Understanding consumer behavior is a broad and complicated task, but with the right research mix you can begin to get a detailed understanding of your customers and their motivations. Consumer behavior is the study of individuals and organizations and how they select and use products and services. It is mainly concerned with psychology, motivations, and behavior.
These will be affected by demographics such as age, gender, culture, profession, background and so on. This factor also includes social class, income, and education level. As the motivations that influence consumer behavior are so wide, a research mix including a variety of data will be the most robust.
Some are more cost effective than others. Focus groups — Bring a group of consumers together and ask them questions directly. It also helps to reveal the language they are using. Google Analytics — Analytics can be used to tell you where your traffic is coming from.
The Audience tab shows geography, interests, and a range of demographics. Read our post on the top competitor analysis tools. Blog comments — Comments on your blog can be a good way of discovering any questions your audience might have. Social media — Millions of people reflect their lives on social media, so information that can enrich several strands of consumer behavior can be uncovered with the right tools. The broadest thing social can help with is collecting consumer insights, found through social media research , which can take all sorts of forms.
The first component is beliefs. A consumer may hold both positive beliefs toward an object e. In addition, some beliefs may be neutral coffee is black , and some may be differ in valance depending on the person or the situation e. Note also that the beliefs that consumers hold need not be accurate e. Consumers also hold certain feelings toward brands or other objects. Sometimes these feelings are based on the beliefs e. For example, an extreme environmentalist may believe that cutting down trees is morally wrong, but may have positive affect toward Christmas trees because he or she unconsciously associates these trees with the experience that he or she had at Christmas as a child.
The behavioral intention is what the consumer plans to do with respect to the object e. As with affect, this is sometimes a logical consequence of beliefs or affect , but may sometimes reflect other circumstances--e. Here are some possible methods:. Attitude research has shown that consumers often tend to react more favorably to advertisements which either 1 admit something negative about the sponsoring brand e. Our perception is an approximation of reality. Our brain attempts to make sense out of the stimuli to which we are exposed.
These frames went by so fast that people did not consciously notice them, but it was reported that on nights with frames present, Coke and popcorn sales were significantly higher than on days they were left off. This led Congress to ban the use of subliminal advertising. First of all, there is a question as to whether this experiment ever took place or whether this information was simply made up. Secondly, no one has been able to replicate these findings.
Here, again, the exposure is so brief that the subjects are not aware of the actual words they saw, but it is evident that something has been recognized by the embarrassment displayed. A large portion of the market for goods and services is attributable to organizational , as opposed to individual, buyers. In general, organizational buyers, who make buying decisions for their companies for a living, tend to be somewhat more sophisticated than ordinary consumers.
However, these organizational buyers are also often more risk averse. There is a risk in going with a new, possibly better lower price or higher quality supplier whose product is unproven and may turn out to be problematic.
Often the fear of running this risk is greater than the potential rewards for getting a better deal. Organizational buyers come in several forms. Resellers involve either wholesalers or retailers that buy from one organization and resell to some other entity. For example, large grocery chains sometimes buy products directly from the manufacturer and resell them to end-consumers.
Wholesalers may sell to retailers who in turn sell to consumers. Producers also buy products from sub-manufacturers to create a finished product. For example, rather than manufacturing the parts themselves, computer manufacturers often buy hard drives, motherboards, cases, monitors, keyboards, and other components from manufacturers and put them together to create a finished product. Governments buy a great deal of things.
For example, the military needs an incredible amount of supplies to feed and equip troops. Finally, large institutions buy products in huge quantities. For example, UCR probably buys thousands of reams of paper every month. Organizational buying usually involves more people than individual buying. Often, many people are involved in making decisions as to a whether to buy, b what to buy, c at what quantity, and d from whom. Often, such long purchase processes can cause long delays.
In the government, rules are often especially stringent—e. In many cases, government buyers are also heavily bound to go with the lowest price. Even if it is obvious that a higher priced vendor will offer a superior product, it may be difficult to accept that bid. Market research is often needed to ensure that we produce what customers really want and not what we think they want.
There are two main approaches to marketing. Primary research, in contrast, is research that you design and conduct yourself.
For example, you may need to find out whether consumers would prefer that your soft drinks be sweater or tarter. Research will often help us reduce risks associated with a new product, but it cannot take the risk away entirely.
It is also important to ascertain whether the research has been complete. For example, Coca Cola did a great deal of research prior to releasing the New Coke, and consumers seemed to prefer the taste. However, consumers were not prepared to have this drink replace traditional Coke. For more information about secondary market research tools and issues, please see http: Several tools are available to the market researcher—e.
