HACE 3100: Test 2
125 Cards in this Set
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Consumer Behavior
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The buying behavior of consumers- the individuals, families, and households who buy goods and services for personal consumption
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Buying Process
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3 Parts, 6 Steps
Prepurchasing
1. Assesing Needs
2. Searching for Info
3. Evaluating
4. Selecting
Purchase
1. Buying (5.)
Post Purchase
1. Evaluating (6.)
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Pre-Purchase
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Consumer tries to determine the pleasure or pain that the product or service will create
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Assessing Need
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Consumer sense difference between current and desired state
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Self Concept Attachment
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establishing user's identity
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Nostalgic Attachment
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Link to one's past
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Interdependence
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Part of the daily routine
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Love
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product elicits a strong emotion
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Searching for information
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Involves sorting behavior
information is obtained from internal or external sources
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Internal Search
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go over things in your mind
ex. opinions
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External Search
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looking for outside information
ex. social media, family, etc.
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Challenges to Obtaining Information
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1. # of products is overwhelming
2. Complexity of the good
3. Time Costs
4. Consumers have high expectations
5. False sense of security
6. Some information is useless or innacurate
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Overwhelming Choices
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is the result of deregulation, leads to more competition.
it is a sign of a healthy economy to have a large number of products and services.
more is better
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Complexity of Goods
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it becomes difficult to assess the good, not enough expertise or information to assess isn't available.
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Time Costs
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it takes time to find information, that time has to come from somewhere
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Consumer Expectations
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increased levels of education leads to consumers who demand intelligent information and more of it.
this can lead to a sense of false security
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False Sense of Security
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consumers assume that they are protected in the marketplace and do not practice Caveat Emptor (buyer beware)
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Useless/ Inaccurate Information
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sometimes information is completely useless, other times it is inaccurate
ex. Contactor Garden Hose
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Consumer Information
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should be:
1. objective
2. Valid and credible
3. understandable
4. complete
5. up-to date
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Objective Information
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should be non-biased
ex. consumer reports
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Valid Information
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should come from reliable sources
information should be provable
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Understandable Information
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written in a way consumers can understand (6th grade level)
No double speak, nor to technical
Diagrams and pictures help
Languages used most often in US: English, Spanish, and French
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Complete Information
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incomplete information can mislead consumer
stating only the good points of the product and leaving out the bad ones may give false impressions of the product.
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Up-to-date Information
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information about the product shoud be relevant for NOW
some consumer reports give information on old and discontinued products, essentially useless information
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Benefits of Info Search
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lower price tag
lower full price or consumer cost
satisfaction from shopping
increased knowledge of what is available
information makes choice meaningful
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Information Search Costs
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time costs
cost of obtaining information
emotional costs
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When Information Search Happens
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have an expensive product
long term product
have a large price dispersion (Black Friday Deals)
have large variations in quality
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Information Search Rule
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CS<ES
cost of search is less than expected savings
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Rules of Thumb
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use instead of searching for information, general rules that make decisions easier
1. Use seals of Approval
2. Buying top of the line merchandise
3. Buying high priced goods
4. Buying brand names
5. Buying in large sizes, bulk because of lower per unit price
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Types of Goods
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Search
Experience
Credence
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Search Goods
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is a product or service with features that can be evaluated before purchase
ex. Cars, clothing
MOST GOODS fall into the search category
goods are often clustered together for consumer ease
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Experience Goods
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is a product or service where product characteristics are difficult to observe in advance but much easier after consumed and experienced
ex. restaurants, roller coasters, movies
Are encourage to buy with coupons, taste tests, or previews
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Credence Goods
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A credence good is a good whose utility impact is difficult or impossible for the consumer to ascertain.
