Chapter 1: Technology-Driven Consumer Behaviour

Marketing Concept:
- The essence of marketing consists of satisfying consumers’ needs, creating value,
and retaining customers.
- It maintains that customers must only produce products they are already aware
will attract customers

Production Concept:
- a business approach conceived by Henry Ford, maintains that consumers are
mostly interested in product availability at low prices; its implicit marketing
objectives are cheap, efficient production and intensive distribution.
- This approach makes more sense when consumers are more interested in
obtaining the product than they are in specific features, and will buy what’s
available rather than wait for what they really want

Alfred Sloan was the first to realize that no two customers are the same and
the company must cater to all different kinds of people

Product Concept:
- Consumers will buy products that offer them the highest quality, the best
performance, and the most features.
- a product orientation leads the company to strive to constantly improve the quality
of its product and to add new features
- product orientation often leads to marketing myopia which is a focus on product
rather than the needs it presumes to satisfy
- Marketing myopia occurs when companies ignore crucial changes in the
marketplace and look “in the mirror rather than the window”

Selling Concept:
- Evolved from the production and product concept
- Maintains the marketers’ primary focus is selling the products that they have
decided to produce.
- The assumption of the selling concept is that consumers are unlikely to buy the
products unless they are aggressively persuaded to do so – mostly through the
“hard-shell” approach. This approach does not consider customer satisfaction,
because consumers who are aggressively induced to buy products they do not want
or need, or products of low quality, will not buy them again

Consumer Research:
- refers to the process and tools used to study consumer behaviour
- consumer research is a form of market research, a process that links the
consumer, customer, and public to the marketing actions and judge the performance
of marketing strategies. The market research process outlines the information
required, designs the method for collecting information, manages the data collection
process, analyzes the results and communicates the findings to marketers.

Marketing Segmentation:
- the process of dividing a market into subsets of consumers with common needs
and characteristics
- consists of defining or identifying groups of shared needs

Targeting:
- means selecting the segments that the company views as prospective customers
and pursuing them

Positioning:
- the process by which a company creates a distinct image and identity for its
products, services and brans in consumer’s minds.

The Marketing Mix (4 Ps):

1) Product/service
2) Price
3) Place
4) Promotion

Societal Marketing Concept:

- requires marketers to fulfill the needs of the target audience in ways that improve
and enhance society’s wellbeing while also meeting their business objectives

Cross-screen Marketing:
- consists of tracking and targeting users across their computers, mobile phones and
tablets

Customer Value:
- the ratio between customers perceived benefits (economic, functional etc.) and the
resources they use to obtain those benefits.

Customer Satisfaction:
- refers to customers perceptions of the performance of the product or service

Customer Retention:
- involves turning individual customer transactions into long-term customer
relationships by making it in the best interest of the customer to stay with the
company

Emotional Bonds:
- represent the customer’s high level of personal commitment and attachment to the
company

Transactional Bonds:
- the mechanics and structures that facilitate exchange between consumers and
sellers

Internal Marketing:
- consists of marketing the organization to its personnel
Chapter 2 – Segmentation, Targeting and Positioning

To be an effective target, a market segment must be

1) identifiable
2) Sizeable
3) Stable and Growing
4) Reachable

Benefit Segmentation:
- based on the benefits that consumers look for from products and services
- the benefits that consumers look for represent unfilled needs, whereas buyers’
perception that a given brand delivers a unique and prominent benefit result in
loyalty to the brand

Usage Rate Segmentation:

- reflects the differences among heavy, medium and light users and nonusers of a
specific product, service or brand.
- also focused on the effects that affect usage behaviour
- rate of usage is strongly related to product awareness status, which is the degree
of a consumer’s awareness of the product and its features, and whether or not he or
she intends to buy it reasonably soon, The consumer’s degree of awareness of the
product, along with whether the consumer is unaware and needs to be informed
about the product, represent the distinct targeting opportunities. A related factor is
product involvement, which reflects the degree of personal relevance that the
product holds for a consumer.