Surveys are useful for getting a great deal of specific information. Surveys can contain open-ended questions e. However, open-ended questions are often skipped by respondents, and coding them can be quite a challenge. In general, for surveys to yield meaningful responses, sample sizes of over are usually required because precision is essential.
Surveys come in several different forms. Phone-surveys get somewhat higher response rates, but not many questions can be asked because many answer options have to be repeated and few people are willing to stay on the phone for more than five minutes.
Mall intercepts are a convenient way to reach consumers, but respondents may be reluctant to discuss anything sensitive face-to-face with an interviewer.
Surveys, as any kind of research, are vulnerable to bias. The wording of a question can influence the outcome a great deal. Interviewer bias occurs when the interviewer influences the way the respondent answers.
For example, unconsciously an interviewer that works for the firm manufacturing the product in question may smile a little when something good is being said about the product and frown a little when something negative is being said. The respondent may catch on and say something more positive than his or her real opinion. Focus groups are useful when the marketer wants to launch a new product or modify an existing one. A focus group usually involves having some people come together in a room to discuss their consumption preferences and experiences.
The group is usually led by a moderator, who will start out talking broadly about topics related broadly to the product without mentioning the product itself. By not mentioning the product up front, we avoid biasing the participants into thinking only in terms of the specific product brought out.
Thus, instead of having consumers think primarily in terms of what might be good or bad about the product, we can ask them to discuss more broadly the ultimate benefits they really seek. For example, instead of having consumers merely discuss what they think about some sugar-free cookies that we are considering releasing to the market, we can have consumers speak about their motivations for using snacks and what general kinds of benefits they seek.
Such a discussion might reveal a concern about healthfulness and a desire for wholesome foods. Probing on the meaning of wholesomeness, consumers might indicate a desire to avoid artificial ingredients. This would be an important concern in the marketing of sugar-free cookies, but might not have come up if consumers were asked to comment directly on the product where the use of artificial ingredients is, by virtue of the nature of the product, necessary.
Focus groups are well suited for some purposes, but poorly suited for others. In general, focus groups are very good for getting breadth —i.
In a questionnaire, if one did not think to ask about something, chances are that few consumers would take the time to write out an elaborate answer. Focus groups also have some drawbacks, for example:.
Personal interviews involve in-depth questioning of an individual about his or her interest in or experiences with a product. The benefit here is that we can get really into depth when the respondent says something interesting, we can ask him or her to elaborate , but this method of research is costly and can be extremely vulnerable to interviewer bias. To get a person to elaborate, it may help to try a common tool of psychologists and psychiatrists—simply repeating what the person said.
He or she will often become uncomfortable with the silence that follows and will then tend to elaborate. He or she is not influenced by a new question but will, instead, go more in depth on what he or she was saying. Although an interviewer is looking to get at the truth, he or she may have a significant interest in a positive consumer response. Unconsciously, then, he or she may inadvertently smile a little when something positive is said and frown a little when something negative is said.
Projective techniques are used when a consumer may feel embarrassed to admit to certain opinions, feelings, or preferences. For example, many older executives may not be comfortable admitting to being intimidated by computers.
The main problem with this method is that it is difficult to analyze responses. Projective techniques are inherently inefficient to use. The elaborate context that has to be put into place takes time and energy away from the main question. Observation of consumers is often a powerful tool. Looking at how consumers select products may yield insights into how they make decisions and what they look for. For example, some American manufacturers were concerned about low sales of their products in Japan.
Observing Japanese consumers, it was found that many of these Japanese consumers scrutinized packages looking for a name of a major manufacturer—the product specific-brands that are common in the U. Observation may help us determine how much time consumers spend comparing prices, or whether nutritional labels are being consulted. Although there may be cause for some concern in that the particular individuals have not consented to be part of this research, it should be noted that there is no particular interest in what the individual customer being watched does.
The question is what consumers—either as an entire group or as segments—do. Consumers benefit, for example, from stores that are designed effectively to promote efficient shopping.
If it is found that women are more uncomfortable than men about others standing too close, the areas of the store heavily trafficked by women can be designed accordingly.
What is being reported here, then, are averages and tendencies in response. The video clip with Paco Underhill that we saw in class demonstrated the application of observation research to the retail setting. By understanding the phenomena such as the tendency toward a right turn, the location of merchandise can be observed. This method can be used to identify problems that the customer experiences, such as difficulty finding a product, a mirror, a changing room, or a store employee for help.