Legal services, drugs mechanical services
These goods are highly regulated and scrutinized by the governemnt
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Passive Information
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encountered when you are doing something else
Banner Ads
Billboards
Ads in Bathroom Stalls
Football Games ads
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Actively Acquired Information
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information you search for
Test driving a car
internet search
reading a book
asking friends
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Evaluating Alternatives
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Based on your information search, depends on the consumer and buying situation. Most evaluate multiple attributes, leads to purchase intentions
influenced by:
likes/dislikes
price
availability
service
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Selecting (Choosing)
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two factors interfere with purchase intention and the actual purchase decision
1. Attitudes of others (Sagging pants not viewed as attractive)
2. Unexpected situational factors ( Iowa lady with 7 kids instead of 1)
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Buying
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the actual process of buying the good.
Which stores should you go to?
What time should you buy it? after the holidays?
How do you pay? cash, credit?
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Post Purchase
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when you evaluate how you feel after buying a product
can lead to buyer's remorse (cognitive dissonance)
if you like the good you tell others
if you didn't like the good, you tell on avg 11 people
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Dissapointment (Post Purchase)
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performance<expectations
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Satisfaction (Post Purchase)
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performance=expectation
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Delight (Post Purchase)
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performance>expectation
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Marketers Motivations
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maximize awareness
maximize consumption
maximize loyalty
maximize consumer satisfaction
all marketing strategies strive to create a sustainable competitive advantage for a firm
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Target Market
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A target market is a group of customers towards which a business has decided to aim its marketing efforts and ultimately its merchandise.
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Marketing Environment Components
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competitive
political/legal
economic
technological
social/cultural
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Competitive Market advice
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it is not always worth pursuing a particular part of a market for strategic reasons
ex. trying to get into the chicken sandwhich market with Chick-Fil-a
know if your competitors are doing something better than you are
ex. Redbox, Netflix, BlockBuster
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5 forces of Market Analysis
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1. Buyer power
2. Supplier Power
3. Substitute Threat
4. Barriers to Entry
5. Competitors
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Political/Legal
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patents, last for 20 yrs
product safety laws
concern for targeting consumers, children in particular
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Economic
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Interest rates
Unemployment rates
Inflation Rates
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Technological
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influences who and how we target for our product
interntet? TV? radio?
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Socio/Cultural
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culture and subculture impact the market
ex. African American vs Asian vs. Hispanic marketing Strategies
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Heather Has Two Mommies
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is a children's book written by Lesla Newman with Diana Souza's illustrations, first published in 1989. "the first lesbian-themed children's book ever published".
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Bonnebell
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first cosmetic company to target African American Women
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Asha's Mum & One Dad, Two Dads, Brown Dad, Blue Dads
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sought to emulate Dr. Seuss books but educate young children on gay and lesbians in order to avoid hate.
Read by James Chamberlain a Surrey teacher
Surrey cited grammatical failings for the ban against the books.
Surrey School board spent $1.2 million to try to ban the books all t…
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Elements of a Marketing Strategy
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blend of
1. Product
2. Price
3. Promotion
4. Distribution
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Product Strategy
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what good or service you are offering\
customer service
package design
brand names
warranties
PLC
positioning
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Pricing Strategy
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A business can use a variety of pricing strategies when selling a product or service. The Price can be set to maximize profitability for each unit sold or justifiable prices
goal is equilibrium price
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Promotion Strategy
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deals with:
informing a consumer's decision
persuading a consumer's decision
influencing a consumer's decision
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Distribution Strategy
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ensuring that consumers find the products and goods in proper quantities at the right times and places
deals with:
modes of transportation
warehousing
inventory control
order processing
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How Companies Respond to Competition
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reduce prices
increase ads
introduce new or improved products
buy out the competition
try to inspire brand loyalty
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Brand Perception
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an image of a product, person, brand or place is formed when people develop beliefs, ideas, perceptions, or impressions about a product, person or place.
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Brand Image
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the set of perceptions that consumers have formed about a brand.
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Trademark
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protects brand names
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Counterfeiting
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to imitate something. Counterfeit products are fake replicas of the real product.
