CONSUMER BEHAVIOR By Karin M. Ekström (2010) - Complete Book Summary / Sinetesi Libro, Sintesi del corso di Marketing Internazionale

Scarica CONSUMER BEHAVIOR By Karin M. Ekström (2010) - Complete Book Summary / Sinetesi Libro e più Sintesi del corso in PDF di Marketing Internazionale solo su Docsity! CONSUMER BEHAVIOR A Nordic Perspective By Karin M. Ekström 2010 BOOK SUMMARY COMPLETE Chapter 1: Development of consumer behaviour as a field of study (p. 43-54) Short summary: Chapter 1 explains how the research orientation “consumer behaviour” in marketing has developed over time. This chapter mainly focuses on two researchers, Arndt (1986) and Belk (1995). It presents their insights about the history of consumer behaviour as a field of study. Key words: - The 5 research orientations from 1930-1980 - Old perspective vs. new perspective - Behavioural decision theory vs. consumer culture theory Consumer behaviour history 1930-1980 (p. 45-48): There are different research orientations (Arndt 1986): “early empiricist phase, motivation research phase, formative phase, utopian grand theories phase and information-processing phase” (p. 45) Early empiricist phase, 1930-1940 (p. 45): - Classical economist theory - “Homo economicus” – “a person who has and uses full and perfect information when making decisions” -> the consumer makes rational decisions - “consumers maximize utility & minimize cost” The motivation research phase, 1950s​ ​(p. 45): - “attempt to understand consumers’ subconscious motives and physical needs for purchasing” - Clinical psychology and theory of Freud (dream analysis, psychological analysis) & Maslow -> brought into consumer research - laboratory and new methods such as in-depth interviews & focus groups - “Research results from this time period were criticized for being subjective interpretations and non-representative samples” - E.g. “Packard (1957) questioned whether examining consumers’ subconscious motives was ethically acceptable” -> as such, Belk discusses that “Packard’s publication was a main reason as to why the practice of motivation research declined” The formative phase, early 1960s (p. 45-47): - Introduction of central concepts when looking at purchase behaviour: “perceived risk, cognitive dissonance, personality, social character and class” (p.45-47) -> first time that they look at individuals who process information - behaviour & cognitive psychology - stimulus & response - “experiments and laboratory research on consumers were conducted and studies were strongly influenced by psychology (Belk 1995)” ------------------------------------------------------------------------------------------------ --- Chapter 2: Historical perspectives of consumption (p. 57-71) Summary: Chapter 2 deals with the evolution of consumerism by giving examples of the rise of department stores, smoking and the formation of sub-cultures. It also elaborates on the anti-consumerism movement in the 1970s (hippies etc.). Lastly, it explains how Sweden went from very poor housing conditions to living in modern and design-driven homes. Key words: ·​ ​Department stores / change in shopping experience ·​ ​Smoking marketing campaigns targeted at women ·​ ​Rituals vs. routines ·​ ​Sub-cultures / anti-consumerism movement ·​ ​Families and the home Dreamworlds (p. 58-60) - Paris 1852: the rise of department stores (Bon Marché) - No longer bargaining, but set prices - Consumption as entertainment - “Scenography and dramaturgy of shopping was staged with the help of theatrical effects of lightening, sensual effects, soundscapes, props and backdrops” (p. 58, bottom) - “These new experiences were much debated: what were the seductive dangers of these new impulse buying settings? Did they create new needs and did they lure customers into overspending?” (p. 58, bottom) - “Department stores were accused of exploiting “the weaker sex” by playing on the supposed emotionality of women” (p. 59, middle) - “But it also illustrated the empowerment of women: they developed the skills of the sophisticated shopper and became knowledgeable about prices, fabrics, models and bargains” (p. 59, middle) - They could seem busy with shopping when all they actually wanted was to daydream in private Smoking (p. 60-63) - Early 1960s 50% of Swedish males smoked and only about 25% of women - “Heavy marketing campaigns targeting women led to smoking being linked with feelings of emancipation and freedom. The young, independents woman smokes!” (p. 60, bottom) - In 1980s same amounts of men and women smoked, and as of 2000s there were more women smokers - Change in 1960s: “wanted to broaden the range of situations and places where smoking was possible. Before it was marketed as an elite luxury with men and women in elegant evening dresses, the focus was now on smoking as a self-evident element in everyday life” (p. 61, bottom) - “In consumer life, we can study how routines are transformed into rituals and vice versa” (p. 62, middle) - “Ritual is supposed to be the opposite of a routine” (…) “When a ritual turns into a routine it is described as no longer catching the attention but simply feeling mechanical, empty or worn” (p. 62, middle) - Example: radio listening or TV watching: “was an almost sacred aura”; “intense concentration of early radio listening or dressing up for TV evenings”; “radio and TV were given a prominent position in the best room”. “But gradually media became routine, people learned how to half listen to the radio while doing other things” (p. 62) My life as a consumer (p. 63-64) - “the use of life histories is a fruitful historical approach in which people are asked to talk about their lives as consumers or their interaction with things” (p. 63, top) - “consumption as a laboratory for experimentation and identity formation comes out even more strongly when people talk about their teenage years” -> “endless hours spent in front of the mirror, experimenting with styles, etc. (p. 63, middle) - “in later stages of life home-making becomes a central metaphor for narrating family life”. “Today the idea of home improvement as a family project that unites wife, husband and children is present in a manner that would have been unthinkable in 1900 or 1930) (p. 63-64) - “in the post-war period home-making became more and more related to identity formation” (p. 64, top) - “Life histories illustrate that this family project called the home is never finished because people are always redecorating, fixing, planning and daydreaming.” (p. 64, top) Consumers or anti-consumers? (p. 65-66) - Burenstam-Linder (1970;90): “people try to squeeze too much consumption into their daily lives” -> over-consumption (p. 65, middle) - Rise of hippies and flower power kids - 1970s people (especially Swedes) went against consumerism: bought cheap chairs instead of expensive comfortable seats. Bedroom doors were left open when guests arrived (unthinkable in the 1930s where everything had to be neat and closed off) - “heavy media-exposed lifestyle of radical subcultures of the 1968 generation may have obscured the fact that the informalisation of home life and home-making was a much broader social movement” (p. 66, bottom) - “magazines were filled with advice for a simpler and more flexible way of living” (p. 66, bottom) New routines for old (p. 66-67) - up until 1970s, there were strict rituals and traditions: - “a living-room set consisted of a sofa, two easy chairs and a small coffee table, while the dining set was made up of four or six chairs, a table and a sideboard. Styles were rather conservative and furniture was support to last a lifetime” (p. 66-67) - the new generation was “done with such ritualised consumption” (p. 67, top) - “market expansion was previously limited by consumer habits tied to certain spaces and situations, but now improvisation resulted in experiments with exotic foods, new colours, forms and function.” (p. 67, middle) - “Consumption should not only be fun and creative but it should also be faster” (p. 67, middle) The dialog between corporations and consumers inevitably entails complex relations and mechanisms of power, consumers are not necessarily passive victims of capitalism but may well have a more active role to play in shaping the meanings of products and brands. Further, global cultural flows may well create new channels for creative exchange, not only for cultural domination. Consumer culture and the cultural dynamics of marketplace activity (p.77-79) Consumer culture generally refers to a society where consumer goods obtained through market exchange play a key role in the construction of culture, identity and social life (Hämäläinen & Moisander, 2007; Slater, 1997). In consumer culture, consumption and marketplace activity are not only the principal means of pursuing personal happiness and well-being but also an important site of political participation and citizenship in society. Hämäläinen and Moisander (2007) discern two main approaches (or streams) to the study of consumer culture: 1. ​Critiques of consumer culture​: Many of the critics towards consumer culture, argue that it represents the destruction of a stable traditional social order by industrial and capitalist relations that demean ‘real culture’ and destroy community [Discussions often drawn from Marxism’s ‘capitalist society’] . In these critiques, consumer culture is often associated with materialism or “Americanisation” or “Disneyisation” of societies (Bryman, 2001). Overall: in the critiques of consumer culture, consumers are usually viewed as relatively powerless, manipulated victims of greedy corporations and the capitalist structure. That ‘false needs’ are created for us in which we consumer things we do not need and in that process consumption destroy the planet (Hämäläinen & Moisander, 2007). 2. ​Cultural studies of consumer culture: ​Less “moralistic” approach than above. Overall, it is emphasized that consumption is productive and profoundly cultural in the sense that it invokes, mediates and reproduces the meanings and systems of representation through which people make sense of their everyday lives and achieve social order (Moisander & Valtonen, 2006). In this stream, the consumer role is credited to be more active and creative, that consumers can resist and rearticulate the meanings that marketers have encoded to brands and products, and transform, customize and re-configure the products that they buy (Hämäläinen & Moisander, 2007). So, how does the consumer culture influence and shape consumer behavior? (p. 79) ● Depends on which literature we depart from; sociology, cultural studies, anthropology etc. They all have some different take on this question, providing different theories. ● Cultural research, for example, emphasize that culture permeates all of society and it is continuously produced in the communication and interaction processes and practices of everyday life, where meanings, norms and values are constantly being reproduced, contested, negotiated and changed (Moisander & Valtonen, 2006). ● From this perspective, culture exerts its influence on consumer behavior through culturally shared meanings, values, norms, rituals and role expectations. - Culture does not ​determine social action in the marketplace. It is not a map ​of social behavior but rather a map ​for ​ social behavior as Peterson (1979:159) puts it. - Culture regulates consumer behavior by limiting the scope of intelligible and/or appropriate action in particular contexts. - To illustrate: in most western cultures, it is not usually intelligible or appropriate for a male person to wear a skirt (unless kilt or Arabian robe) in public places. But it does happen and males can do this if they want to. Global consumer culture and consumers as targets of global marketing If you look at the variety of transnationally marketed brands and products in your local supermarket, or observe cultural icons in ads and TV, you might easily conclude that consumer marketing is rapidly becoming global and that firms increasingly define their target audiences in terms of global consumer segments. - But is there a global consumer culture or a global consumer? - How might we describe the consumer as a member of the global consumer culture and a target of global marketing? Consumers as targets of global marketing Although companies are now tending to move towards more adaptive and ‘glocal’ approaches in order to match their strategies with the particularities of given target markets, the global consumer will almost certainly remain at the heart of and be attractive for global brand strategies (Holt et al., 2004). Holt et al. (2004) reminds us that targeting the global consumer/citizen – involves challenges and pitfalls. According to Holt and his study in 41 countries on why consumer choose global brands, he concluded that global brands are powerful institutions – both in the good and bad sense – and can be seen as the ‘linqua franca’ (communication between different languages) for consumers across the markets. ● Consumers tend to rely on global brands because they are associated with three main characteristics: quality signal, global myth and social responsibility. ● Global consumers seem to be looking for products that are widely recognized as superior in quality and that resonate with global desires. ● They want a piece of global identity that can only be communicated through global brands. ● However, consumers are increasingly demanding global corporations to take more responsibility in global social problems – a demand not necessarily expected from smaller, locally marketed brands ● ​Global brands which marketing efforts are based common on western cultural values (e.g. global youth: Posting pictures on Instagram, wearing