The Internet now reaches the great majority of households in the U. Conditional branching allows the computer to skip directly to the appropriate question. If a respondent is asked which brands he or she considered, it is also possible to customize brand comparison questions to those listed.
Suppose, for example, that the respondent considered Ford, Toyota, and Hyundai, it would be possible to ask the subject questions about his or her view of the relative quality of each respective pair—in this case, Ford vs. Hyundai, and Toyota vs. There are certain drawbacks to online surveys. Some consumers may be more comfortable with online activities than others—and not all households will have access. Today, however, this type of response bias is probably not significantly greater than that associated with other types of research methods.
A more serious problem is that it has consistently been found in online research that it is very difficult—if not impossible—to get respondents to carefully read instructions and other information online—there is a tendency to move quickly. Online search data and page visit logs provides valuable ground for analysis.
If consumers use a certain term frequently that is not used by the firm in its product descriptions, the need to include this term in online content can be seen in search logs. Researchers use a more elaborate version of this type of program in some communities. They then receive a card that they are asked to present any time they go shopping. Nearly all retailers in the area usually cooperate. It is now possible to track what the consumer bought in all stores and to have a historical record.
Electronic equipment run by firms such as A. Nielsen will actually recognize the face of each family member when he or she sits down to watch. The selection is truly random since each household, as opposed to neighborhood, is selected to get one treatment or the other. Thus, observed differences should, allowing for sampling error, the be result of advertising exposure since there are no other systematic differences between groups.
This most likely results from the reality that one must pay greater attention while channel surfing than when watching a commercial in order to determine which program is worth watching. Scanner data is, at the present time, only available for certain grocery item product categories —e. It is not available for most non-grocery product items.
Scanner data analysis is most useful for frequently purchased items e. Even if scanner data were available for electronic products such as printers, computers, and MP3 players, for example, these products would be purchased quite infrequently. A single purchase, then, would not be as effective in effectively distinguishing the effects of different factors—e.
In the case of items that are purchased frequently, the consumer has the opportunity to buy a product, buy a competing product, or buy nothing at all depending on the status of the brand of interest and competing brands. In the case of the purchase of an MP3 player, in contrast, there may be promotions associated with several brands going on at the same time, and each may advertise.
It may also be that the purchase was motivated by the breakdown of an existing product or dissatisfaction or a desire to add more capabilities. Physiological measures are occasionally used to examine consumer response. This can be used to assess possible discomfort on the negative side and level of attention on the positive side.
By attaching a tiny camera to plain eye glasses worn by the subject while watching an advertisement, it is possible to determine where on screen or other ad display the subject focuses at any one time. If the focus remains fixed throughout an ad sequence where the interesting and active part area changes, we can track whether the respondent is following the sequence intended.
If he or she is not, he or she is likely either not to be paying as much attention as desired or to be confused by an overly complex sequence. Mind-reading would clearly not be ethical and is, at the present time, not possible in any event. However, it is possible to measure brain waves by attaching electrodes. These readings will not reveal what the subject actually thinks, but it is possible to distinguish between beta waves—indicating active thought and analysis—and alpha waves , indicating lower levels of attention.
An important feature of physiological measures is that we can often track performance over time. A subject may, for example, be demonstrating good characteristics—such as appropriate level of arousal and eye movement—during some of the ad sequence and not during other parts. This, then, gives some guidance as to which parts of the ad are effective and which ones need to be reworked.
In a variation of direct physiological measures, a subject may be asked, at various points during an advertisement, to indicate his or her level of interest, liking, comfort, and approval by moving a lever or some instrument much like one would adjust the volume on a radio or MP3 player. Republican strategist used this technique during the impeachment and trial of Bill Clinton in the late s.
For example, if at one point Democrats reacted positively and Republicans responded negatively with the same intensity, the average result of apparent indifference would have been very misleading. Focus groups and interviews are flexible and allow the researcher to follow up on interesting issues raised by participants who can be probed.
However, because the sample sizes are small and because participants in a focus group are influenced by each other, few data points are collected. If we run five focus groups with eight people each, for example, we would have a total of forty responses. Even if we assume that these are independent, a sample size of forty would give very imprecise results.
This is usually no more precise than what we already reasonably new. Questionnaires, in contrast, are highly inflexible. It is not possible to ask follow-up questions. Therefore, we can use our insights from focus groups and interviews to develop questionnaires that contain specific questions that can be asked to a larger number of people.
Some cautions should be heeded in marketing research. First, in general, research should only be commissioned when it is worth the cost. Thus, research should normally be useful in making specific decisions what size should the product be? Should the product be launched? Secondly, marketing research can be, and often is, abused. The issues covered below are discussed in more detail in the International Marketing section of this site.