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Pirating
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when an original idea or product is stolen
ex. downloading music/ movies
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Population Trends
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some states are growing in population more than other states
much of future growth in the United States will come from immigration
Average age of population is increasing (Baby Boomers)
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Household
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all persons who occupy a housing unit
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New Product Development
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development of original products, product improvements, modifications, and new brands through the firm R&D efforts
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Bandwagon Effect
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consumer gets satisfaction from being like others in his/her reference group
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Veblen Effect
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consumer gets satisfaction from showing off. he/she shows others that he/she has a lot of money even if in reality he/she doesn't
also known as conspicuous consumption
ex. what happened in the housing market in 2008
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Snob Effect
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consumer gets satisfaction from having something nobody else has (in their reference group)
ex. Jay Leno buying expensive cars
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New Product Development Steps
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1. Idea Generation
2. Idea Screening
3. Concept Development and Testing
4. Marketing Strategy Development
5. Business Analysis
6. Product Development
7. Test Marketing
8. Commercialization
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Idea Generation
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can be from:
internal sources: research and development
external sources: customers, competitors, distributors, suppliers
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Idea Screening
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stage in which ideas are evaluated against criteria, most ideas are eliminated
ex. Aquadots didn't do this properly
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Concept Development and Testing
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stage in which you provide detailed version of new product ideas.
you ask consumers to evaluate concept ideas
ex. concept cars
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Marketing Strategy Development
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stage in which you create a strategy statement that describes:
the target market
product positioning
sales share
profit goals
product price
distribution
longterm distribution strategies
etc.
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Business Analysis
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stage in which you do sales, cost and profit projections
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Product Development
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stage in which you make and test a prototype
ex. Monster Java at UGA
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Test Marketing
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stage in which you have:
standard test markets
controlled test markets
simulated test markets
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Commercialization
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stage in which the product makes it out onto the market
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PLC (Product Life Cycle)
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has 5 stages
1. Product Development
2. Introduction
3. Growth
4. Maturity
5. Decline
note: doesn't apply to fads, fashions, and styles, they have different stages and time frames
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PLC- Product Development
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first stage of PLC, company begins with a brand new product idea.
sales are zero
investment costs are high
profits are negative
not yet on the market
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PLC- Introduction
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second stage of PLC.
low sales
high cost per customer
negative profits
innovators are targeted
little competition
have a basic product
you have selective distribution (like movie screenings)
trying to build awareness among early adopters and dealers
have heavy expenditures on tri…
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PLC-Growth
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third stage of PLC
rapidly rising sales
avg cost per customer
rising profits
early adopters are targeted
growing competition
offering product extensions, and service waranties
have penetrating prices (low) to create interest
have intensive distribution, interested in mass marketin…
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PLC- Maturity
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fourth stage of PLC
sales peak
low cost per customer
high profits
middle majority targeted
competition begins to decline
have diverse brand and models
price is set to match or beat competition
stress brand difference and benefits
try to encourage brand switching through samples o…
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PLC-Decline
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last stage of PLC, by this point you are on to your next new product
declining sales
low cost per customer
laggards are targeted
declining competition
phasing out weak items and under producing stores
cut prices
selective distribution to phase out the product
advertise only enough…
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Decision Making and Time
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time cannot be created, we cannot store it, we can only spend it
what we spend our time on should represent what matters to us in life
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Parkinson's Law
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is the adage that "work expands so as to fill the time available for its completion".
this is why people spend all day shopping if they have the time instead of being time efficent
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Pareto Principle
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(also known as the 80-20 rule, the law of the vital few, and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes.
20% of the time you study is the most efficient, the other 80% of the time you are wasting or are doing t…
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Multi-tasking
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Indifference Curves
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In microeconomic theory, an indifference curve is a graph showing different bundles of goods between which a consumer is indifferent.
the farther to the right the curve is the increased the quantity
a point represents a combination of how much of two products you get
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Budget Constraints
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is a line the quantity of goods you can buy given set prices and limited income
you can purchase outside of budget but with credit, not good since it will take away from your income next month.