Nike sneakers, playing PS4 and drinking Starbucks coffee) are often blamed for the ‘Disneyisation’ or ‘McDonaldisation’ of society. – Therefore, many global brand are being target by political activism and also blamed by the public for the globalizations negative side effects; e.g. exploitive employment policies pursued in Third World countries and environmental degradation. ● So, with the global consumer in mind, TNCs are tempted to create and launch products that summon global desire (e.g. Apple’s iconic brands). At the same time, in promoting global brands, companies need conform to the demands of ‘global citizens’ by means of social responsibility and environmental initiatives. Global consumer and the tribalising society (p. 81 – 84) Much of the criticism towards the conception of global culture, argues that the individual is portrayed as a sort of passive and oppressed cultural sucker at the mercy of global forces. However, ​the cultural perspective of consumer culture stresses that individuals and communities have an active role to play in resisting, negotiating and reworking cultural meanings and practices locally in order to align them with their particular tastes, values and desires. Michel Maffesoli (1988/1996) argues that that in the global marketplace, consumer engage in a multitude of activities and social practices where new forms of communities emerge. Maffesoli mean that there is actually a reverse movement away from mass media produced individualism towards alternative fragmented social arrangements, which he calls ‘neo-liberal’ or ‘post-modern’ ​tribalism ​. Maffesoli argued that the social existence of our society is increasingly based on the ‘little masses’, i.e. heterogeneous fragments of society and groups distinguished by their member’s shared lifestyles and tastes. These ‘new’ tribes are affection-based collectives, such as the groups of music, film or fashion fanatics that are inherently fluid and ephemeral and can only be defined in terms of conceptual boundaries. In addition, contemporary social life is marked by membership of a multiplicity of overlapping groups in which people are free to move in-between, and in which the roles one plays become the main sources of identification. Many empirical studies have also illustrated how the everyday life of post-modern tribes often revolves around particular brands and consumption activities associated, for example with common interests and lifestyles, leisure activities, fashion, gaming and iconic brands like Apple. Managerial implications: products and brands become particularly valuable if they are able to link like-minded people together (Cova, 1997). As a result, an increasing number of ● This is vital if we are to gain better insight into the cultural dynamics of global marketplace culture. Chapter 4: Pro-environmental consumption Chapter summary​: While consumers are increasingly becoming more aware and positive towards changing their consumption behavior in favor of the environment, many marketers, governments and NGOs are puzzled around the fact that consumer’s actual behavior to fully implement these attitudes often fall short. This chapter will provide you with models and concepts to analyze and understand pro-environmental consumer behavior. Foremost, this chapter deals with the different components of the MAO-model and the attitude-behavior gap. At the end, you will be able to answer questions like: ● Why do consumers engage in a wide range of activities to protect the environment? -​ ​For example: social motives and personal norms ● Why does the level of consumer activity often fall disappointingly short of the attitudes and intentions expressed in opinion polls? - ​For example: behavioral costs: it can be time-consuming, inconvenient and we may have habits we do not think of which in turn prevent pro-environmental behavior. Motivation, ability and opportunity – the MAO model (p. 98) Research show that pro-environmental behavior depends both on the individual and on the context. Individual consumers vary in the strength of their ​motivation to act in a pro-environmental way and also in what motivates them to do so (or not to). While motivation is a necessary condition for voluntary pro-environmental action, it is not sufficient alone. The motivated consumers’ adoption of pro-environmental behavior may be impeded by strong habits or lack of resources such as knowledge, time or money. These are personal characteristics that determine the consumer’s ​ability to carry out a pro-environmental action. Also factors in and characteristics of the immediate or wider context of the behavior may facilitate or impede pro-environmental behavior to a higher or lower extent. For example: Lisa in northern Finland and Eric in Copenhagen, Denmark are equally concerned about organic food and adopting a pro-environmental behavior. But since Lisa has to travel far to find a specialty store and pay a substantial price premium for her organic products, Lisa consequently consume less pro-environmental goods than Eric. Availability and price are key characteristics of the context, and determine how easy or difficult it is for consumers to act on their pro-environmental intentions. These and other characteristics of the context determine the extent to which a consumer has the ​opportunity to act in a pro-environmental way. The interaction of motivation, ability and opportunity in determining pro-environmental consumer behavior is illustrated in figure 4.1. (p. 98): MOTIVATION Consumers can have several and different motives for acting in a pro-environmental way, or for not doing so. Lisa may buy organic food because of instrumental or ethical reasons (concerned about pesticides or animal welfare on farms), or have a social motive to do so (e.g. impress her friends). Peter from Stockholm may ​lack motivation to buy organic food since he believe that it does not make any difference (an efficacy-related negative motivation). So, we consumer may have a larger number of environmentally relevant goals, some being more general or abstract than others, spanning from the level of specific behavior to the level of abstract human values. Pro-environmental goals at different levels of abstraction form an interrelated goal-hierarchy ​ (Bagozzi & Dholakia, 1999). (p. 99) à Below are 3 levels of environmental motivation: ● For some people the goal of protecting the environment is a ​focal goal (1), existing at an intermediate level of abstraction and being hierarchically related ​both to more superordinate ​(2) and ​subordinate​ (3) goals. ● The more ​superordinate ​goal(s) are reflected in the person’s value priorities, which determine why environmental protection is important to the person ● The ​superordinate goals are related to the specific actions that the consumer believes are useful means to reach the goals of protecting the environment. Environmental concern The salience of the goal of protecting the environment to an individual consumer or a population is often conceptualized as ‘environmental concern’. Environmental concern refers to individuals’ ​awareness of environmental problems, including how salient these problems are compared to other social problems (Fransson & Gärling, 1999). Environmental concern is sometimes referred to as a general environmental attitude. There are several ways of ​measuring​ environmental concern: ● Dunlap and Jones (2002): measure environmental concern in terms of the number of issues covered (single vs. multiple issues) and whether they capture a single or multiple expression(s) of concern. ● Weigel and Weigel (1978): “environmental concern scale”, are multiple-topic, multiple-expression instruments based on the classical tripartite conceptualization of attitude as consisting of an affective, cognitive and conative dimension. – [Very vague this one] ● ​→ a more ​commonly used type of measure emphasizes salience more than valence and aims at capturing how much the population pays attention to environmental problems, often together with a number of other social problems (e.g. Dunlap, 2002). This type of measure usually consist of only a ​single​ expression of concern. The latter method is popular with pollsters for monitoring the focus of popular concerns and tracking evolution over time, as it is relatively easy to administer and produces results that can easily be compared across issues. An important pollster is the European Commission, which publishes general and special “Eurobarometer” based on surveys undertaken in all the members countries. Environmental concern tend to fluctuate in Europe a lot in the surveys provided by Eurobarometer. For instance, during the financial crisis, people had other issues that they were more concerned about than the actual environment. However, in general, ​the media plays a dominating role in determining the focus of the public’s attention, especially towards environmental issues (Thogersen 2006a). Value priorities Pro-environmental consumer behavior has been consistently linked to individual value priorities (Shultz et al., 2005; Thorgersen & Öhlander, 2002). [See Chapter 15, where value research is treated extensively.] ➢ Human values are “​desirable goals, varying in importance, that serve as guiding principles in people’s lives” ​ (Schwartz & Sagiv, 1995:93) – p. 102 in our book. ● Injunctive and descriptive norms are ​not independent. The impact of descriptive norms depends on subjective (injunctive) norms for the same behavior and vice versa (Thogersen, 2008). ● Hence in order to optimize the power of normative appeals, descriptions of what people usually do (i.e. descriptive norms) should be aligned with information about what is expected from a responsible person (i.e. injunctive norms) in carefully crafted messages (Schultz et al. 2008). Self-efficacy Bandura (1986) defines self-efficacy as the person’s confidence in performing a particular behavior – p. 105. Bandura’s proposition is that behavior change is made possible by a personal sense of control. If people believe they can take action to solve a problem instrumentally, that is, if they have a sense of self-efficacy, they become more inclined to do so and feel more committed to the action. It seems (from various studies) however, that the impact of self-efficacy on pro-environmental behavior is ​context dependent​, and also depends on the ​specific behavior ​in question. In sum Consumer motivation to act in a pro-environmental way depends on their individual priorities, environmental concern, attitudes towards specific pro-environmental behavior and internalized norms and sometimes also on their self-efficacy with regard to the specific behavior in question. Regarding norms: not only injunctive but also descriptive norms influence consumer behavior and both types of norms can be effective vehicles with which to promote pro-environmental behavior. ABILITY When pro-environmental behavior falls short of pro-environmental motivation, the reason is constrains on individual behavior. ● Individual consumers have limited resources in terms of time, money, cognitive capacity and knowledge, and in everyday life, lots of activities and goals compete for the same limited resources. ● Pro-environmental behavior is also constrained by the individual’s ingrained habits, which may make him/her unconsciously repeat environmentally harmful behavior (e.g. car driving, eating meat, wasteful showering habits. Limited time and financial resources ● The purchase of premium-priced environmentally friendly products, such as organic food products, is positively correlated with income (O’Donovan & McCarthy, 2002). - Hence, budget constraints limit how much money people invest in protecting the environment. ● Perceived time constraints have also been found to reduce consumers’ purchases of environmentally friendly products (Tanner & Wölfing Kast, 2002). (e.g. we buy cars to make more time and thus continue to harm the environment). Cognitive capacity ● Limited cognitive capacity restricts the average person’s awareness about and attention towards environmental problems. ● Environmental issues compete with other social issues – in addition to the many private issues that consumers need to deal with in their everyday life. Limited knowledge about problems and solutions ● Appropriate knowledge is a prerequisite for environmentally conscious action. ● Even people who are aware of the fact that an environmental problem exists, may be uncertain about what exactly the problem is or what can be done about it. ● When people are uncertain, they are less likely to make an effort for the common good (Biel & Gärling, 1995) Limited skills and task-specific knowledge o ​ ​Pro-environmental behavior often require specific knowledge or skills. o ​Example: only a consumer who is able to distinguish environmentally friendly products from their less environmentally friendly competitors can buy these products. o ​Other examples include the knowledge to adjust the tyre pressure for our car in order to keep the petrol consumption at a minimum. OPPORTUNITY On top of these personal limitations, consumers’ choice options are constrained by a number of external, contextual factors, including conditions determined by nature (e.g. the climate), the society’s infrastructure and available product and service alternatives. Remember the previous example given? With Lisa in northern Finland and Eric from Copenhagen and their availability to organic food. Differences and interrelations between pro- environmental behavior Most consumer behavior is environmentally relevant. Still, consumers are more likely to act in a pro-environmental way in some areas than others. Why? - In general: the variation