A number of issues are involved in marketing internationally and cross-culturally:. Although trade generally benefits a country as a whole, powerful interests within countries frequently put obstacles—i.
There are several ways this can be done:. We considered several cultural lessons in class; the important thing here is the big picture. Approaches to Product Introduction. Firms face a choice of alternatives in marketing their products across markets. On the other extreme, standardization involves making one global product in the belief the same product can be sold across markets without significant modification—e.
Finally, in most cases firms will resort to some kind of adaptation , whereby a common product is modified to some extent when moved between some markets—e. Similarly, while Kentucky Fried Chicken serves much the same chicken with the eleven herbs and spices in Japan, a lesser amount of sugar is used in the potato salad, and fries are substituted for mashed potatoes. There are certain benefits to standardization. Firms that produce a global product can obtain economies of scale in manufacturing , and higher quantities produced also lead to a faster advancement along the experience curve.
Further, it is more feasible to establish a global brand as less confusion will occur when consumers travel across countries and see the same product. On the down side, there may be significant differences in desires between cultures and physical environments—e.
Adaptations come in several forms. Mandatory adaptations involve changes that have to be made before the product can be used—e. Discretionary changes may also involve cultural adaptations—e. Another distinction involves physical product vs.
In order for gasoline to be effective in high altitude regions, its octane must be higher, but it can be promoted much the same way. On the other hand, while the same bicycle might be sold in China and the U. In some cases, products may not need to be adapted in either way e. Finally, a market may exist abroad for a product which has no analogue at home—e. Country of origin effects. Some countries were thought to be good at making certain things e.
One country could have a good reputation for one type of product but not for another. For example, the British might be perceived as a high quality maker of sports automobiles but a poor quality maker of food. A beer brewer in France and a wine maker in Germany—both being near the border to the other country—deliberately obscured the origin of the products to avoid being judged negatively.
Some firms may engage in the dubiously ethical practice of giving a product an appearance of being associated with—if not being outright manufactured in—a country with a favorable origin impact on the product. For example, a manufacturer of perfume might print the instructions on the container in French even if there is no intention of exporting the product to—let alone making the product in—France. Today, the world of manufacturing is more complicated.
Consumers are increasingly aware that products are often not made in the country associated with the brand. Many Sony products, for example, are produced in countries other than Japan. It is now also recognized that high quality products can be designed and made in countries such as South Korea and even China. The country-of-origin effect today, then, is considerably less than it has been in the past.
There are two ways to measure the wealth of a country. The nominal per capita gross national income GNI refers to the value of goods and services produced per person in a country if this value in local currency were to be exchanged into dollars.
For example, the ability of Argentineans to purchase micro computer chips, which are produced mostly in the U. It should be noted that, in some countries, income is quite unevenly distributed so that these average measures may not be very meaningful.
Similarly, great regional differences exist within some countries—income is much higher in northern Germany than it is in the former East Germany, and income in southern Italy is much lower than in northern Italy. The relevant figures, then, should generally be based on the segments of interest within the respective country. Products come in several forms. Consumer products can be categorized as convenience goods, for which consumers are willing to invest very limited shopping efforts.
Thus, it is essential to have these products readily available and have the brand name well known. Shopping goods, in contrast, are goods in which the consumer is willing to invest a great deal of time and effort. For example, consumers will spend a great deal of time looking for a new car or a medical procedure.
Specialty goods are those that are of interest only to a narrow segment of the population—e. Industrial goods can also be broken down into subgroups, depending on their uses. It should also be noted that, within the context of marketing decisions, the term product refers to more than tangible goods—a service can be a product, too. Brother, for example, has both a line of laser printers and one of typewriters.
Boeing, for example, has both a commercial aircraft and a defense line of products that each take advantage of some of the same core competencies and technologies of the firm. Some firms have one very focused or narrow product line e. Depth refers to the variety that is offered within each product line. Maybelline offers a great deal of depth in lipsticks with subtle differences in shades while Morton Salt offers few varieties of its product.
Products may be differentiated in several ways. Some may be represented as being of superior quality e. Finally, products can be differentiated in terms of offering different levels of service—for example, Volvo offers a guarantee of free, reliable towing anywhere should the vehicle break down. American Express offers services not offered by many other charge cards. Although firms often go back and forth between these idealized stages, the following sequence is illustrative of the development of a new product:.
