com to answer the polling questions for each chapter of CB. Ask them to take the online poll to see how their answers compare with those of other students taking consumer behaviour courses across the country. Then turn to the last page of the chapter to find the What Others Have Thought box feature. This graph is a snapshot of how other consumer behaviour students have answered this polling question thus far. LEARNING OUTCOMES After studying this chapter, the student should be able to: LO1 Understand how value varies with situations. LO2 Know the different ways that time affects consumer behaviour. LO3 Analyze shopping as a consumer activity using the different categories of shopping activities. LO4 Distinguish the concepts of unplanned, impulse, and compulsive consumer behaviour. LO5 Use the concept of atmospherics to create consumer value. LO6 Understand what is meant by antecedent conditions. SUGGESTED LECTURE OPENER Using coupons to encourage consumer purchasing is nothing new. Using a cellphone to deliver and personalize those coupons is definitely new. This application allows marketers to instantly provide targeted incentives to consumers. Consumers benefit by receiving deals on items they are potentially already out shopping for, and the coupons are instantly redeemable. [Source: Sarah Haughey, “Coupons? There’s an App for That,” The San Francisco Examiner, August 15, 2010, http://www.sfexaminer.com.] KEY CONCEPTS WITH POWERPOINT® SLIDES Slide 1 Slide 2 LO1. Understand how value varies with situations. Value in Situations? Slide 3 What can I do in class? Q: By a show of hands, ask students who likes to shop. What was their most unique shopping experience? Do they prefer to shop in stores or online? A: Students might state that a regular shopping experience is buying groceries or shopping for clothes for a night out, while shopping at the West Edmonton Mall or at Harrods is an example of a unique shopping experience. Answers will vary about online versus in-store preferences. Situations and Value Situational influences are factors that cause the value that a consumer obtains from a purchase or consumption act to vary based on the context in which the act takes place. Situational influences are classified into three categories: 1. Time—Time can influence the way information is processed depending on how much time the consumer has to make the purchase. 2. Place—Place can frame any purchase. When at the movies, popcorn becomes more valuable. 3. Conditions—Weather and social situations can influence a person’s choice for a product. Slide 4 Slide 5 Slide 6 LO2. Know the different ways that time affects consumer behaviour. Time and Consumer Behaviour Slide 7 Time is a critical factor and necessary for consumption to occur. Time can affect consumption in any of the following forms: • Time pressure • Time of year • Time of day/circadian cycles Time Pressure Time pressure is an urgency to act based on some real or self-imposed deadline. Time pressure affects consumers in several ways: • Consumers process less information when time is scarce. • Consumers are more likely to rely on simple choice heuristics. • Consumers may only rely on price and quality instead of other attributes. Thus, brands that position themselves as high quality might benefit from situations in which consumers are characterized by time pressure, even if the price is high. Time of Year Seasonality refers to regularly occurring conditions that vary with the time of year. Fireworks are not worth as much to consumers in the middle of February. Other not so obvious effects of seasonality include the time of day that consumers shop in the winter months as well as their spending habits. Time of Day/Circadian Cycles What’s the most popular drink of the Danes, Italians, and French in the morning? Coffee! What’s the most popular drink of the United Kingdom and many parts of Asia? Tea! Whether it’s beverage consumption, attire, or choice of entertainment, the time of day affects the value of products and activities. The circadian cycle refers to the rhythm within our bodies that varies with the time of day. A circadian cycle determines our body’s natural rhythm. The daily ups and downs that accompany natural circadian rhythms can be annoying and interfere with normal activities. Thus, when consumers find a product that helps them cope with the down times associated with circadian rhythms, that product is likely to offer value. Slide 8 What can I do in class? Ask which of your students are morning persons and which are night persons. Do their online social networking habits reflect whether they are morning or night people? How? Advertiming Advertiming is an advertising schedule that primarily runs an advertisement at times when customers will be most receptive to the message. It can also be based on seasonal patterns or day-to-day changes in the weather. Swimming pool marketers know that consumers are more receptive to their ads in the spring or summer. Slide 9 LO3. Analyze shopping as a consumer activity using the different categories of shopping activities. Place Shapes Shopping Activities Slide 10 Introduction Shopping is not only an activity but an important component of the economy. Many activities in the CVF and consumer behaviour theory in general take place in the shopping process. What exactly is shopping? The following questions can help put shopping in perspective. 