Organizational Decision Making vs. Consumer Decision Making: A Comparison, Exams of Marketing

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MAR3503 EXAM 3 Study Guide Group and Situational Influences on Decision-Making (Chapter 9)  The nature of situational influence o Situational influence includes all factors particular to a time and place that do not follow from knowledge of the stable attributes of the consumer and the stimulus and that have an effect on current behavior.  Physical Surroundings o Fairness: willingness to pay for an item (i.e. a beer)  “Fair” price may be determined by non-economic considerations o Atmospherics: is the sum of all the physical features of a retail environment  Atmospherics influences consumer judgments of the quality of the store and the store’s image.  Atmosphere is referred to as servicescape when describing a service business such as a hospital, bank or restaurant. o Components of physical surroundings  Colors   Aromas  Music  Crowding – effects on:  Information processing  Consumption choices o Amount and type of consumption  Social Surroundings: Other people and groups, especially those who possess some kind of social power, influence our decisions. o Reference groups: A person or group that serves as a point of comparison (or reference) for an individual in the formation of either general or specific values, attitudes, or behavior.  Factors that affect reference group influence  There is a large and diverse range of groups that have the potential to influence consumer behavior; we will look at four: o Friendship groups (informal)  Next to family, considered the most likely to influence individual’s purchase decision  Seeking and maintaining friendships is a basic drive of most people  Opinions and preferences of friends are an important influence in determining the products and brands a consumer selects  Marketers recognize this and often depict friendship situations in their ads, especially for products such as clothing, snack foods and alcoholic beverages o Shopping groups  Two or more people who shop together  A range of reasons  Social--to share time together  Risk reduction--to have a second opinion  Informational--others in the group may know more about certain products o Work groups  Formal work groups involve individuals who work together as a team and thus there is an opportunity for influencing each other’s consumption-related activities  Informal work groups are people who have become friends through their work, though they may not work as a team o Brand Communities  A group of consumers who share a set of social relationships based upon usage or interest in a particular brand  Consumer tribes share emotions, moral beliefs, styles of life, and affiliated product  Brandfests celebrated by community  Autonomic decision: one household member chooses a product  Syncretic decision: involve multiple household members o Used for cars, vacations, homes, appliances, furniture, home electronics, interior design, phone service o As education increases, so does syncretic decision making  Consensual versus accommodative purchase decisions  Consensual purchase decisions: a decision in which the group agrees on the desired purchase and differs only in terms of how it will be achieved  Accommodative purchase decisions: the process of using bargaining, coercion, compromise, and the wielding of power to achieve agreement among group members who have different preferences or priorities  Resolving household decision conflicts o Product involvement and utility – the degree to which a person will use the product to satisfy a need o Power – degree to which one family member exerts influence over the others  Organizational decision making  The decision-making process differs when people choose what to buy on behalf of an organization rather than for personal use. o Organizational buyers: purchase goods and services on behalf of companies for use in the process of manufacturing, distribution, or resale. o Business-to-business (B2B) marketers: specialize in meeting needs of organizations such as corporations, government agencies, hospitals, and retailers.  Compared to Consumer Decision Making, Organizational Decision Making o Involves many people o Requires precise, technical specifications o Is based on past experience and careful weighing of alternatives o May require risky decisions o Involves substantial dollar volume o Places more emphasis on personal selling  Types of organizational buying decisions  Buyclass theory: organizational buying decisions divided into three types, ranging from most to least complex: o  Temporal Perspectives: deal with the effect of time on consumer behavior o Time poverty  Limited purchase time often limits search  Internet shopping is growing rapidly as a result of the time pressures felt by consumers.  Antecedent States o Mood versus emotional state  Moods: Transient feeling states that are generally not tied to a specific event of object.  Momentary Conditions: Temporary states of being (tired, ill, having extra money, being broke, etc.)  Emotional state: anger, sadness, disgust, there are 13  Able to pin point what caused the mood  Emotional state should not influence your purchase decision theoretically  Moods have a significant impact on your purchase decisions is because you don't know what caused the mood (doesn't actually make a practical differences  People are really bad at pin pointing what caused feelings  Example of suspension bridge, finds person shown more attractive shown after the bridge rather than before, same with the example of roller coaster when you're waiting in line low arousal experience after you ride the roller coaster it was a high arousal experience so date found more attractive o Dimensions of emotional states  Arousing  Exciting  Pleasant  Relaxing  Sleepy  Gloomy  Unpleasant  Distressing Demographics (Chapters 10 and 11) Age  Age cohort (“my generation”) o People of similar ages who have undergone similar experiences o Kids: Age 12 and under (2002-2014) -17% of population -Primary Market -Influence Market  Spend $40 billion annually, influence $500 billion in purchases -Future Market o Teenagers: ~13-19 (1995-2001) -10% of the population -Trying to establish identity – ideal product helps them do this -Autonomy from family -“Fit in” with social groups Spend on trendy, “feel-good” items:  Music  Clothes, cosmetics  Fast food or fast casual? -Why target teens? • Brand loyalty develops in adolescence • Market power o Generation Y: 20-35 (1979-1994) o “Millennials” and “Echo Boomers” make up one-third of U.S. population  Spend $600 billion a year  First to grow up with computers in their homes, in a 500- channel TV universe and the world of streaming  Multitaskers with cell phones, music downloads, IM on Internet  Most diverse generation ever  Many raised by single parent and/or working mother Income  Discretionary Income: the money available to a household over and above that required for a comfortable standard of living.  