Usage Occasion Segmentation:

- purchasing a product for a certain occasion EX. Birthday

Behavioral Targeting:
- consists of sending consumers personalized and prompt offers and promotional
messages designed to reach the right consumers and deliver them highly relevant
messages at the right time and more accurately than when using conventional
segmentation techniques.

SHOWROOMING – using your smartphone to scan a barcode

Umbrella Positioning:
- a statement or slogan that describes the universal benefit of the company’s offering
EX. Campbell soup’s slogan “Soup is good food” works because it promotes ALL soup
not just Campbell’s and Campbell dominates the soup market so consumers initial
thought when thinking about Soup is Campbell

Repositioning:
- the process by which a company strategically changes the distinct image and
identity that its product or brand occupies in consumer’s minds.
- companies do so when consumers get used to the original positioning and it no
longer stands out in their mind or when they begin to see the slogan as dull.
Chapter 3 – Consumer Motivation and Personality

Two Types of human needs:

1) Physiological needs – are innate (biogenic, primary) and fulfilling them sustains
biological existence. They include food, water, air, clothing, shelter etc.
2) Psychological Needs – learned from our parents, social environment, and
interactions with others. Among many others, they include needs for self-esteem,
prestige, and affection, power etc.

Goals:
- sought after results of motivated behaviour, and all human behaviour is goal
oriented.
Two Types of Goals:
1) Generic Goals – outcomes that consumers seek in order to satisfy physiological
needs and psychological needs
2) Product-specific goals – outcomes that consumers seek by using a given product
or service.

Rational Motives:
- Goals chosen according to objective criteria (EX. Price, provides greatest utility)

Emotional Motives:
- goals chosen based on personal or subjective criteria (ex. Desire for social status,
fear-based, pride-based)

Latent Motives:
- motives that the consumer is unaware of or unwilling to recognize

Manifest Motives:
- motives that the consumer is aware of and willing to express

Maslow’s Hierarchy of Needs (in order of importance)

1) physiological needs (food, water, air, shelter)
2) Safety and security
3) Social Needs (friendship, affection, belonging)
4) Ego Needs (Prestige, status, self-esteem)
5) Self-actualization (self-fulfilling)

A Trio of Needs – Mcclelland

1) power
2) affiliation need
3) achievement
Freudian Theory:
- unconscious needs or drives, especially sexual and other biological drives, are at
the heart of human motivation and personality
- Freud constructed his theory on the basis of patients’ recollections of early
childhood experiences, analysis of dreams and specific nature of their mental and
physical adjustment problems
_ Freud proposed the human personality consists of 3 interacting systems, the ID,
the superego, and the ego
- the ID is the “warehouse” of primitive and impulsive drives – basic physiological
needs such as thirst and hunger
- The superego is the individual’s internal expressions of society’s moral and
ethical codes of “proper” or “correct” conduct. Superego’s role is to see that
individuals satisfy their needs in socially acceptable fashion
- the ego is the individual’s conscious control. It functions as an internal monitor
that attempts to balance the impulsive demands of the ID and the superego

Consumer Ethnocentrism:
- consumer’s willingness to buy or not to buy foreign-made products
- highly ethnocentric consumers feel that it is inappropriate or wrong to purchase
foreign-made products, because of the resulting economic impact on the domestic
economy
Chapter 4 - Consumer Perception

Perception:
- The process by which an individual selects, organizes, and interprets stimuli into a
meaningful and coherent picture of the world
- how we see the world among us

Sensation:
- the immediate and direct response of the sensory organs to stimuli

Stimulus:
- any unit of input to any of the sense. Ex. Products, packages, brand names,
advertisements

Sensory Receptors:
- the human organs (eyes, ears, nose, mouth, skin) that receive sensory inputs

Absolute Threshold:
- lowest level at which a person can experience sensation

Differential Threshold (or JND):

- the minimal difference that can be directed between 2 similar stimuli

Sensory Adaption:
_ “getting used to” certain sensations

Weber’s Law:
- the stronger the initial stimulus, the greater the additional intensity needed for the
second stimulus to be perceived as different

Subliminal Perception:
- perception of weak or rapid stimuli received below the level of conscious
awareness
- stimuli too weak or brief to be consciously seen

Is Subliminal Persuasion Effective?