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Budget Set
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A budget set or opportunity set includes all possible consumption bundles that someone can afford given the prices of goods and the person's income level.
it lies on or inside the budget line
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Price Discrimination
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Price discrimination or price differentiation is a pricing strategy where identical or largely similar goods or services are transacted at different prices by the same provider in different markets based on gender, race, age or territories.
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All or Nothing Price Discrimination
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when you are forced to buy a group of items but cannot buy them individually
ex. light bulbs, movie popcorn and candy
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Two Part Pricing
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paying a price for the privilege of buying items and a price per item.
ex. country club fees, green fees, cover charge to enter and for drinks
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Advertising
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producer generated information about products and services.
the activity of attracting public attention to a product, service or business by paid announcements in print, broadcast, or electronic media
we see it absolutely everywhere
is used by:
Business firms- Chick Fil-a, Wend…
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Personal Selling
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a very effective but expensive way of selling that allows you to contact almost everyone, girls scouts use this method.
it allows advertisers to reach more potential customers
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Identity Market
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when consumers wear or display product logos
Solomon says our identities are formed by allegiance to common value systems expressed through product affiliation
ex. sporty people wear NIKE
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Advertising Pros and Cons
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Pros:
Increased Sales
Increased Consumer base
Cons:
the money spent to advertise
loss in sales if the advertisement is bad or offensive
$470 Billion dollar industry
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Purposes of Advertising
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Inform-tell you about something
Persuade-get you to spend your money
Compare-talk smack about another company or its product
Remind-remind you about something
Inform and Remind are very similar, they are like Public Service Announcements
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Commercial Components
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Be familiar- ex. Snap, Crackle, Pop
Have Humor- (positive Humor Association) Geico's Hump Day
Have Sexuality- sex sells
Have Animals- animals are cute, people like that
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Infomercials
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program long advertisement usually for one product in particular to inform and convince consumers to buy it.
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Product Placement
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products or logos used in movies and on TV programs to showcase them
ex. an actress drinking Pepsi
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Consumerspace
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when a company sells a product using you, if you wear a companies shirt you are advertising for them for free with them
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Magazine Ads
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are placed in magazines based on the readers interests
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Billboards
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a large outdoor advertising structure, typically found in high-traffic areas such as alongside busy road that draws attention and informs people with a visual
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Sports Events
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a place where many corporations decide to advertise their products
ex. Nascar, Football, Soccer, you name it.
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Money Facts
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a 30 sec Superbowl ad cost $3.5 million
Kevin Fed. advertised for NAtionwide insurance after he broke up with Brittney Spears
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FTC
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government agency responsible for regulating and enforcing advertising rules
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Informative Ad
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also called Pioneer Advertising
provides consumers with specific, understandable, and verifiable claims
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Puffing Ad
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ads that do not give relevant information about the product but do not mislead the consumer
ex. Captain Morgan ad
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Deceptive Ad
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ads that have a tendency to deceive, it gives the impression that the ad is truthful when it isn't
often omits important information
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Bait and Switch
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you give a couple of products unrealistically low prices, and then try to convince consumer to buy the next best product at a much higher price after the low price option is out of stock
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Comparative Ad
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type of ad which companies used to hesitate doing but now do it often. compare their product to another competitor's product, often smack talking
can backfire in campaign ads.
ex. Tylenol vs. Alleve
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Defensive Ad
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Major elements of advertising straegy
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Goals of an Ad
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AIDA
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Factors in Selecting Advertising Media
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Media Timing
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Consent decree
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Ad Substantiation
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Cease and Desist Order
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Corrective Ad
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HACE 3100: Exam 3 Ch. 12: Housing