Initially, a product is introduced. Since the product is not well known and is usually expensive e. Eventually, however, many products reach a growth phase—sales increase dramatically. More firms enter with their models of the product. Frequently, unfortunately, the product will reach a maturity stage where little growth will be seen. For example, in the United States, almost every household has at least one color TV set.
Some products may also reach a decline stage, usually because the product category is being replaced by something better. For example, typewriters experienced declining sales as more consumers switched to computers or other word processing equipment. The product life cycle is tied to the phenomenon of diffusion of innovation. When a new product comes out, it is likely to first be adopted by consumers who are more innovative than others—they are willing to pay a premium price for the new product and take a risk on unproven technology.
It is important to be on the good side of innovators since many other later adopters will tend to rely for advice on the innovators who are thought to be more knowledgeable about new products for advice.
At later phases of the PLC, the firm may need to modify its market strategy. Deodorizing powders to be used before vacuuming were also created.
It is sometimes useful to think of products as being either new or existing. Many firms today rely increasingly on new products for a large part of their sales. New products can be new in several ways. They can be new to the market —noone else ever made a product like this before. For example, Chrysler invented the minivan.
Products can also be new to the firm— another firm invented the product, but the firm is now making its own version. For example, IBM did not invent the personal computer, but entered after other firms showed the market to have a high potential. Products can be new to the segment—e. Later, firms decided to target the more price-sensitive mass market. A product can be new for legal purposes. Usually, when new products or ideas come about, they are initially only adopted by a small group of people.
Later, many innovations spread to other people. The bell shaped curve frequently illustrates the rate of adoption of a new product. Cumulative adoptions are reflected by the S-shaped curve. The saturation point is the maximum proportion of consumers likely to adopt a product. In the case of refrigerators in the U.
The figure will almost certainly be well below that for video games that, even when spread out to a large part of the population, will be of interest to far from everyone. Several specific product categories have case histories that illustrate important issues in adoption. Until some time in the s, few physicians bothered to scrub prior to surgery, even though new scientific theories predicted that small microbes not visible to the naked eye could cause infection.
Younger and more progressive physicians began scrubbing early on, but they lacked the stature to make their older colleagues follow. Several forces often work against innovation. One is risk, which can be either social or financial. For example, early buyers of the CD player risked that few CDs would be recorded before the CD player went the way of the 8 track player.
For example, birth control is incompatible with religious beliefs that predominate in some areas, and a computer database is incompatible with a large, established card file. Innovations come in different degrees. A continuous innovation includes slight improvements over time. Very little usually changes from year to year in automobiles, and even automobiles of the s are driven much the same way that automobiles of the were driven.
A dynamically continuous innovation involves some change in technology, although the product is used much the same way that its predecessors were used—e.
A discontinuous innovation involves a product that fundamentally changes the way that things are done—e. In general, discontinuous innovations are more difficult to market since greater changes are required in the way things are done, but the rewards are also often significant. Several factors influence the speed with which an innovation spreads. One issue is relative advantage i. Some products, such as cellular phones, fax machines, and ATM cards, have a strong relative advantage.
Other products, such as automobile satellite navigation systems, entail some advantages, but the cost ratio is high. Lower priced products often spread more quickly, and the extent to which the product is trialable farmers did not have to plant all their land with hybrid corn at once, while one usually has to buy a cellular phone to try it out influence the speed of diffusion.
Finally, the extent of switching difficulties influences speed—many offices were slow to adopt computers because users had to learn how to use them. It should be noted that innovation is not always an unqualifiedly good thing. Some innovations, such as infant formula adopted in developing countries, may do more harm than good. Individuals may also become dependent on the innovations.
For example, travel agents who get used to booking online may be unable to process manual reservations. Sometimes innovations are dis adopted. Different firms have different policies on the branding on their products. In general, the use of brand extensions should be evaluated on the basis of the compatibility of various products—can the same brand name represent different products without conflict or confusion?
Coca Cola for many years resisted putting its coveted brand name on a diet soft drink. In the old days, available sweeteners such as saccharin added an undesirable aftertaste, implying a clear sacrifice in taste for the reduction in calories.
Thus, to avoid damaging the brand name Coca Cola, Coke instead named its diet cola Tab. Only after NutraSweet was introduced was the brand extension allowed. In many markets, brands of different strength compete against each other. At the top level are national or international brands. A large investment has usually been put into extensive brand building—including advertising, distribution and, if needed, infrastructure support.
Although some national brands are better regarded than others—e. Regional brands, as the name suggests, are typically sold only in one area. In some cases, regional distribution is all that firms can initially accomplish with the investment capital and other resources that they have.