in the popularity of individual pro-environmental behavior has been attributed to the differences in behavioral costs (Diekmann & Preisendörfer, 2003). - Supplementary explanation: the variation in the salience of environmental issues discussed previously. Whereas behavioral costs and issue salience tend to produce ​differences in environmental behavior, other forces draw in the opposite direction. ● It has been suggested that pro-environmental conduct “spill over” from one behavior to another. ● For example: The higher goal salience subsequently increases the likelihood that the consumer will notice the relevance of ​other types of behavior for the same goal and therefor change this behavior as well. The attitude-behavior gap The frequent finding that consumers’ pro-environmental behavior falls short of their expressed attitudes is sometimes referred to as the “attitude-behavior gap” (Boulstridge & Carrigan, 2000). The motivation-ability-opportunity (MAO) model and research on how pro-environmental behavior depends on consumers’ ​ability and ​opportunity illustrate a key reason for this gap, namely that any specific behavior is the product of several factors, the consumer’s attitude being only one of them. In research into the attitude-behavior relationship, this is sometimes reffered to as the “other factors” explanation for the gap (Zanna & Fazio, 1982). These “other factors” will be discussed in brief in the following sections: OTHER MOTIVATIONAL FACTORS Self-efficacy ​or ​perceived control has been found to increase explained variance in a number of studies of pro-environmental behavior (Harland et al. 1999). This reflects that consumers sometimes strive less hard to obtain pro-environmental goals than they could, and would like to, because they feel powerless. People’s attitudes and norms with regard to pro-environmental behavior are not always completely aligned, for example when the person feels that (s)he should do something that is time-consuming, uncomfortable or in other ways costly. Everyday norms of decency and status may dictate behavior that is environmentally problematic, like driving a crazy-big car. Norms and self-efficacy contribute to the consumer’s motivation to act. Norms and self-efficacy are substantially different types of motivation and are also substantially different from attitudes. As different types of motivation may influence behavioral intentions and behavior, there can be a gap between any one of these motivations and behavior, including and attitude-behavior gap. OTHER NON-MOTIVATIONAL FACTORS As previously discussed, some of these factors are personal (i.e. ability) whereas others have to do with the context of the behavior (i.e. opportunity). Ability It is well documented that part of the attitude-behavior gap for pro-environmental behavior can be attributed to insufficient consumer ​knowledge​ (Thogersen, 2005a). - Consumers with little knowledge or who feels uncertain about the outcomes of acting in a pro-environmental way, are less likely to do so, in spite of a positive attitude. Chapter 5: The Economics of Consumption (pp.117-pp.132) Key words/concepts Economics of consumption; cost of leisure; consumer sovereignty; externalities Purpose The chapter explains the increase in consumption levels with the increased wages as well as the increased labour supply. Higher wages partly explain why households tent to buy new products rather than repair old ones. General discussion of environmental taxes to encourage a shift in consumption towards less negative impact on the environment. Article Summary The economics of consumption (pp.117-120) The basic model of consumer behavior has two main ingredients: a. Preferences constraints - In a given budget, the consumer can choose to consume the most preferred set of goods and services (E.g. renting or buying a house, day care, medical services as well as typical daily goods bought in stores are all counted as consumption.) ​pp.117 - Due to their rationality, consumers are set to make the best consumption choices among all feasible ones. (E.g. Spending your entire income on alcohol may also be seen as rational as long as the consumer has strong preferences for alcohol). ​Pp.118 b. Feasibility (budget) constraints - In the long term, the overall amount of consumed goods and services cannot exceed the income of an individual. (E.g. bank loans to finance consumption are only short term solution as individuals need to spend portion of their future income on paying them back) pp.118 - On the other hand, by spending less than what they earn, consumers will add up money to their bank accounts which would increase future consumption possibilities. ​pp.118 - Overall, in the long term this leads to a consumption value equaling the total income earned (People spend as much as they have earned) ​pp.118 Conclusion to this section is that the consumption will keep growing as long as the people’s income continues to increase – something that won’t stop in the near future as people tent to work more now than 50 years ago. It cannot be expected that people decrease their overall consumption when their overall income increases. ​Pp.118 With this rate of increased individuals’ affluence, the consumption rate will double up until 2050 which would be extremely damaging for the environment unless we start thinking of lowering the environmental impact. ​Pp.120 c. Brief explanation of how productivity and labour supply have developed in Nordic countries throughout the years: (​all info below is from pp.120) - In Norway, working week for men dropped from 49.1 hours in 1972 to 40.3 in 1991. As for women, change was not significant as it went down from 31.8 to 30. - Even if the working hours went down, wages went up due to a higher productivity caused by the increased amount of saving made by consumers. This made people a lot wealthier than 40 years ago - Even if the society have lived through a very tough economic crisis, the productivity growth won’t deteriorate in long term thus making income and consumption even higher Optimisation (pp.120-125) Optimisation models are being used by economists in order to see how consumers would react in changes of the consuming environment (e.g. changing prices of consumer goods/changing income). One of the main researches recently is seeing ​“how prices and income affect the choice between leisure and consumption, which determines the overall level of consumption” ​pp.121 The reason for an increased consumption is related to the amount of working hours done by consumers leading to higher income. Even if it is possible to further reduce their working hours (through strong labor unions pushing the government) in order to have more leisure time and less consumption, people tend to avoid this even if they can afford this. But why is this? ​ Pp.121 Given Example: - In order to buy a laptop that costs 6000 kroner, a person earning 100 kroner per hour, net of tax, would need to work 60 hours for it. So the price of 60 hours of leisure for the person is thus one laptop. Ten years ago, in order to buy a laptop of lower quality costing 12000 kroner, a person earning 60 kroner per hour, net of tax, would need to work 200 hours for it. ​Pp.121 ​(see Figure below) - Similarly, 10 years ago the cost of a refrigerator was equivalent of what a person earned in 2-3 months. Nowadays, he can buy the same products for a price equivalent of him working 2-3 days of work. ​Pp.122 ​(see figure below) - Conclusion is that ​“as wage increases consumers get richer, but at the same time the cost of leisure increases in terms of the amount of consumption forgone when we choose to work less and have more leisure ​”. ​Pp.122 The two main effects of increasing wages are: a. The cost of leisure in terms of forgone consumption will raise à this would make people having less leisure time in order to work more and consume more b. However, as people get richer, they will be able to afford more leisure So at the end a. and b. are pulling each other into different directions. Hence, the economic explanation of why consumption increases would be that as we work as much as before, wages keep raising at some point as well as income which leads to an increasing consumption as a consequence. ​Pp.122 Looking at how taxes influence the consumption and leisure is also important for economists. The general rule of thumb is that taxes reduce the cost of leisure. Example: If a guy works 150 kroner per hour (100 kroner after tax) he will need 20 hours of working to buy a refrigerator costing 2000 kroner. Of these 2000 kroner, around 400 are value added tax(making the real price of the fridge 1600kroner). Thus, if tax was not included, he would be able to buy a refrigerator for less than 11 hours of work (11x150kroner = 1650 kroner against a refrigerator costing 1600 kroner without tax value added). Conclusion is that taxes reduce the cost of leisure (with tax, 20 hours of leisure cost 1 refrigerator, whereas without tax 20 hours of leisure would cost almost 2 refrigerators). The main effect of taxes is to make people do more leisure and consume less. ​Pp.123 ---------------------------------------------------------------------------------------------------------------- --- Chapter 6: Political Consumerism (pp.133-149) Key words​ : ​Political consumerism, boycott, boycott, political consumers Purpose ​: ​The purpose of the chapter is to get us into the political consumerism types and focus on its influence on the Nordic countries Article Summary 1. Political Consumerism defined (pp.133) · What is Political Consumerism? – “conscious consumer uses of the market as an arena for politics” - Focuses on variety of global issues such as: deforestation, overfishing, overconsumption, etc. - Arguing that the industrialization and globalization is harming the environment as well as the human rights. · Four distinct types of Political Consumerism: - Boycotts - Buycotts (anti-boycotts) - the excess buying of a particular brand or product in an attempt to counter a boycott of the same brand or product (e.g. following labelling schemes – explained later on in the summary) - Discursive actions targeting vulnerable aspects of corporate brands (​all information below from pp.136) a. Defined as the expression of consumer views about companies’ irresponsible practices and policies. b. Examples of Discursive actions: * Anti-sweatshops campaigns in the Nordic countries – movements referring to improving the working conditions of workers in ​sweatshops (a place with poor working conditions)​: ​E.g. anti-sweatshop public fashion in public places, campaigns targeting public procurement of work wear for civil servants, direct communication with Nordic garment corporations asking for better policies and practices c. Discursive actions used as tool to advocate new patterns of consumption and new consumer lifestyles *E.g. Adbusters Media Foundation focusing on the problematic nature of the Western consumption patterns. - Lifestyle political consumerism (lifestyle change in consumption patterns) (​all info below from pp.137 and 138) a. Common trait is the skepticism about the ability of consumer demand to force the type of change needed to form sustainable societies. ​Pp.137 b. Thus, people following this type of consumerism are expecting the government or the citizens to take primary responsibility of shifting toward sustainability. They don’t believe in businesses leveraging significant change by themselves. ​Pp.138 c. Most lifestyle political consumers believe in including political activities in their definitions of sustainable living: e.g. voting ​pp.138 d. Others believe that the solution can be found within the civic sphere, requiring cooperation with other community members to influence change at household and community levels. ​Pp. 138 2. Nordic Political consumers (all the above is from pp.134-135) · Political Consumerism is an increasing mainstream gaining importance within the Nordic countries ​pp.134 · Nordic people are in the top of the rankings regarding boycotts and buycotts compared to the rest of the world. ​Pp.134 · Majority of Nordic political consumers are women ​pp.135 · Nordic political consumers have higher level of education and income compared to the rest of the world ​pp.135 · Tendencies show that more middle than working class are engaging in political consumerism ​pp.135 · Politic consumerism is more common for people under 55 years of age ​pp.135 3. Organized civil society efforts in promotion political consumerism (pp.138-141) · ​Old and new civil society are both involved in political consumerism and the development of market-based mechanisms to promote sustainable consumption. · ​ Old civic society examples: - Save the Children Foundation, Red Cross, Churches, Nature conservation groups: all involved in “fair trade” campaigns. - Societies for human treatment of animals: involved in campaigns against the use of whales, seals and fur animals for human consumption, animal testing, etc. - Danish Animal Welfare Society and Animal rights Sweden: Both involved in campaigns such as ones against the fur industry. - Majority of other old civic societies focus on Greening consumption with nature conservation societies in the Nordics promoting political consumerism (E.g. all Nordics Societies for Nature Conservation) ​Detailed examples on ​pp.139 · ​New civic societies (established in the 60s 70s) focus more on the market itself as a tool for change of society behavior. They use the market conditions to craft their activism. Examples of such societies: ​pp. 139/140 - Anti-sweatshops societies · ​ It can be detrimental for the environmental and social justice (E.g. anti-Semestic group who were joined