- No evidence has shown that it can change behaviour

3 Aspects of Perceptions:
1) selection – conscious and unconscious screening of stimuli: selective exposure
(consumers actively choose stimuli they want to see) , selective attention
(consumer’s decide how much attention they will pay to stimuli), perceptual
defense (consumer’s screen out psychologically threatening stimuli), and perceptual
blocking (“turning out” of stimuli)
2) Organization – depends on 3 major factors: consumer’s previous experience,
consumer’s motives, and nature of stimulus
3) interpretation
Chapter 5 – Consumer Learning

Consumer Learning:
- the process that evolves and changes as consumers acquire knowledge from
experience, observation, and interactions with others.

Cues:
- stimuli that direct motivated behaviour

Responses:
- an individual’s reaction to a drive or cue

Reinforcement:
- is the reward – the pleasure, enjoyment, benefits that the consumer receives after
buying or using a product/service

Classical Conditioning:
Behavioral Learning (sometimes referred to as stimulus-response learning)
- it is based on the premise that observable responses to specific external stimuli
signal that learning has taken place.
- viewed as “knee-jerk” response that builds up through repeated exposure of a
specific product/brand
- based on the premise that observable responses to specific external stimuli signal
that learning has taken place.
- behavioral learning is not concerned with the process, but rather with the inputs
and outcomes of learning.

Unconditional Stimulus -stimulus that occurs naturally in response to given

circumstances

Conditioned Stimulus - stimulus that became associated with a particular event or

feeling

Cognitive Associative Learning - the acquisition of new knowledge about the world

Repetition - the key to forming associations between brands and fulfillment of needs

Instrumental Conditioning:
- based on the notion that learning occurs through trial-and-error process, with
habits formed as a result of rewards received for certain responses or behaviors.
Like classical conditioning, instrumental conditioning requires a link between
stimulus and a response. However, in instrumental conditioning, the stimulus that
results in the most rewarded responses is the one that is learned.
INFORMATION PROCESSING:
- a lot of learning occurs through consumer thinking and problem solving.
Sometimes we resolve purchase-related dilemmas instantly. In other situations, we
search for information and carefully evaluate what we learned. This kind of learning
is called cognitive learning. Cognitive learning consists of mental processing of
data rather than instinctive responses to stimuli.
Information processing occurs in 3 stages – the sensory, short-term memory,
and long-term memory
1) sensory store: the mental “space” in the human mind where sensory input lasts for
just a second or two. If it is not processed immediately, it is lost. All data comes
through our senses, but the senses do not carry whole images. Each sense receives a
piece of information and transmits it to the brain in parallel, where the perceptions
of a single instant are synchronized and perceived as a single image only for a brief
moment. For marketers this is important because it means it is relatively easy to get
information into the sensory store, however it is difficult to make a lasting
impression.
2) Short-term: short term is where information is processed and held for just a brief
period. Anyone who has ever looked up a number in a telephone book, only to forget
the number when you go to dial it knows how briefly information lasts in your
short-term memory. If information in your short-term memory under goes the
process known as rehearsal, which is the silent, mental repetition of information, it
is transferred to long-term memory. The transfer process takes anywhere to 2 to 10
seconds. If the information is not rehearsed and transferred it is lost in 30 seconds.
3) Long-term: the mental “space” where information is retained for extended perios
of time. Although it is possible to forget information after it has processed to your
long-term memory it is more common for information in long-term memory to last
for days, months or even years.
Encoding: the process by which we select a word or visual image to represent a
perceived object.
Chunking: defined as the process during which consumers recode what they have
encoded.
Retrieval: the process by which people recover information from long-term
memory
Cognitive learning: the systematic evaluation of information and alternatives
needed to solve a recognized but unfilled need or unsolved problem