Professor S.J. Grant

Spring 2007

Overview: Marketing and Consumers

BUYER BEHAVIOR, MARKETING 3250

Outline

What is strategy? Strategy starts with analysis

• 3 C’s• SWOT

What is consumer behavior? How does consumer behavior impact

marketing?• STP • 4P’s

Marketing Strategy

What is the goal of strategy?To develop and maintain strategic fit

between the company’s abilities and changing market opportunities

• Strategy positions the firm to optimize • Strategy must consider alignments of

internal, external factors• Internal: company • External: competitors, consumers

Marketing Management

MarketOpportunity

Consumers

Competition

Company

SWOT Analysis

Basic approach starts with evaluatingInternally

• Strengths• Weaknesses

Externally• Opportunities• Threats

What is Consumer Behavior?

Consumer’s Culture

Consumer Behavior Outcomes

Process of Making Decisions

Psychological Core

What Affects Consumer Behavior?

Psychological Core

Having motivation, ability, and opportunity

Exposure, attention, and perception Categorizing and comprehending

information Forming and changing attitudes Forming and retrieving memories

What Affects Consumer Behavior?

Process of Making Decisions

Psychological Core

Problem recognition and search for information

Making judgments and decisions

Making post-decision evaluations

What Affects Consumer Behavior?

Consumer’s Culture

Process of Making Decisions

Psychological Core External processes:

• Regional and ethnic influences

• Age, gender, and household influences

• Reference groups

What Affects Consumer Behavior?

Consumer’s Culture

Consumer Behavior Outcomes

Process of Making Decisions

Psychological Core Consumer behaviors

can symbolize who we are

Consumer behaviors can diffuse within a market

What Affects Consumer Behavior?

Developing a customer-oriented strategy starts with a segmentation schemeWhat is known about the market?How is the market segmented?

• Different types of consumers• Different needs

• Perception of value• Willingness to pay

Implications: Segmentation

Choose a targetHow profitable is each segment?What are the characteristics of

consumers in each segment?Are customers satisfied with existing

offerings?

Implications: Targeting

PositioningHow are competitive offerings positioned?How should our offerings be positioned?Should our offerings be repositioned?

Implications: Positioning

Developing products or servicesWhat are consumers’ ideas for new

products?What attributes can be added to or

changed in an existing offering?What about guarantees? Post-purchase

service? Repeat-buying opportunitiesAny consumer trends that can inspire

development?

Implications: Product

Making promotion decisions Sales promotion objectives and tactics (push)

• When should sales promotions happen?• Have our sales promotions been effective?• How many salespeople are needed to serve

customers?• How can salespeople best serve customers?

Advertising (pull)• What should our advertising look like? • Where should advertising be placed?• When should we advertise?• Has our advertising been effective?

Implications: Promotion

Making pricing decisionsWhat price should be charged?How sensitive are consumers to price and

price changes?• What is price elasticity?

When should certain price tactics be used?How do price changes affect the firm?

Implications: Price

Making distribution decisionsWhere are target consumers

likely to shop?How should stores be

designed?

Implications: Place

Perception, Memory & Learning

Professor S.J. Grant

Spring 2007

BUYER BEHAVIOR, MARKETING 3250

Perception A model of memory

What are the types of memory?Organization of memoryHow memory works

• Storage• Retrieval

Learning

Outline

Hemispheric lateralization

Perception

When do we perceive stimuli?Absolute and differential

thresholds• Just noticeable difference• Weber’s law

Selective – cocktail party Subliminal perception

• Does subliminal perception affect consumer behavior?

Perception

Perception

Does subliminal messaging make people buy? 1956 N.J. movie theater flashed

subliminal messages, “Hungry? Eat popcorn. Drink Coca-Cola.”

• Increased popcorn sales 58% and Coca-Cola sales 18%, but results were not replicated

Erotic stimuli and sexual symbols in ads purported to increase receptivity to suggestions in the ad

A Model of Memory

Perceived information is encodedExplicitImplicit

Then stored in memoryShort-term storeLong-term store

Retrieval involves calling up stored bits from memory

A Model of Memory

StimulusShort-Term

Memory

Long-TermMemory

RetrievalConsolidation

Recall

A Model of Memory

Sensory Short-term Long-term

SensoryEchoicIconicCharacteristics of sensory

memory

A Model of Memory

Short-term memory (STM)Imagery processingDiscursive processingCharacteristics of short-term

memory• Short-term memory is limited (7±2)• Short-term memory is short-lived

A Model of Memory

Long-term memory (LTM)Autobiographical (episodic) memorySemantic memoryCharacteristics of long-term memory

• Stable memory of events of more distant past• Unlimited capacity• Organized by nodes

A Model of Memory

A Model of Memory

Converting short-term memories to long-term store is physically located in the hippocampus

Elaboration, or rehearsal, of information increases consolidation

Recall from long-term storage is a function of recency and availability Availability is aided if memory is organized into

a well-defined associative network of nodes• Categories• Hierarchies

A Model of Memory

Beverages

Carbonated Non-carbonated

MixersColas Juices Water

Pepsi Coke EvianPolandSpring

A Semantic (or Associative) Network

Chunking Rehearsal Recirculation Elaboration

Y=mx+bY=mx+bY=mx+bY=mx+b

How Memory Is Enhanced

Semantic network Trace strength

• Accessibility Spreading of activation

• Priming Retrieval failures

• Decay• Interference• Primacy and recency effects

Retrieval errors

What Is Retrieval?

Explicit memoryRecognitionRecallJudgments

Implicit memoryJudgments

What Are the Types of Retrieval?

Retrieval

Perceptual• “His name started with a ‘J’ . . .”

Conceptual• “A brand of personal computers that

competes with IBM . . .”

Characteristics of the stimulusSaliencePrototypicalityRedundant cuesThe medium in which the

stimulus is processed

How Retrieval Is Enhanced

What the stimulus is linked toRetrieval cuesWhere do retrieval cues come from?The brand name as a retrieval cueOther retrieval cuesConsumer implications

• Consideration set

How Retrieval Is Enhanced

How a stimulus is processed in short-term memoryDual coding

Consumer characteristics affecting retrievalNetwork of associationsExpertise Mood

How Retrieval Is Enhanced

Exposure

Attention

Interpretation

Memory

Information Processing Selective

ExposureRandom Deliberate

AttentionLow- High-

involvement involvement

InterpretationLow- High-

involvement involvement

Short-term Memory Long-term

Active problem Stored experiences, solving values, decisions,

rules, feelings

Purchase and consumption decisions

Pe

rce

pti

on

A Model of Learning