1. Do consumers have to buy to shop? 2. Is a store necessary for shopping? 3. What motivates consumer shopping? A physical location is no longer required for shopping to take place. Married consumers report that one of the main reasons for not shopping with a spouse is time pressure. Men see an advantage to shopping together to reduce the financial risk by making joint decisions. Consumers appear to have more pleasure when shopping alone or with a friend as opposed to shopping with a family member. Slide 11 What can I do in class? Q: Ask students where they like to shop and to describe their shopping activities. Who do they usually shop with? A: Answers may include catalogues, online, or in stores. Answers will vary about who they shop with. What Is Shopping? The shopping activity ranges from surfing the Internet for a song to download or visiting the mall for a new item. Shopping can be looked at as the inverse of marketing. Shopping is the set of value-producing consumer activities that directly change the likelihood that something will be purchased. Shopping Activities Shopping activities take place over time in specific places under specific conditions or contexts. They can be divided into four different types. Any given shopping experience is characterized by at least one of these types. They are: 1. Acquisitional Shopping—Activities oriented toward a specific, intended purchase or purchases. 2. Epistemic Shopping—Activities oriented toward learning about products. 3. Experiential Shopping—Recreation-oriented activities designed to provide interest, excitement, relaxation, fun, or some other desired feeling. Outshopping is a term used to refer to consumers who are shopping in a city or town that they must travel to rather than in their own hometown. Outshopping is often motivated simply by the desire for the experience. 4. Impulsive Shopping—Spontaneous activities characterized by a diminished regard for consequences and a desire for immediate self-fulfillment. Exhibit 11.2 provides an example of each type of shopping activity and ties the activities to the types of value to which they are most associated. Slide 12 Slide 13 Shopping Value All shopping activities are aimed at one key result: value. Personal shopping value (PSV) is the overall subjective worth of a shopping activity when considering all associated costs and benefits. PSV can be divided into two types: utilitarian shopping value is a value that pertains to the worth obtained because some shopping task or job is completed. Hedonic shopping value is the value that pertains to the worth of an activity because the time spent doing the activity itself is personally gratifying. Slide 14 Retail Personality The definition of a retail personality is the way in which a retail store is defined in the mind of a shopper based on the combination of functional and affective qualities. The two retail personality dimensions are extremely useful when viewed as a perceptual map. 1. Affective quality—This quality refers to positioning a unique environment, an impressive décor, friendly employees, and pleasant emotions that can provide relatively high hedonic shopping value. 2. Functional quality—This quality refers to positioning a store by using things such as a wide selection of goods, low prices, guarantees, and knowledgeable employees that can provide a high proportion of utilitarian shopping value. Slide 15 What can I do in class? Q: Ask students which quality has an impact on their shopping experiences: the functional or the affective quality. Why? A: Student answers will vary. LO4. Distinguish the concepts of unplanned, impulse, and compulsive consumer behaviour. Impulsive Shopping and Consumption Slide 16 So, just what is a compulsive consumption act? As the definition implies, impulsive consumption involves consumption acts that are characterized by the following three components: 1. They are spontaneous and involve at least short-term feelings of liberation. 2. They are associated with a diminished regard for any costs or consequences. 3. They are motivated by a need for immediate self-fulfillment and are thus usually highly involving emotionally. The more any activity contains relatively high amounts of these characteristics, the more likely that act is impulsive. For example, a consumer might have a bad morning at work and decide to cancel a business lunch to take a shopping break for self-gifts or “happies” via the Internet. The behaviour can be broken down as follows to demonstrate the impulsiveness involved: 1. The act involves willingly deviating from previous plans and thus shows spontaneity and feelings of liberation from the negative events of the day. 2. The act shows diminished regard for the consequences of missing the business lunch or for any expense incurred. 