by many Nordics consumers against Jewish merchants between the two world wars) ​pp.146 However, some of the good things about Political Consumerism identified by its supporters are: · ​ It pushes corporations to work on improving their sustainability and behave in a more responsible manner towards the environment and the human rights. à businesses are being transformed into ​sustainable enterprises ​Pp.146 · ​ It is a necessary tool of regulating the market as a crucial regulatory policy at national and international governmental level is not in place at the moment (E.g. Swedish eco-labeling scheme ​Good environmental choice​ was established in 1980 in order to ensure the production of environmental friendly products; Establishment of fair trade labelling schemes ensuring the free trade on workers and farmers in developing countries ​pp.147 In order to really evaluate and assess the ability of political consumerism to promote sustainability a comprehensive model of effectiveness should be develop. This is yet to be done though. Until then, few effects can already be discussed: · ​Much attention on ​politics of products ​on the Nordic countries is being put realizing the negative effects of production and consumption on global environment, human rights and farm animal welfare. ​Pp.147 · ​ Activists convince many corporations that they need to have a deeper look into their production processes in order to reduce the negative impact on nature and human rights. (e.g. Nike, Shell Oil, IKEA) ​pp.147 · ​Organic and Fair trade labelling is also mainstream in the Nordic supermarkets (e.g. Coop advertises fair trade goods). Eco-labelling of paper and washing detergents have also improved the waterways. ​Pp.148 · ​By purchasing fair trade and organic labelled goods, consumers indirectly help the producers to improve economically, environmentally and socially. ​Pp.148 8. Studying political consumerism pp149 Political consumerism can be used in many different studies such as anthropology, economics, geography, politics, etc. Few investigations have been made by scholars of why it has rapidly developed in the 00s of this century: · ​ Some scholars focus on the individual decision making of participating in one of the four different types of political consumerism · ​ Others examine it at group and civil society level including “studies on lifestyle approaches to consumption and on the role of social movements and interest groups in political consumerist process in local, national, regional and global settings” Two main streams of research in political consumerism: · ​ Anthropology: relying on ethnographic methods for more personal level on how consumers integrate their concerns on sustainability in their life. · ​Political science: relying on large surveys in order to map and explain the trends in political consumerism on an individual level. Political scientists are actively participating in developing the term of ​political consumers​. ​Critical comments/limitations - ​Nothing in particular​- Chapter 7 : Public sector consumerism (from page 153 to 165 of the printed version) Short summary: This chapter explains how public services can be organized as a real marketplace in order to empower citizens and give them the status of consumers. Key words: ​consumerism, competition, new public management, citizen empowerment The ‘supermarket state’ metaphor used to describe the following standpoint : The government should be seen as a business and the citizen as a consumer (Olsen, 1988). Public key services such as health care, social care and education have been the focus of the debate. The citizen has the opportunity to choose between those services and therefore becomes a consumer, the state also has to adapt. There are public services that are excluded from the idea of choice (prison). Consumption in the public sector (tax payer’s money) is different that in the private sector (consumer’s own money). Public services are technically free when delivered to citizens. Citizen’s should have the right to discuss the content of the public service because these services are mainly realized thanks to their money. - NPM = new public management / public sector consumerism The concept of consumerism was popularized in the public sector in the UK during the 1980’s. Potter (1988) argues that consumerism in the public sector empowers the citizen. The empowerment process entails that the citizen should be given an identity of a consumer ​ of these services. Why strengthen the consumer position ? Because the status of consumer allows the exit option: if a citizen is not happy with a public service (school) he can easily switch to another one à difficult to evaluate the options in the public sector due to a lack of information. o ​In the case of disabled people, they can easily find relevant information within the voluntary associations taking care of them à autonomous position and more knowledge about the situation à empower consumers and give more choice. o ​When the State gives information (via agencies) , it is very often not adapted/ biased because they don’t know what kind of information citizens want ! Consumerism in the public sector – opportunities and problems (p’ 164) · ​Governments organize markets where citizens can use vouchers to choose between competing providers of services. · ​These initiatives are important because they give the consumer an exit option (free to choose à empowerment à competition à better quality à consumerism) · ​However, providers’ services are very often regulated by the State and it is therefore very hard for them to adapt their offer to citizens’ needs. These regulations tend to protect consumers ·​ ​à Balance between protection and control is hard to define. · ​The knowledge of consumers’ requirements is fairly limited in government agencies and among providers. ·​ ​The individual is influenced by his family and this reduces his empowerment. · ​Citizens don’t have the same level of appreciation/knowledge and don’t make the same decisions (some of them might use the exit option and leave the others behind). Chapter 8: Consumers as judgement , decision making and habits (from page 172 of the printed version) Short Summary ​: this chapter introduces the way consumers make decisions and highlights that their decisions/preference are not always deliberate and stable (explanation of the bias). The concepts of value, utility and judgement are introduced. It also presents the fact that decisions are made by individuals but also as groups (households). Key words: ​expected utility theory, predictive judgements, judgements of value, subjective Expected Theory, habitual choice, heuristics. Introduction Even with the best technological innovations, if we don’t understand the consumers and on what basis they buy à the goal will be missed. Consumers decisions are very often assumed to be deliberate, consistent and result in a good choice of products. Preferences are assumed to be stable → NOT VALIDATED. Individual Decision making (p’174) Making decisions = choosing among alternative courses of action with future consequences. Each alternative has one or more consequences that have utility or value to the decision maker. o ​ ​Predictions – predictive judgements o ​ ​Evaluations – judgments of value The decision is assumed to be made by integration of judgements of the ​value of the consequences and their ​probability ​of materializing in the future. Value = refers to monetary value, utility to value in a broader sense. Expected utility theory (Hastie and Dawes, 2001) : the value and probability of each consequence is multiplied and then added up across all consequences à good decision = the one with the highest sum. People are frequently unable to make good decisions (violation of rationality – Shafir and LeBoeuf). People also make cognitive errors even though the situation is quite easy and only realize the error when it is pointed out to them → Error is made because of a rapid and intuitive mode of thinking. → Realization of errors is linked to an analytical process but it is impossible/unbearable for a consumer to engage in an analytical way of thinking when purchasing decisions are made. Judgement of probability (p’175) Consumers are not always aware of the uncertainties they face. The probability of consequences represents a quantification of the uncertainties. Subjective Expected Theory ​(Edward, 1954): it is assumed that the decision maker forms beliefs about and judges probabilities of consequences. Judgements of probability increase non linearly with objective/real probability (small probabilities are overestimated and large probabilities are underestimated (chart p’176). → An objective/real assessment of prob is either based on a scientific theory or on empirical data but this information isn’t available to people, they use simplifying heuristic methods (rules of thumbs) for making judgements. Several ​heuristics have been identified by research: these methods are sensible ways of assessing risks for example (p’177) Representativeness: an event that is a subset (sous-ensemble) of of a joint event is judged to be more probable than the joint event itself. (in the book they give they examples of the fact that an earthquake is more likely to occur in California than in the US because California is more representative for where earthquakes occur) Integration: Decision Strategies (p’181) Attributes to take into consideration when buying a product: Quality and Price Attributes are assessed prior to choosing a product based on a decision rule which may be either compensatory or non-compensatory. Compensatory decision rule: involves evaluating the alternatives as whole entities, implying that all the products attributes inform the assessment and that the overall impression it gives is then compared with the overall impression given by the other alternatives (undesirable attributes can be compensated with good ones). → Consumers have difficulty assessing conflicting product attributes à they don’t like sacrifices! Non-compensatory decision rule: consumers establish a minimally acceptable cut off point for each attribute evaluated. Brands that fall below the cutoff point on any one attribute are eliminated from further consideration. The aim behind a non compensatory a non-compensatory decision rule is to find a dominant alternative which is better than all the others on at least one aspect and not inferior on any aspect. Most of the time, consumers use heuristics in order to simplify the decision (shortcuts taken when cognitive effort is not wanted). § ​Consumers tend to think that quality is associated with price (price as an indicator of quality). § ​Country of origin as an indicator of origin (makes it easier to choose) § ​Bundles of products also have an impact on consumers’ decision depending on how the 2 products are related (functionally and in time). Habitual choice (p’184) The everyday lives of consumers are not dominated by deliberated conscious decisions. Habit, emotions and traditions frequently have a bigger impact than the analysis of the consequences. Habitual purchases of consumers are repeated and are not perceived to entail any great risk or long-term importance (consequences are not evaluated thoroughly) à quick and effortless action to choose a product that you always choose à the degree of information search and processing decreases and stored memory is used. Because new information about the product might be missed errors occur (‘old’ consumers are also less receptive to product information than new ones) ​Impacts (p’185-186) o ​Consumers can remain unaware that new options/alternatives exist within a product category. o ​Consumers might not notice that the product they have been purchasing for a long time has changed. → measures have to be taken to persuade the consumer to change his habit or choice of brand. - Encourage consumers to employ a more conscious decision making process (make him aware that there are alternatives) - A factor that can help developing new purchases is environmental values. Consumers must first recognize the importance of environmental values before they start considering alternative product and develop an intention to alter a habitual choice. - In general, negative information is more powerful than positive information (if certain apples are labeled as BAD APPLES, nobody is going to buy them whereas the label GOOD APPLES might not even be taken into consideration) - Another way of influencing consumers’ purchasing habits is the use of different types of products on shelves, the position of the products, the atmosphere and design in the store. Household decision making (p’187) Coordination between the consumer’s actions and the values and actions of the people he lives with → interdependence. However, a study shows that individuals often follow their own preferences and attempt to maximize their own benefits instead of trying to include their partner’s preferences and ensure joint benefits à why ? à because it requires work to get to know other’s preferences. ​Conflict-avoidance: § ​Identify shared preferences for objective and concrete attributes (number of rooms wanted when buying a new flat) à a problem remains : subjective preferences are more difficult to discover/communicate (the feeling the flat gives for example) § ​Identify the lowest common denominator (an alternative that partners can both accept) § ​The partners divide decision making between them (gender roles are very often used for this one : women tend to decide on everyday goods that require less financial commitment and men decide about purchases of expensive long-term goods) à but it’s changing !! Conclusions: - ​Consumer decisions are very often not deliberate and consistent and may therefore not result in the selection of product that are best from an objective standpoint. - ​Consumer preferences are not always stable and people want to see/touch the products they buy because they are sensitive to this. Opening: has technological development (online purchases) been on their best interest ? 