This means that advertising is usually done at the regional level. This limits the advertising opportunities and thus the effect of advertising. In some cases, regional brands may eventually grow into national ones. While a regional beverage, it became so successful that it was able to attract investments to allow a national launch.
In a similar manner, some brands often start in a narrow niche—either nationally or regionally—and may eventually work their way up to a more inclusive national brand. For example, Mars was originally a small brand that focused on liquor filled chocolate candy. Eventually, the firm was able to expand.
Store, or private label brands are, as the name suggests, brands that are owned by retail store chains or consortia thereof. Typically, store brands sell at lower prices than do national brands. However, because the chains do not have the external brand building costs, the margins on the store brands are often higher.
Retailers have a great deal of power because they control the placement of products within the store. Many place the store brand right next to the national brand and place a sign highlighting the cost savings on the store brand. Co-branding involves firms using two or more brands together to maximize appeal to consumers.
Some ice cream makers, for example, use their own brand name in addition to naming the brands of ingredients contained. Sometimes, this strategy may help one brand at the expense of the other.
For some products, packaging accounts for a large part of the total product manufacturing cost. Long warranties often signal to consumers that the product is of good quality since the manufacturer is willing to take responsibility for its functioning.
Most products contain some of both. A computer, for example, is a tangible product, but it often comes with a warranty and software updates. Resources are allocated to achieve those outcomes that the firm values the most. Generally, a sequence of events is needed before a consumer will buy a product. He or she must then be motivated to give some attention to the product and what it may provide. In the next stage, the need is for the consumer to evaluate the merits of the product, hopefully giving the product a try.
A good experience may lead to continued use. Note that the consumer must go through the earlier phases before the later ones can be accomplished. Early in the PLC—during the introduction stage—the most important objective is creating awareness among consumers.
For example, many consumers currently do not know the Garmin is making auto navigation devices based on the global position satellite GPS system and what this system can do for them. A second step is to induce trial —to get consumers to buy the product for the first time. During the growth stage, important needs are persuading the consumer to buy the product and prefer the brand over competing ones. Here, it is also important to persuade retailers to carry the brand, and thus, a large proportion of promotional resources may need to be devoted to retailer incentives.
During the maturity stage, the firm may need to focus on maintaining shelf space, distribution channels, and sales. Prior to the purchase, the marketer will want to establish a decision to purchase the product and the specific brand. Here, samples might be used to induce trial.
Paying retailers for preferred shelf space as well as point of purchase POP displays and coupons may be appropriate. After the purchase, an appropriate objective may be to induce a repurchase or to influence the consumer to choose the same brand again.
Thus, the package may contain a coupon for future purchase. There are two main approaches to promoting products. Hallmark, for example, has invested a great deal in creating a preference for its greeting cards among consumers. There are several types of advertising. Comparative advertisements are a prime example of this. For instance, note the ads that show that some trash bags are more durable than others.
Reminder advertising seeks to keep the consumer believing what other ads have already established. For example, Coca Cola ads tend not to provide new information but keep reinforcing what a great drink it is.
It is essential to pretest advertisements to see how effective they actually are in influencing consumers. An ad may have to be redesigned if it is found not be to be as effective as targeted. Depending of the promotional objectives sought by a particular firm, different advertising strategies and approaches may be taken. The following are some content strategies commonly used. A significant objective of advertising is attitude change.
Beliefs can be both positive e. In general, it is usually very difficult to change deeply held beliefs. Thus, in most cases, the advertiser may better off trying to add a belief e. Consumer receptivity to messages aimed at altering their beliefs will tend to vary a great deal depending on the nature of the product. For unimportant products such as soft drinks, research suggests that consumers are often persuaded by having a large number of arguments with little merit presented e.
In contrast, for high involvement, more important products, consumers tend to scrutinize arguments more closely, and will tend to be persuaded more by high quality arguments. Celebrity endorsements are believed to follow a similar pattern of effectiveness. The Elaboration Likelihood Model ELM suggests that or trivial products, a popular endorser is likely to be at least somewhat effective regardless of his or her qualifications to endorse e. For example, a basket ball player may be perceived as knowledgeable about athletic shoes, but not particularly so about life insurance.
In practice, many celebrities do not appear to have a strong connection to the products they endorse. Tiger Woods might be quite knowledgeable about golf carts, it is not clear why he has any particular qualifications to endorse Cadillac automobiles. The effectiveness of advertising is a highly controversial topic. Research suggests that in many cases advertising leads to a relatively modest increase in sales. In general, it appears that advertising is more effective in selling durable goods e.