3. The act fulfills the need to maintain a positive outlook on the self and thus provides hedonic value. Impulsive versus Unplanned Consumer Behaviour Use Exhibit 11.4 to discuss the relationship between impulsive and unplanned consumer activity. The right side of the exhibit illustrates that unplanned consumer acts, such as shopping, are characterized by the following factors: • Situational memory—Situational memory characterizes unplanned acts because something in the store (e.g., a display) triggers the need for the item, such as a pack of gum. • Utilitarian orientation—A utilitarian orientation fulfills the need to replenish the supply of a product. • Spontaneity—Spontaneity implies “without forethought.” Slide 17 Distinguishing Impulsive and Unplanned Consumer Behaviour The line between impulse and unplanned is not always clear. Some unplanned acts are impulsive, and many impulsive acts are unplanned. For years, Las Vegas tourism has used a tagline that states: “What Happens in Vegas, Stays in Vegas.” The tagline emphasizes the impulsive nature of consumer behaviour in Las Vegas. Certainly, the campaign highlights the heightened hedonic value that can be obtained and encourages consumers not to worry about the consequences. Go to YouTube (www.youtube.com), and show students some of the Las Vegas TV spots. Students generally like these commercials and can relate well to them. Susceptibility to Situational Effects All consumers are susceptible to unplanned and impulsive behaviour, but not all equally. Impulsivity is a personality trait that represents how sensitive a consumer is to immediate rewards. For example, consumers with attention deficit disorder typically have high degrees of impulsivity, which makes them more prone to impulsive acts. Consumer Self-Regulation A key personality trait that affects a consumer’s tendency to do things that are unplanned or impulsive is self-regulatory capacity. Consumer self-regulation is a tendency for consumers to inhibit outside, or situational, influences from interfering with shopping intentions. Consumers tend to be referred to as either of the following: 1. Action-oriented consumers—These consumers have a high capacity to self-regulate their behaviour and are not affected by feelings of dominance in the environment. 2. State-oriented consumers—These consumers have a low capacity to self-regulate their behaviour and are affected by feelings of dominance in the environment. This type of consumer is more apt to buy a product in an upbeat electronics store. Exhibit 11.6 lists questions that can distinguish consumers based on self-regulatory capacity. Slide 18 Slide 19 Impulsive versus Compulsive Behaviour Although impulsive and compulsive behaviours share many of the same characteristics, there are differences between the two. Compulsive consumer behaviour: 1. Is harmful. 2. Seems to be uncontrollable. 3. Is driven by chronic depression. Slide 20 LO5. Use the concept of atmospherics to create consumer value. Places Have Atmospheres Slide 21 Retail and Service Atmospherics The term atmospherics pertains to the emotional nature of an environment or, more precisely, to the feelings created by the total aura of physical attributes that comprise the physical environment. View Exhibit 11.7 for a partial list of atmospherics and the qualities of an environment. Atmospherics can be affected by both the functional and affective qualities. Servicescape is a term used to refer to the physical environment in which consumer services are performed. Each servicescape has its own unique environment. Slide 22 Slide 23 Functional Quality The functional quality of an environment describes the meaning created by the total result of the attributes that facilitate the function and make it perform efficiently. In a shopping environment, this includes convenience in all of its forms: price levels, number and helpfulness of employees, breadth and depth of merchandise, and other characteristics that facilitate the shopping task. Affective Quality The affective quality represents the emotional meaning of an environment, which results from the sum effect of all ambient attributes that affect the way a consumer feels in that place. It appears that female shoppers are more demanding and react more negatively when this element is missing. What can I do in class? Q: Ask students whether a retail environment with a distinctly high functional quality necessarily has an uninteresting or poor affective quality. A: Quite the contrary! An environment with a favourable functional quality also could be associated with some degree of positive affect. Adolescent girls, for example, find an environment with high levels of functional qualities, such as accessibility and safety features, to also be more pleasing places to shop. Atmosphere Elements The way that an atmosphere makes a consumer feel is actually determined by the consumer’s perception of all of the elements in a given environment working together. The two factors that help merchandisers and retail designers create this atmosphere are the following: 1. Fit—Designates the appropriateness of the elements in a given environment. 