199 - 201 Involvement and motivation ● Involvement is permanent in nature and can be seen as an ongoing motivational state ● Level of involvement only changes if life-goals alter or the product/its usage undergo remarkable changes ● High involvement is assumed to increase the influence of product-related cognitions (like beliefs and attitudes) ● Low involvement triggers simple decision-making styles and learned behavioural patterns (price promotions have a greater influence) 201 - 202 Role of Involvement Product involvement is influenced by: product characteristics, characteristics of consumption setting and personal characteristics Situational involvement is influenced by: characteristics of processing situation and temporal consumer characteristics 202 - 205 Measuring involvement 205 - 208 Conclusion and managerial implications ● Low involvement products: price reductions, coupons and sampling are beneficial marketing activities ● High involvement products: attitudes need to be influenced; information advertising and clear argumentation (consumers are motivated to search for information) Chapter 10 - Attitudes and Attitude Change Short Summary: ​This chapter deals with the concept of attitudes and attitudes change. Some major influential attitude theories are presented (consistency theories, multi-attribute theories). It is explained how associations with a product and therefore the attitudes towards products and services are formed. Attitudes have an influence on behaviour. Key Words: ​Attitudes, attitudes theory, behaviour, product associations Content: 212 - 217 Consistency Theories of Attitude ● One stream of researchers believes that people strive for consistency in the way they think and feel ● Balance theory: studies how our attitudes are affected by our relationships to other people and our perceptions of their attitudes 214 ● Dissonance theory: puts emphasis on the strategy by which people try to resolve incosistencies (people try to reduce/avoid dissonance of their mind) 215 ● Social judgment theory: says people do not have a general motivation to strive for consistency; it assumes that people always evaluate stimuli in a relative way 217 - 222 Multi-attribute Approaches ● Fishbein-Model is most famous approach: A person's overall attitude towards an object is the weighted sum of his or her evaluations of the attributes that he or she believes the object to have ● Network representations of attitude: strongest and most accessible attitudes are created through diverse, repeated and direct experience with an attitude object ● Automaticity: automatic processes are defined as processes that operate without conscious awareness, are unintentional, are efficient in the sense that they require little processing capacity and are not subject to conscious control 225 Mechanism of Attitude Change ● Changes in the associative structure may result from a new product you tried or liked from repeated exposure ● Incremental changes, takes time and needs exposure to something new The cognitive cycle process can be compared to an automated production cycle; where inputs are received from our senses and the information filtered through our cognitive system until it assumes a format we can operate with (order) - process - [cognitive system component involved in the process] (1) Reception of input materials [Senses] (2) Placement in intermediate storage [Sensory Memory Register] (3) Audit, selection and discarding of inputs [Perceptual process] (4) Scrutinizing inventory control – valuable vs threatening inputs [Attention process] (5) Operations management – positive vs negative input [Working Memory System] (6) Working memory – forming impressions + taking action [Central executive control] (6.a) Immediate response for negative impressions [Long-term memory] (6.b) Further deliberation for valuable data [Conscious, propositional reasoning] Figure 11.1 N.B. The C.C. processes most information automatically, without conscious awareness Continuous feedback from all stages of information processing enable the system to become more efficient > Perpetual learning Perpetual learning > non-associative (does not link two stimuli, or a stimulus with a response) > leads to direct ‘neural network’ that increases speed of stimuli recognition SENSATION (p.235) Sensation > “the stimulation of receptors in our sensory system by internal or external stimuli.” (p. 235) > the most advanced area of psychological research There are 6 sensory systems: (1) Vision (4) Olfaction (2) Audition (5) Somatosensation (3) Gustation (6) Vestibular sense Each sensory system consists of several sub-systems > jointly construct internal representation of stimuli & relay it to the sensory memory registers Adaptation > characteristic shared by most of our senses > continued exposure to the same stimulation leads to decrease in sensory response Our senses are geared towards detection of changes rather than states PERCEPTION (p.236) Perception > “(umbrella term) the process that automatically select, organize and interpret information from the sensory memory registers” so that information acquires meaning E.g. Visual perception involves the following functions: - Feature of detection & discrimination (colour, intensity, shape, orientation) - Depth perception (distance from/between objects) - Motion detection (movement of objects) - Feature integration & binding (grouping into objects, closure, size and object constancy) Perception involves two processes: - “bottom-up” processes driven by stimuli - “top-down” processes that involve existing memory content (allow automatic affective reactions*) “bottom-up” & “top-down” processes are in recurrent interaction with each other *A.A.R. > responsible for ‘gut feelings’ enabling a quick/automatic response to large classes of stimuli > targeted by copycat products who imitate design features such as packaging to trick our …perpetual system into object recognition error, resulting in a state of ‘brand confusion’ ATTENTION (p.237-8) Attention > (Often compared to a spotlight that prioritizes info) “The gateway to our consciousness” > Visual attention is the most intensely researched area Attention (like perception) involves two processes: - “bottom-up” processes driven by salience of stimuli we perceive (more salient = more attention) - “top-down” processes driven by tasks we currently perform, the (integrated) action plans and the desired goals Other classes of stimuli that receive higher visual attention: emotional, socially significant, novel and (stimuli) associated with personal involvement WORKING MEMORY (p.238-9) Working memory > In contemporary theories of cognition – regarded as the seat of our consciousness > consists of 4 subsystems: 1. Central executive: a central control function for attention, information storage and retrieval 2. Phonological loop: a memory buffer for small amounts of audio information 3. Visuospatial sketchpad: a memory buffer for small amounts of visual information 4. Episodic buffer: an intermediate memory buffer where (2) and (3) can be integrated Subsystems (2) & (3) are limited > forcing the working memory system to be selective > resulting in a slow & serial mechanism for processing info > influences consumer decision-making process Sensation, perception and attention in consumer research (p. 240): The cognitive processes outlined above have driven academic researchers to develop ‘consumer theories’ in two particular areas: - Sensory analysis in product development - Visual attention in advertising SENSORY ANALYSIS IN PRODUCT DEVELOPMENT (p.240-3) Sensory analysis > born out of practical need to “understand how changes in product formulation ……………………..would affect the flavor and texture of a product” > main objective: measure the perceptions of the physical attributes of a product eliminating biasing effects caused by brand attitudes + other external factors Sensory analysts typically perform 3 types of research tasks: 1. Sensory profiling: identify the quality attributes perceived in a product 2. Detection & discrimination: analysis of objective + subjective stimulus intensities 3. Preference testing: measuring hedonic consumer preferences + relating them to product aspects Book Chapter 12: “Learning & Memory” (p.249 - 265) By Jens Nordfält Lecture 2: Behavior Decision Theory {chpts 4, 8-12-15} Short summary: Chapter 12 attempts to outline the main methods of learning as well as the different ways in which our memory is able to store information. There are some marketing implications which are explained by examples, even though these are rare and far between. Key concepts Behaviorist, Cognitivist, Brand associations, Memory Structure, Memory Systems. Key words: Classical conditioning, Reinforcements, Punishments, Architectural approach, Operant conditioning, Observational learning, Memory retrieval, Schemas, Exemplars, Scripts, PDP model Purpose: The purpose of this chapter is to outline and elaborate on the three major ways of learning: (1) Classical conditioning (2) Operant conditioning (3) Observational learning Each method is explored in depth in terms of its practical application and effects in the field of brand management. SUMMARY [INTRODUCTION] (p. 249): The entire cycle from “learning” to “making use of what has been learned” > Seen as one process Problems retrieving information from memory > Popular topic of interest in the last decade Brand managers focus has shifted > from: associations their brands evoke > to: what evokes their brand Brands are concerned with effectiveness of advertising > increased attempts to communicate with customer at point-of-purchase (in-store) Three ways of learning (p. 249): Learning refers to “a development of, or change in mental representations, or in behavior that is caused by experience” - Learning can take place involuntarily (when we’re not trying) There are 3 major ways of learning: 1. Classical conditioning 2. Operant conditioning 3. Observational learning TWO APPROACHES: BEHAVIOURIST & COGNITIVIST (p.250) Traditionally, human learning theories are divided into: A. Behavioral > (Behaviorist) argue we learn through conditioning (classical, operant) > emphasize importance of measuring only what can observed (i.e. behavior) B. Cognitive > (Cognitivist) argue humans have ability to ‘mentally control’ stimuli and their effects > assume that all 3 ways of learning involve ‘cognitively controlled processes” Philosophical distances between A + B’s approaches B have blurred in recent years (e.g.) Cognitivist > now agree that many mental processes involved are beyond cognitive control CLASSICAL CONDITIONING (p.250) Classical conditioning schematically contains 4 elements: - Unconditioned stimulus (US) > naturally elicits a response (UR) Example: a subject’s response of fear (UR) to an electric shock (US) - Conditioned stimulus (CS) > only elicits a response when paired with an US Example: (CS = light), (US = electric shock) > (CS) a light (on its own) does not solicit a response > (CS + US) a light paired with an electric shock will give way to a Conditioned response - Conditioned response (CR) > (CS) + (US) = (CR) Cognition is Classical Conditioning (p.251) Cognitivists > learning is not a consequence of conditioning, but of cognitive effort > cognitive effort is mediated/controlled to some extent by expectation Theory enforcing experiment: Two groups of people (X + Y) receive same number of CS (light) + US (electric shock) Group Y > receive additional US (electric shocks) in absence of CS (light) Group X > demonstrate stronger classical conditioning due to stronger expectations Learning Brand Associations (p.251) By associating brand names to meaning (stimuli) > achieves stronger consumer responses Example: consuming beer with a logo/label and without is evaluated differently by consumer Brand associations > create both complex + enduring meanings > tools used: advertising + commercials (e.g. Volvo and safety) - Researches claim that 3 exposures suffice to create an association in the consumers mind (BUT memory trace remains weak) - Maximum salience is achieved by outnumbering competitors (in terms of exposures) who are also competing for same value - Brand familiarity helps because consumer already has strong memory of the brand, therefore existing memory boosts processing of new values - Advertising wear out is a result of over exposure to an advert (consumer loses interest) – BUT can be avoided by varying communication medium - Conveyers (or peripheral cues) commonly used to create brand associations at a conscious or beyond conscious level Example: insurance company using eggshell to convey (via association) values of protectiveness Learning Associations Through Emotions (p.252) Affect transfer > “when an effect evoked by one stimulus is transferred to another” > closely resembles associative learning Mere exposure > refers to people tendencies to like a stimulus after being exposed multiple times > not limited to simply creating new associations but increasing the liking of the Brand as a whole - Stimulus Generalization > “when a person borrows associations from a stimulus that is similar to the stimulus on display (e.g. copycat logos) - Discrimination > refers to the ability to detect differences between two stimuli (opposite of S.G.) (e.g. The importance of Pepsi brand not to be