Also, advertising appears to be more effective for new products. This suggests that advertising is probably most effective for providing information rather than persuading people. Note that many advertising agencies make a large part of their money on commissions on advertising sold. Thus, they have a vested interest in selling as much advertising as possible, and may strongly advise clients to spend excessive amounts on advertising. Very small amounts of advertising are too small to truly register with consumers.
At the medium level, advertising may be effective. There are several potential ways to measure advertising effectiveness. Two main categories include:. Therefore, getting favorable media coverage can be quite valuable. One downside, of course, is that the marketer does not get to control what the media will say.
This type of coverage is not necessarily less expensive than traditional advertising, either, since a lot of labor is often needed to generate media interest. News releases should generally be brief. Ordinarily, these should not exceed two double spaced pages in length although additional information can be made available.
It is important to quote actual people—whether customers, neutral experts, or employees of the firm. Pricing decisions are extremely important for the firm.
Some of the reasons:. A logical examination suggests that price should be defined as. That is, we need to consider the quantity you receive as well as the amount of money you have to fork out. The above conceptualization suggests that the marketer has several ways available to change price:.
Pricing strategies can be categorized based on several different variables. One variable of interest relates to the consistency of the prices.
Some retailers today attempt to follow a strategy of "everyday low pricing. Other retailers instead feature prices which, when not discounted, are somewhat higher. To compensate, periodic sales feature price reductions.
Sales can be implemented either with a predictable pattern e. See chart on overheads. Note that "high-low" and "everyday low price" strategies are intended to take advantage of different price elasticities across people. Some consumers are price sensitive and will tend to buy only during sales; other people, in contrast, will buy all the time. Thus, people who are not willing to switch brands will have to pay full price for your products when they are not on sale; while they are on sale, a large number of "switchers" are attracted and sales volumes are increased.
Another dimension of interest in pricing the price introductory strategy. The "skimming" strategy entails offering a product first at a relatively high price. Consider, for example, what we can do when there is a large degree of price elasticity—i. In the chart above, we see that some consumers are willing to pay a lot of money to get a new product quickly, while others are not willing to pay as much.
This often happens, for example, with new computer chips. It may be possible, then, to charge the first segment more money, and then lower the price enough so that the next segment will buy it. The process continues until all segments that can be profitably served have bought. In the chart below, we introduce the product at price P1. This means that we will only sell a limited quantity--Q1.
Later, we reduce the price to P2, enabling us to sell a quantity of Q2. Eventually, we lower to P3, selling Q3. Since consumers differ in how much they are willing to pay for a product, it is possible to make large margins on the price inelastic segment. For example, Intel tends to charge high prices for its most recent chips, gradually lowering prices as a new generation is introduced. Alternatively, firms may choose to use the "penetration" pricing strategy.
This strategy also takes advantage of price elasticity and attempts to dramatically boost the number of units sold by offering the product at a low price. Since costs of production tend to go down as cumulative production increases, this strategy may be effective. Penetration pricing is also useful when a firm wishes to establish a large market share early on, and it may be useful to develop a market for accessories to products.
For example, a manufacturer of a new computer system may want to increase sales volumes in order to encourage the development of compatible software so that the computer brand will become more competitively attractive.
Note that "skimming" and penetration pricing involve tradeoffs. A clearly preferred strategy may not be obvious, and managers may need to engage in some serious consideration to arrive at a desired strategy. Both strategies involve some level of risk. The main risk to "skimming" is the attraction of aggressive competitors who see an opportunity to make large profits by entering. Penetration pricing, in contrast, gambles on the possibility that sales volumes will in fact increase with lower prices.
Two other concepts are worth noting. A " cost-plus " pricing strategy entails marking up the estimated cost of producing a product by a certain, fixed percentage.
We will discuss deficiencies of this approach later. In contrast, pricing based on consumer perceived value keeps the firm in closer proximity to the market.
Several objectives can be pursued in pricing. One is product line pricing. In some cases, it may be useful to settle for small margins on some members of the product line in order to assure the success of others.
For example, Avery, the maker of adhesive labels, sells relatively inexpensive software for printing on the labels in order to stimulate demand for the higher margin labels. Two-tier pricing involves an attempt to entice the consumer into buying a product at a low price with the expectation that he or she will buy accessories later.
For example, makers of razor blades tend to sell the razors at low prices so that the consumer has an incentive to go with the same brand of blades later on. Tying , which is often illegal in the U. Back when Xerox was the dominant manufacturer of copy machines, for example, a court case forced the company to abandon its policy of including service of the copiers with machine purchase; consumers were now free to seek out any cheaper third party service available.