2. Congruity—Designates how consistent the elements of an environment are with one another. Odours Odours are prominent environmental elements that affect both a consumer’s cognitive processing and affective reaction. Hollister uses a very distinctive scent to signal a youthful, fashionable image. Olfactory refers to a human’s physical and psychological processing of smells. While shoppers process ambient citrus odours, the odours tend to make consumers feel more relaxed and receptive to product information. Music Music affects consumer shopping experiences. Whether the music is fast or slow, consumers will show either a willingness or an avoidance to shop based on this factor. For example, consumers who dislike rap or country music will likely have a difficult time shopping in a place playing loud rap or country music. Foreground music is music that becomes the focal point of attention. Foreground music can have strong effects on a consumer’s willingness to approach or avoid an environment. Background music is music played below the audible threshold that would make it the centre of attention. Typically, service providers use this type of music for a retail setting. The effects of background music include the following: 1. The speed of background music determines the speed at which consumers shop. Slower music means slower shopping, and faster music means faster shopping. 2. The tempo of music affects the patience of consumers. Faster music makes consumers less patient. 3. The presence of background music enhances service quality perceptions relative to an environment with no background music. 4. Pop music used in the background contributes to discount store perceptions. 5. Incongruent music lowers consumers’ quality perceptions. Colour Some colours are preferred more than other colours, but personal preference isn’t really the key to understanding consumer reactions to colour. The following are a few examples of how colour affects consumers: • Blue—The most universal colour and presents few cultural taboos. • Red, black, and white—Present cultural variables and may represent bad omens or death in some cultures. • Red and orange—May signify poor quality and low price expectations. Slide 24 Merchandising The social environment refers to the other customers and employees in a service or shopping environment. The type of salespeople will affect the shopping experience. A cosmetics salesperson must fit the appearance of the product being sold. What can I do in class? Ask students if they prefer to shop online because of poor experiences they have had in stores, either with salespeople or the mood, music, or odours they might experience while in a store. Social Settings The term crowding refers to the density of people and objects within a given space. Crowding actually exerts a nonlinear effect on consumers, meaning that a plot of the effect times the amount of crowding does not make a straight line. Exhibit 11.9 illustrates how crowding affects consumers. An empty store might indicate a sign of poor-quality merchandise. A savvy retailer knows that moving displays around will create a better shopping environment. Salespeople and service providers are an important source of information and influence. Source attractiveness is the degree to which a source’s physical appearance matches a consumer’s prototype for beauty and elicits a favourable or desired response. Social comparison is a naturally occurring mental personal comparison of the self with a target individual. Slide 25 Slide 26 Virtual Shopping Situations Many effects that are evident in “bricks and mortar” shopping environments are also evident in the virtual shopping world. For example, the effects of colour and sound work in much the same way. A website with a blue background can enhance quality perceptions just as easily as the background in a physical store. LO6. Understand what is meant by antecedent conditions. Antecedent Conditions Slide 27 Antecedent conditions are situational characteristics that a consumer brings to a particular information-processing, purchase, or consumption environment. Antecedent conditions include economic resources, mood, and other emotional perceptions, such as fear, and they can shape the value in a situation by framing the events that take place. Slide 28 Economic Resources • Buying power—Found in the form of cash on hand, credit card spending limits, or money available by debit card. Thus, consumer buying power may determine where people shop. • Consumer Budgeting—While the majority of consumers do not perform a formal budgeting process, consumers who do budget end up with different spending habits than those who do not. Generally, budgeting is associated with frugality. Even consumers who do not prepare a formal budget do perform mental budgeting, which is an accounting from memory for recent spending. Orientation When consumers enter each exchange environment, they may have natural tendencies toward one shopping orientation or another. Gift shopping can dramatically shift a shopper’s orientation and change the shopping experience all together. Mood Each consumer brings their current mood to the particular consumption situation. Consumers in particularly bad moods may be prone to binge consumption, such as eating an entire bag of President’s Choice Chocolate Chip cookies. Mood can also affect shopping. The mood that consumers bring to the shopping environment can exaggerate the actual experience. Shoppers who go shopping in a bad mood are particularly