confused with Coca Cola) INSTRUMENTAL LEARNING: OPERANT CONDITIONING (p.253) Operant conditioning > (a.k.a. instrumental conditioning) is a trial-and-error form of learning > occurs as an individual learns to perform behavior that result in positive outcomes (avoiding negative outcomes) The ‘conditioned behavior’ > learned over a period of time (known as shaping) Reinforcement and Punishment (p.253) Operant conditioning occurs in 3 ways: 1&2. Positive reinforcement, Negative reinforcement > used to strengthen behavior 3. Punishment > used to alter behavior Marketing Implications (p.254) Operant conditioning > strengthens patterns of behavior (most related to sales or promotions) > useful marketing technique (e.g. discounts, coupons, bonus points etc.) ‘Ladder’ is a form of competition utilized in grocery shops where customers are incentivized to increase their spending over a certain period of time (rewarded with promotional item). Behavior is triggered by competition + re-enforced by reward > Behavior continues after completion ends Operant conditioning-based communication model: - Transformational products > products where intended use is assumed to generate positive reinforcement (e.g. luxury cars) - Informational products > products used to avoid unpleasant outcomes - i.e. educates consumer Advertising industry focuses on learning - Sales/retail focus on memory retrieval THE NON-CONSCIOUS ASPECT OF MEMORY RETRIEVAL (P.262) Memory retrieval > rarely influenced by non-conscious cognitive processes (referred to as automaticity) There are two types of automaticity > spreading activation and priming > both enhance memory retrieval Spreading Activation (p.262) Spreading activation > “when an activation of one node or a larger area in a mental network leads to other proximate notes becoming activated” > example: using a grocery store as a pantry – i.e. products on display activate areas of memory network that remind the consumer what to buy Priming (p.262) Priming > (post-conscious automaticity) “when echoes of conscious processes affect later experiences” > example: purchasing bread (conscious activity) activates thoughts about eating bread, mentally preparing the consumer to retrieve foods to pair with the bread Consideration Sets (p.263) Consideration sets > consumers make decisions based on limited subset of brands (not total number) due to limitation of WM (working memory) > viewed as special case of spreading activation Nedungadi (1990) study revealed that less preferred alternatives can be chosen over a preferred alternative simply because the preferred alternative was not easily retrieved (in the consumers mind) MASURING RETRIEVAL THROUGH RECALL AND RECOGNITION Two basic measures of retrieval > recall and recognition Two-process theory > “recall involves a retrieval process followed by a recognition process” > recognition scores are almost always quantitatively better than recall scores > recall involves greater degree of reconstruction leading to false recollections Example: recalling the colour of the shirt your professor was wearing in class today – more likely to recall what he/she usually wears Implications for businesses: - Brands ‘on display’ should measure recognition (vision guides consumer decision-making) - ‘Store’ brands (and restaurants) should measure recall (vision does not guide consumer d-m) CONTEXT FACTORS INFLUENCING MEMORY RETRIEVAL Encoding-specificity principle > “the ease of recall is influenced by how well the stimuli present at the time of retrieval match those present at the time of learning” State-dependent retrieval > “refers to the fact that recall is enhanced when a person’s internal state is the same as that when the information was learned” > example: if you study for an exam whilst under the influence of alcohol you are likely to perform better in an exam if you’re drunk at the time of taking the exam (true story) Retrieval cues > used by companies to help consumers remember advertising messages in-store > packaging is especially important (can be used in advert) Critical comments/limitations: Some more empirical examples to help understand the marketing implications of the outlined theories would have been much appreciated. Concepts are too broad and leave the feeling of having read through a book for a physiology degree, as opposed to international marketing. Chapter 13: “Personality and Self” (pp. 269-284) Short summary: Human beings live in and interact with a reality larger than themselves. The present chapter presents some previous and current theories about the influence of ​personality​ and ​self ​on individual’s behavior. Chapters’ first part deals with research on personality and the second party with research on the self. People shop to fulfil their self identity and to live up to an ideal self. Protecting and developing self-esteem is a powerful motive for humans, and a common way to accomplish this appears to be through social recognition. Key words: ​Personality, Self, Individual, Collective, Ego Personality General Overview Cause of behavior primarily located within the individual ·​ ​Trait theories (cattell, H. Eyseneck, Costa & McCree Cause of behavior located within and outside of the individual ·​ ​Psychoanalysis and Psychodynamic approaches (S. Freud, A. Freud, Adler, Horney ·​ ​The humanistic tradition, “third force” (Rogers, Maslow) ·​ ​Cognitive personality theories (Heides, Carver & Scheier; Troupe & Lieberman) -​ ​The trait-situation interaction approach ​: ​developed as compromise between the trait and situationistic appraoaches. (p.271). ·​ ​ (Endler & Magnusson) Cause of behavior primarily located outside of the individual ·​ ​Behavioristic theories (Watson, Skinner) ·​ ​Cultural-historical school and Activity theory (Vygotsky, Leontiev) ·​ ​The ​situationistic ​approach (Mischel) Table 13.1 Common personality theories (in parentheses, important researchers) P. 270 o​ ​Conduct rewarded (“reinforced”) by the environment tends to be repeated. o​ ​Conduct that is punished tends to disappear. (not specific which behavior will be repeated, therefore the concept of reinforcement has been criticized as lacking theoretical foundation) Coginitive personality theories (p.277) o​ ​Emphasizes the importance of the individual’s construction of meaning on the basis of his or her pre-understanding. o​ ​Pre-understanding ​à ​ ​prior knowledge,​ but in this context knowledge is not necessarily true in relation to reality, but is a ​conception ​ of reality o​ ​Individual’s conscious and unconscious thinking processes are important for the regulation of behavior. o​ ​Attribution: ​how humans attribute causal properties to their environment o​ ​Behaviour caused by internal (e.g. dispositions) or external factors o​ ​Later, cognitively oriented theories integrated human motivation and human goal striving into their explanations of behavior Construal Level Theory (CLT) (p.278)​: our understanding and planning are influenced by the time dimension. -​ ​Planned behavior in the more distant future we tend to apply principle and central values (e.g. protect the environment). -​ ​Behavior in the present we tend to rely more on detailed pragmatic and hedonistically oriented ad-hoc reasoning (e.g. this morning it will be quicker to take the car than the bus) This explains the presence of grand plans for the future that are pooly implemented when the time comes to put words into action. Cognitive Styles: ​assumes that individuals differ in their ways of perceiving, thinking, making decisions and problem solving, but that a specific individual will tend to stick to a specific cognitive style Need for closure concept: ​Some individuals like to deliberate on their decisions while others have a desire for quick answers, or closure, to questions or problems and may tend to avoid ambiguities. The Self (p.278&279) How people understand themselves, their properties, what they are and how they function etc. 1)​ ​Individual part 2)​ ​Collective part Me (the known): ​The I has to do with the person’s self-awareness and feeling of agency, and the Me with the persona’s self-concept or understanding of him/herself. Self-Schemata: ​generalized knowledge that structures the topic of person’s self, that is, they represent generalized self-understanding. The Schemata are derived from the person’s experience and especially rom ​repeated ​ experiences. Information Extended Self – e.g. the feeling one gets when their property is lost or stolen. Individuals and presumably societies, vary with respect to the degree to which they identify with their property. The working self concept (p.279) Working-self: only a subset of an individuals self-schemata is active at a specific time. Aspects where one is in minority in a social situation tend to be activated. An adult person among children will be more conscious as an adult. Possible selves (p.279&280) ·​ ​Him/herself in possible future situations, some of which are seen as very likely to occur and others as quite unlikely. ·​ ​Not neutral to the person. Instead they are more or less desired or feared. Impression management (p.280) The phenomenon that most individuals, to a variable extent monitor the expectations of the social surroundings and adjust their behavior and appearance accordingly. 1.​ ​Social (e.g. expressed opinions and emotions) 2. Material (e.g. clothes, furniture in one’s home and means of transportation) Most people present different aspects of themselves depending on the context. Independent and dependent selves (p.281) o ​ ​Non-western societies tend to be more collectivist Seems to be greater tendency for people to see themselves as dependent on others as integrated into a social network with other people, especially family, relatives and friends. o ​ ​Western societies more individualistic in their orientation See themselves as fairly independent, quite detached from others, with clear and explicit notions of what characterizes themselves with respect to fairly stable properties, values and preferences. Chapter 14: “Customer Satisfaction and Loyalty” (pp. 285-300) Short summary: An examination of the satisfaction-profit chain with a particular focus on the link between satisfaction and loyalty. Key words: ​customer, loyalty, behavior, satisfaction, link Introduction (p.285) Customer loyalty is related to revenues and costs in such a way that loyal customers are likely to be more profitable than less loyal customers. Satisfaction à increased loyalty Satisfaction + Loyalty + Profitability = satisfaction-profit chain The satisfied customer What is customer satisfaction (p.286) A function of the match between: A) The customer’s expectations of an offer prior to the purchase B) The customer’s perceived performance of an offer prior to purchase. Negative results = dissatisfaction Positive results = satisfaction However, this does not provide an answer to what satisfaction is. 1) Customer satisfaction is an evaluative judgement made by the customer who has purchased or consumed a particular offer. Evaluative aspect: attitudes, images, emotions perceived quality – and reflects that evaluations along a negative-positive dimension. Negative-positive dimension is defined in terms of two end points: very dissatisfied and very satisfied. 2) Customer satisfaction is a post-consumption evaluation and occurs after an offer is consumed. (p.287) Experience-based construct. Only those who experience it can respond in terms of satisfaction. 3) Subjective evaluation. Every customer will be equally satisfied (or dissatisfied) in their consumption of an identical offer. One of the main reason why marketers are interested in customer satisfaction is this potential of behavioral influence. Objectivity-versus-subjectivity. How might the customer\s level of satisfaction be identified (p.288) Multi-item measures – to collect satisfaction data from each customer in a survey. Responses are then subject to a reliability analysis. High reliability à proceed to compute/analyze. Empirical data support this assumption (<50% satisfaction) in terms of re-purchase intentions, however this is not the only determinant thus indicating other factors, also contribute to re-purchase intentions. Conclusion: “satisfaction seems to be responsible, to some extent, for customers’ re-purchasing intentions”. Loyalty-producing factors other than satisfaction 1.​ ​Emotion: Satisfaction arguably one among several emotions, most favored among marketers although some argue that “delight” represents emotions with a higher positive charge and may have stronger effects on loyalty. 2.