Consumer Confidence: Reflects the extent to which people are optimistic or pessimistic about the future health of the economy.  When people are pessimistic about their prospects, they tend to cut back their spending and take on less debt.  When they are optimistic about the future, they tend to reduce the amount they save, take on more debt, and buy discretionary items. Social Class  The grouping of members of society according to status (i.e., social stratification).  Most often three major categories: High, middle, low  Usually largest concentration in middle class  How social class is determined  Income vs. social class  Not necessarily correlated  Income increases with age, but does not necessarily affect social class  Dual-career families generate a higher than average income but not necessarily higher status  Occupation and education  Greatest determinant: occupation  Still differences between cultures  Achieved Status: earned through hard work  Ascribed Status: obtained through luck or inheritance  Social Mobility  Horizontal Mobility: when a person moves from one position to another that is roughly equivalent in social status (i.e. a nurse becoming a teacher)  Upward Mobility: moving up a social class usually obtained through marriage (i.e. The Bachelor)  Downward Mobility: moving to a lower social standing (i.e. a displaced worker becoming homeless)  Social Class Aspirations: marketers appealing to a consumers desire to change social standing by positioning a product or service as a symbol of social class standing or achievement  Conspicuous Consumption: the acquisition and display of goods and services to show off one’s status  Status Symbols – products or services that tell others about someone’s social class standing  Fraudulent Symbols – status symbols that become so widely adopted that they lose their status (and counterfeits)  Parody Display – Seek status by deliberately avoiding status Psychographics  Use of psychological, sociological, & anthropological factors to:  Determine market segments  Determine consumers’ reasons for choosing products  Fine-tune offerings to meet needs of different segments Online Consumption Behavior (chapter 12)  The 4E framework for social media o o Excite – offer must be relevant to targeted customer  Can be achieved by providing personalized offers o Educate  Golden opportunity: product’s value proposition and offered benefits o Experience – information about a firm’s goods and services  Simulating real experiences o Engage - any kind of user behavior related to social sharing, promoting content, giving feedback, or interacting with a brand/company/page  Components  Involvement: passive engagement with a brand in social media; visits, time spent, views, etc.  Interaction: active; what consumers do with brands in social media – likes, comments, posts, mentions  Influence: active; what consumers do with other consumers in relation to brands in social media – sharing content, recommendations, referrals, sentiment of mentions  Action, loyalty, and commitment  Positively engaged consumers lead to more profitability, can backfire  Types of social network users o Bonders – to stay in contact with friends/family o Creators – making YouTube videos/content is original o Professional – only use for jobs o Sharers – share content that is not your own  Analyzing effectiveness of social media campaign o Hits: # of times something is viewed o Page views: # of people who viewed a page (factoring in the actual amount of people, multiple views by one person only counted once) o Bounce rate: the amount of people that leave a page o Click paths: how to go from first seeing the advertisement to making a purchase o Conversion rates: how many people actually join/purchase o Keyword analysis: when you try and quantify someone’s comments, assign numerical numbers to words  Social reach, extended network, influence o Social reach: how many people a person influences o Influence: the extent to which the person influences others o Extended network: the influence of the person’s cumulative network  Search engine marketing o It consists on promoting a website through advertising it by making it appear prominently in search engines results pages ($20B a year and 10% yearly growth rate) o Search engine optimization: Making adjustments, modifications and rewrites to a website in order to achieve a higher natural ranking in organic search engine results o Paid search marketing: A company pays to be featured at a prominent place in the results pages (pay-per click, cost-per-click, contextual ads, sponsored listings) o AdWords: Customized search engine results based on a searcher’s past browsing behavior and web activity  https://www.youtube.com/watch?v=05we2g3Edgs o Mobile device internet capabilities (mobile websites, Apps) Marketing Research  The systematic and objective process of generating information for aid in making marketing decisions  Secondary: Based on data previously collected for purposes other than the research in hand (e.g. published articles, government stats, etc) Disadvantages:  Relevance: may not match the data needs of a given project  Measurement units  Time Period  Reliability  Differences in category definitions