prone to buying less and experiencing lower consumer satisfaction than consumers who are in good moods. Security and Fearfulness Consumers today live with the ever-present reminders of vandalism, crime, and even terrorism. Shopping malls, markets, airports, and other places where large numbers of consumers gather are consistently mentioned as potential terrorist targets, thus providing another reason for consumers to feel less secure. Fearfulness can affect consumers in multiple ways: • Consumers who go shopping in a fearful mood will not go about their shopping in the same manner. • Fearful consumers will tend to buy less and enjoy the experience less. • Consumers may cope with the fear of shopping by utilizing non-store outlets, such as the Internet, as a seemingly safer means of doing business. Retailers can enhance the shopping experience for consumers by making them feel safe in a number of ways, which are discussed in Exhibit 11.10. Slide 29 VIDEO CLIP PowerPoint Clip from Murray’s Cheese Run time 1:43 minutes Slide 30 Murray’s Cheese is a dairy retailer that has grown in recent years from a single counter to a multi-store, wholesale business with a partnership with a large chain of grocery stores. One of the keys to Murray’s success lies in its employees who do more than just sell cheese. Counter mongers walk customers through an experience helping them to learn and choose the cheese that is right for their taste and occasion. Part of the experience involves tasting the cheese. This helps customers make informed decisions and also provides Murray’s with immediate product feedback. This strategy also involves providing promotional cheeses for sampling at the counter to increase sales from a single cheese to multi-cheese. Ask your students: 1. What type of shopping value does Murray’s provide for its customers? Answer: Murray’s provides a personalized, friendly, and sensory shopping experience that engages consumers. 2. Why does at-counter tasting help promote Murray’s Cheese sales? Answer: Allowing consumers to interact directly with the product, particularly because it is a food product, helps consumers to make an informed decision, rather than purchasing a product they do not understand or with which they are unhappy. CHAPTER 12 DECISION MAKING I: NEED RECOGNITION AND SEARCH WHAT DO YOU THINK? POLLING QUESTION Most of the time I am a rational decision maker. Strongly disagree 1 2 3 4 5 6 7 Strongly agree Have students access www.icancb.com to answer the polling questions for each chapter of CB. Ask them to take the online poll to see how their answers compare with those of other students taking consumer behaviour courses across the country. Then turn to the last page of the chapter to find the What Others Have Thought box feature. This graph is a snapshot of how other consumer behaviour students have answered this polling question thus far. LEARNING OUTCOMES After studying this chapter, the student should be able to: LO1 Understand the activities involved in the consumer decision-making process. LO2 Describe the three major decision-making research perspectives. LO3 Explain the three major types of decision-making approaches. LO4 Understand the importance of the consideration set in the decision-making process. LO5 Understand the factors that influence the amount of search performed by consumers. SUGGESTED LECTURE OPENER Anticipating and predicting how and why consumers make purchasing decisions is a vital part of marketing. The closer one’s product or service is to what a customer wants, the more likely a sale is to be made. Companies need to provide not only information, but also the right kind of information. Sometimes what companies want to represent and what consumers want can differ. For example, demand for calorie labels has seen a recent spike, particularly in the fast-food industry, but some restaurateurs are reluctant to make this move. In a recent survey conducted by Aramark, a food services company, 83% of consumers want nutritional information available in restaurants. However, the question remains if providing this information will really affect food choices toward healthier options—some studies have shown that only 10 to 20% of diners make a lower-calorie choice based on nutritional information. [Source: Roni Caryn Rabin, “Calorie Labels May Clarify Options, Not Actions,” The New York Times, July 17, 2010, http://www.nytimes.com.] KEY CONCEPTS WITH POWERPOINT® SLIDES Slide 1 Slide 2 LO1. Understand the activities involved in the consumer decision-making process. Consumer Decision Making Consumers encounter problem situations each and every day. The basic consumer behaviour consumption process is shown again in Exhibit 12.1 along with the decision-making process. Slide 3 Slide 4 To better visualize the decision-making process, review Exhibit 12.2. The decision-making process generally includes the following five activities: 1. Need recognition 2. Search for information 3. Evaluation of alternative 4. Choice 5. Post-choice evaluation Note that consumers do not always move through the process in a sequential order nor do they always complete the process. Slide 5 Decision Making and Choice Decision-making processes frequently do