​ ​Switching Barriers: a set of factors which make it difficult for the customer to switch from one supplier to another, and can therefore enhance loyal behavior despite the fact that the customer may not be satisfied. Conclusion Customer satisfaction, it is argued, is an evaluative judgement at a global level that occurs after an offer has been consumed, and a subjective state of mind with a potential to affect behavior. Customer loyalty is a more complex construct, in the sense that it has been used to cover both mentality and behavioral aspects – over time- in the relation between a customer and an offer. Chapter 15: Lifestyle and Values Quotation: Hannsen, T. (2010). Values and Lifestyles, in: Ekström, K.M. (ed), ​Consumer Behaviour A Nordic Perspective ​, Lund: Studentlitteratur AB, pp. 307-324 Focus of Article / Chapter: ❏ values and norms are criteria used by individuals to select and justify actions, value objects and other's behaviour ❏ values are grouped into social and personal values ❏ consumer's preference for certain values is expressed through activities, opinions and interests and consumption ❏ measurement scales such as RVS, LOV, VALS can be used for measuring values and lifestyles ❏ lifestyle analysis is a popular tool in marketing management decision making (tailoring an offer to a lifestyle) ❏ e.g. Knorr lasagne, designed to meet demand for quick and easy food preparation, modern consumers do not always have the time to cook meals from scratch and therefore offers a product that can be "individualised" through consumers own choices Key Words/ Questions Lifestyle, Values, Measurement Scales What drives human behaviour? → Two major theoretical perspectives Article Summary: 15.1 Introduction Behavioural Decision Making Perspective (BDT) (307) ● focus on the consumer as an individual ● three theoretical dimensions behavioural dimension ○ consumer as a "black box" ○ consumers' behaviour is conditioned response to marketing stimuli ○ mental processes are not considered information processing dimension ○ consumer behaviour as an ongoing cognitive process ○ consumer develops beliefs and attitudes towards the environment in order to make decisions hedonic / affective dimension ○ affects like emotions should be included in consumer decision-making ○ consumer looks for new experiences via consumption ○ main goal is to fulfil desire and obtain pleasure in life Consumer Culture Theory Perspective (CCT) (p. 307) ● focus on the consumer as asocial being ● culture as the fundamental determinant of a person's wants and needs => values and norms are developed as a guideline for behaviour ● values and norms as a criterion for human beings to select and justify their actions and value objects & behaviour of others 15.2 Values (308) ❏ t​erm "culture" is often used to describe differences and similarities across nations / groups of nations ❏ across nations, differences can be found in e.g. religion, food intake, social customs, language ❏ differences can also appear within one nation ("sub-cultures") ❏ nations and general values of a nation (e.g. freedom of speech, equality) = the overall structure within which the individual / group of individuals form their own perceptions and evaluations of the world ❏ broad psychological constructs influencing interests, opinions and behaviour ❏ central to decision-making ❏ "the ultimate source of choice criteria that drive buying behaviour" (Vanden, 1995) ❏ definition ​: "trans-situational goals that serve the interest of individuals or groups and act as guiding principles in consumers' lives" (Schwartz & Sagiv, 1995) ❏ not in a particular situation (contrary to attitudes) ❏ social values = desired behaviour or end-state for a society or group ❏ personal values = desired behaviour or end-state for an individual 15.3 Lifestyles (p. 309) ❏ how consumers fit products and services, resources and activities into their daily life ❏ subject to change ❏ influenced by social and personal values ❏ actual behavioural outcome of a lifestyle may be subject to available resources and competencies (behavioural barriers) ❏ behavioural barrier = consumers do not have unlimited amount of mental, physical, time or financial resources to pursue lifestyle ❏ companies can target ❏ "upper-class lifestyles" restricted to only a few people ❏ lifestyles attainable by "everyone" ❏ definition ​: "lifestyles are defined as patterns in which people live and spend their time and money" 15.4 Combining Values and Lifestyles (p. 310) ❏ lifestyle as a reflection of personal and social values ❏ therefore, not only a matter of AOIs (activities, opinions, interests) but a link between individual's psychology and behaviour ❏ consumer preferences for certain values are expressed through activities, interests and opinions and ultimately consumption ❏ Example: activities may be preferred by a person who values excitement (fast car, mountain bike, bungee jump) ❏ Example: activities may be preferred by a person who values security (going for a walk, attending church services) ❏ measurement of consumer lifestyles by asking questions about ❏ activities (work, hobbies, vocation) ❏ interests (family, job, community) ❏ opinions (about themselves, others, social issues, politics, business) Hierarchical Value-Lifestyle-Behaviour Model (311) while in the above mentioned model, there is no direct link between values and behaviour (only weak connection) intervention of lifestyle between abstract goals (personal values) and situation-specific product perceptions and behaviours ❏ products selected on the basis of search attributes (books, computer products, travel etc.) are fast-selling online ❏ products like groceries still face difficulties in consumer spread and a large number still resists online buying even if this would provide advantages (convenience, ease of shopping) ❏ possible explanation: notion of being too risky, too expensive (delivery costs), too complex ❏ according to a Swedish study, grocery shopping is related to social normative influence ❏ retailers therefore may try to communicate that buying online is a socially approved shopping mode ❏ attraction towards online grocery shopping differs between personal values ❏ e.g. consumers emphasising conservation values are likely to find online shopping less attractive ❏ e.g. consumers emphasising self-enhancement values are likely to find online shopping attractive The VALS System (316-318) ❏ usage of consumer personality traits to create consumer segments in the marketplace ❏ personality traits are referred to be underlying motivation for consumers' behaviour ❏ American lifestyles based on psychological traits and four demographics ❏ usage of both psychographic characteristics (e.g. motivation) and resources (income, education, energy level) ❏ consumers are inspired by one of the following ❏ ideals (guided by knowledge and principles) ❏ achievement (seek products demonstrating success to social surroundings) ❏ self-expression (seek social or physical activity, variety and risk) ❏ 8 lifestyle groups ❏ innovators: successful, high self-esteem ❏ achievers: conventional, realistic ❏ experiencers: impatient and impulsive ❏ believers: respectful, loyal ❏ strivers: social, trendy, but also unsure about themselves ❏ makers: self-sufficient and practical ❏ survivors: cautious, conformist ❏ backwards-segmentation procedure = comparison of similar types on behavioural characteristics ❏ forwards-segmentation procedure = first grouped according to behavioural characteristics 15.6 The practical use of Values and Lifestyles (318) ​values and lifestyles = psychographic variables, used for understanding consumer behaviour and consumer segmentation ❏ lifestyle may provide some insight into purchasing patterns, but other factors (product evaluation, available resources, situational factors) have to be taken into consideration, too ❏ no one-to-one relation between personal values and lifestyle ❏ individuals are part of different social contexts, taking over different "roles" and actual behaviour might differ in different settings ❏ lifestyle analysis as a popular tool in marketing management decision making ❏ tailoring an offer to the lifestyles of a particular market segment ❏ Example: women's clothing preference is more affected by lifestyle rather than age ❏ Example: launch of BMW 3 "lifestyle edition" ❏ different types of lifestyle such as "green", "relaxed", "Nordic" have been included in daily language ❏ Example Nordic Lifestyle ❏ second home ownership is common in Scandinavia (Summer / Winter house or houses abroad) ❏ houses majorly serve the purpose of vacation and recreation, but are also used to illustrate Scandinavian way of living and to attract tourists Chapter 16: Taste and Fashion Quotation: Skov, L. (2010). Taste and fashion, in: Ekström, K.M. (ed), ​Consumer Behaviour A Nordic Perspective ​, Lund: Studentlitteratur AB, pp. 325-339 Focus of Article / Chapter: ● taste and fashion in relation to consumer culture ● change from vertical / hierarchical segmentation towards horizontal / micro segmentation ● rapid turnover of trends, which is difficult for marketing managers to keep up with (supported by specialised trend agencies) Key Words Taste, Fashion, Trends, Veblen, Conspicuous Consumption Summary Groups formed around taste and fashion when people develop preferences by observing others and adjusting their own behaviour, to fit in or stand out. 16.1 Taste (p. 325) concrete level abstract level ○ located in the mouth, together with smell discerning whether things are not to eat ○ sense of taste can give pleasure ○ activation of taste through direct contact with an object (therefore considered as a lower sense) ○ aesthetic appreciation for music, art, literature etc. ○ "good taste" refers to a person being educated, sensitive, refined ❏ taste is mediated by culture and society ❏ different styles of taste depending on respective culture ❏ different hierarchies of taste (good and bad taste) in different cultures, mostly upper classes associating "bad taste" with the lower classes ❏ therefore, the upper classes have an economic advantage and can define was is tasteful Bourdieu's Study / "Distinction" (1979) (p. 326) ❏ relationship between ❏ class: education, class origin ❏ taste: food, music, art, cultural forms ❏ correlation between three large class formations: upper, middle, working class & aesthetic preferences ❏ notion of good taste acts as symbolic power, making differences in income and education appear as differences in individual sophistication ❏ the study of good and bad taste can give insight into the stratification of society ❏ origin and education give people a basic disposition orienting themselves towards certain kinds of jobs, fun, talking, political attitude = ​habitus​ = "a set of acquired patterns of thought, behaviour and taste" ❏ interest in changing class system ❏ emergence of a new class of "new cultural intermediaries", well-educated people whose work is based on their "good taste" ❏ being both producers and consumers of the cultural economy ❏ coming from lower class backgrounds ❏ aesthetic appreciation can be learned Richard Florida (2002) ❏ "creative class" ❏ economic growth is dependent from this "creative class" (designers, musicians, software developers) ❏ in fashion / music / film industries, overproduction is rational ❏ reason: no prediction can be made whether a product will be a "hit" ❏ problem of information inbalance and market uncertainty ("​knowbody knows​" property of creative industries) ​16.4 Fashion and the Nordic Countries ❏ argumentation that fashion trends thrive towards an egalitarian society ❏ linking fashion and democracy ❏ rigid class structure: specific rules about what is (not) appropriate ❏ less fixed class structure: social play of fashion, creating similarity and difference ❏ fashion has a growing importance in today's society ❏ Example Nordic Countries: no rigid class segmentation (as it is e.g. still the case in France), culture shaped by ideal of egalitarianism ❏ therefore, the Nordics have a strong appeal for the new / product-tests ❏ general willingness to embace social change ❏ egalitarianism as the success to the Nordic fashion industry (e.g. H&M) ❏ Nordics have a strong tradition for outdoror activities and therefor special clothing for this ❏ design ideals: functionality and freedom of movement ❏ additionally, design movement since the 1990s (Filippa K, Acne...) ​16.5 Trends ❏ increase in willingness to try new things ❏ faster development of trends compared to the past - not limited to the fashion industry only ❏ emergence of "trend spotters", a new profession dealing with trend analysis ❏ method: analysis of "elite consumes" to identify where the commercial market will develop in the future ❏ distinction between fashion leaders and followers ❏ fashion leaders are e.g. princesses in Scandinavia followed and imitated by fashion followers ❏ other lead users are individuals dedicated to a specific lifestyle ❏ distinction of elite consumers between those who have influence (wearing pieces publicly) and those actually experimenting with new trends (providing something new) Critique: ● critique on distinction between elite and mainstream consumers ● argumentation that a mainstream consumer, following trends that have been defined for them ● instead, all consumers act actively and creatively Chapter 17: Consumption and Inequality (p. 341-358) By Torbjörn Hjort & Tapio Salonen Focus ​:​ This chapter deals with the increasing consumption patterns arising from increasing incomes and demand especially in Nordic countries. Consumption seems to be the most significant social marker in western affluent societies. The aim of this chapter is to take a closer look at the ​low income consumer and discuss the understanding of scarcity in midst of affluence ​ (analysis of welfare distribution: balance/non-balance of income and expenditure). Keywords: poverty, scarcity consumption, welfare society, inequality consumption Introduction (p. 341) - ​Today, with the increase in income and consequently, demand, it is not anymore important how much money we have or earn, rather it seems to be more important how and what we spend our money on --> e.g. it is regarded to better spend on a ergonomic and expensive mattress than a simple cheap one o ​This transformation of society affects different groups in different ways: “What does it mean to live in a society that is characterized and impregnated by consumption and messages of consumption but not be able to participate in it, at least not to the degree that is considered normal?” (p. 342) o ​Important to understand norms, codes and borders that are constructed in consumer society and how they govern opinions regarding and feelings of inclusion, exclusion and participation Consumption as a sphere of welfare (p. 343) - ​Consuming