For a more contemporary example, let's imagine that rap singer Joyoys J has two albums on the market: The legal issues here are complex, in part because there are often serious questions about the extent to which it is reasonable for the customer to be able to buy only one product when most customers would want to buy the combination.
P roduct price bundling , generally legal, presents an alternative to outright tying. Here, the consumer can buy each product separately, but a discount is offered for buying two or more items simultaneously. Research suggests a large segment of consumers does not give much attention to the prices of individual products.
Consumers were found on the average to spend only about 12 seconds between arriving at the site within a store where a frequently purchased product was located and departing; on the average, consumers inspected only 1. Note that this study does not indicate a total lack of consumer price sensitivity since consumers are undoubtedly making some inferences about the overall price levels of a store.
Thus, the store has some incentive to maintain reasonable overall prices. The United States maintains relatively stringent by international standards antitrust laws.
Much of the rest of the World is catching up with us, but traditionally, anti-competitive laws in many European and Asian countries were either non-existent, intended to actively encourage collusion, or not enforced.
In fact, a professor at INSEAD, the premier French business school, reported that his students—who came from countries throughout Europe—actually expected him to teach them how to collude with each other. Antitrust issues relevant to prices can be categorized into the following main categories:.
Consumers typically maintain reference prices for products. These are typically based on prices they have seen or paid in the past or perceived fairness of prices.
Research shows that both experience prices previously paid and the sale context prices of competing brands influence a consumer's internal reference price.
Consumers tend to experience two sources of value for a product. Acquisition utility refers to the utility of obtaining a product, while transaction utility refers to the difference between a subject's reference price and the featured price. More recent research, however, shows that a large segment of the population will apparently respond to "negligible" discounts.
There is some question as to whether "odd" product prices those ending in "9," "95," or "99 actually increase sales. Some effect has been found in the U. Note, however, that "odd" prices may communicate the idea that you are receiving a bargain, which may nor may not be consistent with the desired positioning of the product. As some firms have painfully learned, changing the price of a product can be difficult. Some experimenters tried to introduce a laundry detergent both at a "high" and "low" price in stores.
After eight weeks, the price of the laundry detergent under the "low" intro price condition was changed to match that of the "high" introductory condition. Although sales were higher in the low introductory price condition while the price was low, sales dropped dramatically after the price had been raised—in fact, after sixteen weeks, cumulative sales were higher in those stores where the price had been high all along.
This suggests that consumers started thinking about the product as a "low price" one and had difficulty adjusting when the price was later changed. There are other cases where changing product prices has proven difficult. The Coca Cola Company also found it difficult to raise its price above its highly salient 5 cent level.
The " framing " of products tends to dramatically influence consumer response. The Automobile Club of Southern California, for example, indicates that upgrading to "AAA Plus" service costs "only pennies a day" rather than emphasizing the yearly cost.
Note that this framing effect may also have implications for the practice of sales—when the sale is retracted, consumers may see this as a loss rather than the termination of a gain. Economists such as John Kenneth Galbraith have traditionally held that advertising serves to create artificial differentiation among products where few real differences exist and thus allows the firm to charge higher prices.
This effect can be observed on whole-sale prices, where heavily advertised products tend to sell for higher prices.
To fully understand how consumer behavior affects marketing, it's vital to understand the three factors that affect consumer behavior: psychological, personal, and social. Psychological Factors In daily life, consumers are being affected by many issues that are unique to their thought process.
Consumer behavior involves services and ideas as well as tangible products. The impact of consumer behavior on society is also of relevance. For example, aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for .
Customer Experience What Change in Customer Behavior Will Impact Marketing Most in ? What Change in Customer Behavior Will Impact Marketing Most in ? Marketing insiders predict the most significant ways buyers will behave differently in —and what marketers should do about it. A more in depth definition will also include how that process impacts the world. Consumer behavior incorporates ideas from several sciences including psychology, biology, chemistry and economics. "All marketing decisions are based on assumptions and knowledge of consumer behavior," (Hawkins and Mothersbaugh, ).
Customer Behavior marketing guides and reports for the busy professional Influencer Marketing Success Stories With examples including Forbes Digital and Virgin America, this new Case Study Collection will show you how use influencer to boost brand awareness, introduce new products, increase sales, and more. Consumer behavior is a hotbed of psychological research as it ties together issues of communication (advertising and marketing), identity (you are what you buy), social status, decision-making.