not involve finding a tangible product. Rather, consumers make choices about behaviours that are not directly related to a purchase. The box feature discusses one of the biggest decisions that many consumers face—which university to attend. Students regularly start thinking about the choice of university during their early years in high school. Although students spend a handful of years on campus, this choice can have a profound impact on their lives. What can I do in class? Q: Ask students about their choice of university. Did they follow the decisionmaking process? How did students search for information? What were their alternatives? How did they make their final decision? A: Answers will vary. Some students might have used materials such as the Maclean’s Guide to Canadian Universities, but this would be a good time to reinforce previous lecture examples of word-of-mouth marketing. Decision Making and Value Both utilitarian value and hedonic value are associated with consumer decision making. As mentioned in the discussion about the concept of value, the car-buying experience involves both value types. Decision Making and Motivation Motivations are the inner reasons or driving forces behind human actions as consumers are driven to address needs. Decision Making and Emotion Consumer decision making is also closely related to emotion. The decision-making process can be very emotional depending on the type of product being considered or the need that has arisen. One example involves the difficult task of deciding which job offer to take when you graduate. Will the job offer be many kilometres away or closer to your family? Decisions like these can be quite emotional. Slide 6 Slide 7 LO2. Describe the three major decision-making research perspectives. Decision-Making Perspectives Slide 8 Consumer researchers view the decision-making process from three perspectives. These perspectives are illustrated in Exhibit 12.3. Rational Decision-Making Perspective This perspective is considered by many to be the traditional approach to the decision-making process. The rational decision-making perspective assumes that consumers diligently gather information about purchases, carefully compare various brands of products on salient attributes, and make informed decisions regarding what brand to buy. The act of buying an appliance, such as a dishwasher, often follows a rational process. Experiential Decision-Making Perspective The experiential decision-making perspective assumes that consumers often make purchases and reach decisions based on the affect, or feeling, attached to the product or behaviour under consideration. For example, a consumer may decide to spend time at a day spa as the result of an experiential decision-making process. Behavioural Influence Decision-Making Perspective The behavioural influence decision-making perspective assumes that many decisions are actually learned responses to environmental influences. From this perspective, behaviour is influenced by environmental forces rather than by cognitive decision making. Slide 9 Slide 10 LO3. Explain the three major types of decision-making approaches. Decision-Making Approaches Slide 11 Consumers reach decisions in a number of different ways. Generally speaking, as involvement and risk increase, consumers are motivated to move more carefully through the decision-making process. Consumers face several types of risk, including: • Financial risk—This risk is associated with the cost of the product. • Social risk—This risk is associated with how other consumers will view the purchase. • Performance risk—This risk is associated with the likelihood of the product performing as expected. • Physical risk—This risk is associated with the safety of the product and the likelihood that physical harm will result from its consumption. • Time risk—This risk is associated with the time spent searching for the product and the time spent for the product to be serviced or maintained. Slide 12 Decision-making approaches can be classified into three categories. Exhibit 12.4 shows these categories in the form of a continuum based on involvement and risk. 1. Extended Decision Making—When consumers engage in extended decision making, they tend to search diligently for information that will help them reach a satisfactory decision. 2. Limited Decision Making—Consumers search very little for information and often reach decisions based on prior beliefs about products and their attributes. 