food, clothes, home electronics, etc. is an everyday activity that is difficult to disregard when describing spheres that can be included in the concept of welfare - ​Reasons why consumption was never considered in welfare studies: o ​consumption was seen as a private matter and we often consider welfare to be a sphere that is managed by state o ​consumption based more upon an idea of the individual as an agent - ​“if we look consumption as a sphere of welfare, money or income is a dominating tool for determining participation” (p. 344) o ​But there are others such as access to markets, knowledge and competence - ​In fact, markets of goods and services do not treat everyone as equal presumptive consumers à some groups are privileged and some are discriminated against à consumers with few resources have to cope with more difficult and often more expensive circumstances than other consumers à this indicates that there are similarities w.r.t. spheres of work and education, certain qualifications and resources are required in order to be included and reach a secure position - ​“during last decades, research has highlighted consumption as a vehicle with which to obtain citizenship in a consumer- and market-based society” (p. 344) - ​“Skills and competence to plan, choose and rationalize according to dominating norms and expectations are more or more less a requirement if one is to be regarded as “well-deserving” citizen” (p. 344) - ​Traditional view of the citizen: individual with rights in relation to welfare state turning towards the consumer who is supposed to choose out of different options - ​Not much research done of knowledge asymmetry, inequalities or structural hindrances and barriers in marketing of goods and services w.r.t. to consumption and welfare yet - ​Consumption plays a role in how we present ourselves and how we perceive others à style, image and taste are main issues in social consumption (no one wants to be labeled as “poor” today) - ​Consumption can be seen as encompassing three main topics: 1. Consumption that aims at survival and is based on products like food, clothes, and shelter and other items considered by the general public as necessities à number of items that are considered as necessities is increasing 2. Second motive is based on social emulation and the striving for normality, or to be and appear like everybody else 3. Consumption can be understood as a way of separating oneself from majority, e.g. not being like everybody else a. Another concept used to describe the latter motive is social distinction o ​First motive is mainly based on material or basic necessities, the other two are based on the symbolic dimensions of consumption and linked to social comparison - Social distinction: being different from the majority and express exclusivity or belongingness (real or imagined) to a certain group - ​Understanding of consumption as a social phenomenon and as a dimension of people’s welfare requires a conceptual meeting of the two research strands consumption and welfare Consumption and unequal financial conditions (p. 346) - ​This section focus is on the relation between consumption and inequality regarding people’s living conditions and how this relation can be understood from different analytical perspectives - ​One way to describe financial inequality among population is to measure household income o ​Housing situation can be described as stalled and defensive and trying to avoid negative mobility to a poor and socially burdened area if the family has not already lived there à every change, even the smallest, in income or expenditure is perceived as a threat to the housing situation o ​The social security systems are seen as insecure and changeable, it is difficult to plan income through these systems, even in the short-term o ​Prioritization of children: parents stand back and consume less in favor of children o ​Dependence on network and also weakness regarding resources in network: low income families describe a situation of catastrophe if they cannot get financial help from family or friends - ​Two pits regarding reasons for family difficulties: o ​1 ​st​ pit: Blame the structures that low income consumers are victims of an unjust distribution of resources and opportunities o ​2 ​nd ​ pit: Blaming the individual for lack of competence, skills and moral judgments - ​2 conditions and ways of talking about the mechanisms that structure the conditions for low-income consumers: 1. Those that can be identified as explicit hindrances and barriers that make consumption more difficult and expensive for people on low incomes a. These obstacles and barriers can be divided into three different types: i. Exclusion: sets rules for opportunities and admission, in that without certain qualifications access is denied to different types of contracts and credit arrangements ii. Aggravating: governs access to certain kinds of financially advantageous consumption iii.Making dearer: concerned with price; households with few financial resources often lack buffer that enables consumers to save money à results in consumption that is more expensive than that of mainstream households 2. Conceptions and norms for how households in general and those with scarce financial resources should consume a. Conceptions are linked to ideas about how to be rational and economical, as well as being an active consumer who aims to be like everybody else and not deviating b. Avoiding consumption that is wasteful and unnecessary à irrational - ​Strategies on how to deal with different consumption demands and budget of low income families: o ​First two strategies are internal and external 1. Consumption as Compensation for a situation characterized by scarcity and privation a. Children seen as victims, parents buy items to allow them to be part of society 2. Consumption as Cover-Up strategy: consuming certain items and activities to cover-up a scarce financial situation from the judgment of others 3. Privation strategy: struggle to go without goods and activities that everybody else seems to have or do à being extremely economical and having strict control of every expenditure à family saves small sum of money to cover unforeseen expenditure, risk of being seen as poor and deviant 4. Last minute strategy: not paying for or buying anything before it is necessary à a way of having control over the money as long as possible, or not paying for something without cause 5. Avoid situation strategy: can reveal scarcity à tied to feelings of shame (e.g. avoid inviting people for dinner) - ​Those strategy are used time to time in most families or in a temporary financial downswing à for low income families these strategies are not temporary ways of acting but are something characterized in everyday life - ​Comparison of low income and middle income class household in terms of consumption: Low Income Class Middle Income Class - ​Talk about consumption as problematic and forced upon from outside - ​It is others who decided what to consume and they try to consume like everyone else - ​Feelings of being burdened by consumption demands - ​Seldom see consumption linked to excitement - ​Self-confident and security regarding consumption behavior - ​Describe themselves as competent to make right choices and decisions in relation to external expectations and to their own needs or happiness, rather as negative and problematic Conclusions (p. 355) - ​This chapter elaborates consumption in a context of welfare with a special focus on low income or poverty - ​Consumption plays an important role in our daily lives à it concerns expansion of supply of goods amplified by marketing and media - ​Our social and cultural identities depend to a major extent on our behavior as consumers o ​Normative element is vital correction of the expert judgment and aids the interpretation of quantitative empirical data o ​Enhance legitimacy of budget by anchoring its principles in everyday reasoning Criticism (p. 369) - ​Main challenge of standard budget is legitimacy - ​3 principle critical arguments against standard budget: o ​First related to subjective (normative) judgments o ​Second and classical argument is that approach relies on “absolute” conception of human needs (p. 369) à consumer level varies over time, across cultures and across social groups o ​Third is die dubious political implication of standard budget if used in practical manner - ​Standard budget may be placed at core of classical economic theory (classical poverty tradition) Real income as an historical concept (p. 369) - ​Two important European traditions utilize the empirical data of consumption and consumer expenditures and levels of living: the central European tradition of wage conditions and levels of living for working class and British tradition of studying poverty Poverty studies (British tradition) (p. 370) - ​Rowntree (1871-1954) is most prominent representative of classical tradition and known for method of delimiting poverty o ​He defined poverty and creates link between income and basic need à developed objective and explicit criteria for what is necessary and what is not o ​Based on budget method, he links needs with consumption and consumer items à constructed a basket of goods with objective needs § Goods consisted of necessities like food, clothes, rent and other goods and content of food basket was supposed to satisfy the energy needs of an adult make undertaking moderate physical activity à used nutritional knowledge o ​Given the male food basket he diverted the equivalent for females (80% of males) and children of different gender o ​He collected clothes in the basket by asking the poor about their opinion what is necessary The central European tradition (p. 371) - ​Ducteptiaux (1804-1868) form Belgium, Le Play (1806-1882) from France and Engel (1821-1896) from Germany were founding fathers of modern, empirical studies of levels of living - ​Ducteptiaux: studied in detail the expense profile of three income groups where both parents were alive with 4 children o ​He found three levels of living: 1. Families that were “in need”, e.g. lived in poverty (p. 371) 2. Families with income sufficient to cover the expenses 3. Families capable of saving some part of income o ​He also made classification of different consumption areas: 1. Expenses of a physical and material nature 2. Expenses of a religious, moral and intellectual type 3. Expenses of luxurious and improvidential type o ​He concluded in his analysis that the poor and relatively well off spent practically no money on expense type 2, but a significant amount of money on expense type 3 - ​Le Play: collected huge amount of information regarding localities and physical environment, religion, health etc. via interviews and observations across countries relating material to a household’s level of living - ​Ernst Engel: based on Le Play and Ducteptiaux analysis he conducted a generalized re-analysis of budget data o ​Documented stable relationship between household’s total income, the income spent on necessities like food and other more high-grade expenditure o ​He found that “households with high income spent more money on food than households with a lower income, but that the higher income, the proportion of total income spend on food is lower” (named as Engel’s law) (p. 372) o ​Engel’s law ​: “the share of the total consumer expenditure spent on food is the best indicator of the material living standard of the population. The poorer the family the higher proportion of the total expenditure is spent on food” (p. 372) The modern level of living analysis and consumption (p. 373) - ​Standard budget has been applied in three different ways: - ​First, it is used as an aid for single consumers struggling to create their own budget o ​In modern society, study of levels of living is no longer profound, rather study of income has gained ground o ​In European Community, poverty is defined as the proportion of the population with an income of 60% or less of the median income à income distribution is the principal evaluation scale, not specific levels of living o ​ Income definition of poverty is a practical measure that is well suited to monitoring the development of inequality, but that fails to define people in real need - ​Second, application of standard budget is private and public institutions efforts to set “livelihood” levels that functions as norms for what different households needs for daily consumption - ​Third, standard budgets are used as an input in economic analysis o ​National banks used it to estimate debt burden and economic robustness among households o ​These analyses utilize the budget estimates of the cost having a reasonable consumption level or portion of the income spent on reasonable but necessary consumption The Future Challenges for Standard Budget Methodology (p. 377) - ​Strength of standard budget in Scandinavian countries: o ​All three budgets are constructed by initiative from a consumer organization à are experts and have knowledge to estimate consumer expenditure - ​Weakness of standard budget: dependency on consumer organization in the changing priorities of consumer policy o ​Today, household economy is no longer a priority o ​Consumer today is well protected, educated and has enough tools to be able to act rationally and thus, must be responsible for own actions o ​Include better functioning of market and safeguarding the contested consumer interest - ​Future of standard budget and its methodology lies in cooperation between consumer research, consumer organizations, welfare research and agents interested in development of real income - ​Critical challenge is the balance between normative reasoning and empirical research