3. Habitual (or “Routine”) Decision Making—Consumers generally do not seek information at all when a problem is recognized. Two topics are of special importance regarding habitual decision making: brand loyalty and brand inertia. a. Brand loyalty—may be defined as a deeply held commitment to rebuy a product or service regardless of situational influences that could lead to switching behaviour. b. Brand inertia—is present when a consumer simply buys a product repeatedly without any real attachment. Reward cards can be a successful method of rewarding loyalty if consumers value both the product and the incentives offered. Slide 13 Slide 14 Final Thought on Decision-Making Approaches Consumers go through decision processes, but these decision processes do not guarantee maximum value from a consumption experience. What can I do in class? Q: Ask students for examples of brands to which they are loyal and those to which they experience brand inertia. A: Answers will vary. Students may have loyalty to Apple products, brands of cars, or clothing, such as Hollister or Roots. LO4. Understand the importance of the consideration set in the decision-making process. Need Recognition, Internal Search, and the Consideration Set Slide 15 Need Recognition The decision-making process begins with the recognition of a need. Simply put, a need is recognized when a consumer perceives a difference between an actual state and a desired state. An actual state is his or her perceived current state. A desired state is a perceived state for which a consumer strives. A desired state can be affected by many factors including reference group information, consumer novelty seeking, and cognitive thought processes. Consider how happy consumers once were with their cellphones—that is, before the iPhone was released. When the iPhone was introduced, the desired state for many consumers changed dramatically. Now that Apple has rolled out the iPad, consumers’ desired state for the PC has changed. Slide 16 Slide 17 Slide 18 What can I do in class? Q: Ask students if their desired state for their computer choice changed when the iPad was introduced. Did anyone rush out to buy one? A: Answers will vary. It would be interesting to poll the class (if there are several iPad users) to see how many will change from a laptop to the iPad. Search Behaviour When consumers perceive a difference between an actual state (an empty bag of chips) and a desired state (a full bag of chips), the decision-making process is triggered. Consumers seek all types of information about potential solutions to needs, including the following: • Number of alternatives available • Price of various alternatives • Relevant attributes that should be considered and their importance • Performance of each alternative on the attributes Ongoing and Pre-Purchase Search A consumer performs an ongoing search when he seeks information simply because he is interested in a particular topic, such as a product or organization. Consumers who perform ongoing searches are usually highly involved with the product category and seek information simply for enjoyment. The concept of information search has changed dramatically in recent years due to the mass adoption of the Internet as well as the proliferation of mobile information technologies, such as smartphones. The problem is that there is simply too much information out there. Information overload refers to the situation in which consumers are presented with so much information they cannot assimilate it all. Slide 19 The Consideration Set A consideration set includes the brands, or alternatives, that are considered acceptable for further consideration in decision making. An internal search includes the retrieval of knowledge about products, services, and experiences that is stored in memory. A universal set is the total collection of all possible solutions to a recognized need (e.g., the total number of brands of running shoes available on the market). An awareness set includes the set of brands or alternatives of which a consumer is aware. There are three categories of alternatives in an awareness set: 1. Consideration set (or “evoked set”)—Includes the alternatives that are considered acceptable. 2. Inept set—Includes those alternatives that are deemed to be unacceptable for further consideration. 3. Inert set—Includes those alternatives to which consumers are indifferent or toward which strong feelings are not held. The conceptualization of a consideration set is presented in Exhibit 12.5. This demonstrates how the size of both the awareness and consideration sets is smaller than the universal set. Slide 20 LO5. Understand the factors that influence the amount of search performed by consumers. External Search Slide 21 An external search includes the gathering of information from sources external to the consumer including friends, family, salespeople, advertising, independent research reports (such as Consumer Reports), or the Internet. When selecting the best information sources, consumers consider the following factors: • Ease of obtaining information from the source • Objectivity of the source • Trustworthiness of the source • Speed with which the information can be obtained Slide 22 What can I do in class? Q: Ask students about their sources of information. How many now use Facebook as a source of information? Do they consider the information on Facebook to be trustworthy? A: Answers will vary. The Role of Price and Quality in the Search Process Two evaluative criteria are used across almost all consumer decisions: price and quality. Consumers tend to seek out information about these attributes early in the search process, and they play important roles in an external search. Price represents an important type of information that consumers generally seek. But, what is a price? A price is really a piece of information that signals the amount of potential value contained in a product. Consumers also commonly search for information about a product’s quality and nearly always consider quality as an important evaluative criterion. Quality is the perceived overall goodness or badness of some product. Slide 23 What can I do in class? Q: Ask students whether price or quality is more important to them when purchasing an item. Discuss when price might make more sense and when quality is a better indicator. A: Answers will vary. Some students will not be convinced about the importance of price. A good discussion topic would be the purchase of their first suit. A suit of good quality will hold up over time and can be used for years to come. External Search and the Internet In today’s fast-paced and information-rich environment, a tremendous amount of information is available to us. The Internet improves consumer search activities in several ways: • Lowers costs associated with the search and make the process more productive • Makes the search process itself enjoyable • Controls the information flow more efficiently than TV or radio ads With the Internet at our fingertips, it has become a popular tool for many reasons: • Search engines including Google and Bing allow you to solve problems • Facebook provides the opportunity to connect with people and products worldwide • Consumers can buy from sponsored links on other sites • Mobile technologies will continue to grow and consumers will be able to do even more online Slide 24 Slide 25 Amount of Search The amount of search that a consumer performs related to decision making can be measured in a number of ways including the number of stores visited, number of Internet sites visited, number of personal sources used (e.g., friends, family, salespeople), number of alternatives considered, and number of advertisements acknowledged. Factors influencing the amount of search performed by a consumer include the following: • Product Experience—Evidence shows that moderately experienced consumers search for purchase-related information more than either experienced or inexperienced consumers. This finding is shown in Exhibit 12.6. • Involvement—Purchase involvement is positively associated with search activities, especially for ongoing searches. • Perceived Risk—As perceived risk increases, search effort increases. • Value of Search Effort—When the benefits received from searching exceed the associated costs, consumers derive value. • Time Availability—Having more time to spend on a search usually results in increased search activity. • Attitude toward Shopping—Consumers who value shopping and who possess positive attitudes toward shopping generally spend more time searching for product information. • Personal Factors—Search tends to increase as a consumer’s level of education and income increases. • Situational Influencers—Situational factors also influence the amount of search that takes place. Perceived urgency, financial pressure, and mood can impact search behaviour. Slide 26 Slide 27 What can I do in class? Q: Which search factors are most important to students when purchasing a new laptop? Cellphone? Home? A: Answers will vary. Because time is such a consideration for all consumers today, time availability will be on the top of the list for many students. Search Regret The term search regret refers to the negative emotions that come from failed search processes. Many times, consumers are simply not able to find an acceptable solution to their problem, and the decision-making process stops. In these situations, consumers may feel like the entire search process was a waste of time, and search regret will be felt. Slide 28 There are both pros and cons to the controversial practice of slotting allowances. Marketers pay retailers a fee to place a new product in a specific location to draw attention to it. What can I do in class? Have students discuss slotting allowances and debate the pros and cons of the use of them by marketers and retailers. VIDEO CLIP PowerPoint Clip from Manifest Digital Run time 1:49 minutes Slide 29 Manifest Digital is a marketing and design firm with a focus in website development. Manifest Digital focuses on making their clients’ sites customer-oriented and easy to use. This company relies on user-centred principles to meet the needs of both their clients—those producing and marketing goods—as well as the website’s users—potential consumers. For Manifest Digital the end goal is providing users with a rewarding experience. Ask your students: 1. What does Manifest Digital mean when it says its philosophy is based on “user-centred principles”? Answer: User-centred means making decisions focused on customers’ needs and providing a positive user experience. This company believes a good user experience occurs when users easily find what they are coming to the site to find, rather than focusing on high-end graphics and animation. 2. How has this philosophy contributed to the company’s success? Answer: Manifest designs or re-designs websites around the user’s viewpoint, enabling users to experience the site at an enhanced level, while also meeting the needs of the client—to market a product, good, or service. Instructor Manual for CB Consumer Behaviour Canadian Barry J. Babin, Eric Harris, Kyle B. Murray 9780176555283