CONSUMER

BEHAVIOR
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Consumer Psychologist Facebook Forum

Lars Perner, Ph.D.

Assistant Professor of Clinical Marketing
Department of Marketing
Marshall School of Business
University of Southern California
Los Angeles, CA 90089-0443, USA
(213)?740-7127

CONSUMER BEHAVIOR:
THE PSYCHOLOGY OF MARKETING
Introduction
The study of consumers helps firms and organizations improve their marketing
strategies by understanding issues such as how

• The psychology of how consumers think, feel, reason, and select

between different alternatives (e.g., brands, products, and retailers);
• The psychology of how the consumer is influenced by his or her
environment (e.g., culture, family, signs, media);
• The behavior of consumers while shopping or making other marketing
decisions;
• Limitations in consumer knowledge or information processing abilities
influence decisions and marketing outcome;
• How consumer motivation and decision strategies differ between
products that differ in their level of importance or interest that they
entail for the consumer; and
• How marketers can adapt and improve their marketing campaigns and
marketing strategies to more effectively reach the consumer.

One "official" definition of consumer behavior is "The study of individuals,

groups, or organizations and the processes they use to select, secure, use, and
dispose of products, services, experiences, or ideas to satisfy needs and the
impacts that these processes have on the consumer and society." Although it is
not necessary to memorize this definition, it brings up some useful points:

• Behavior occurs either for the individual, or in the context of a group

(e.g., friends influence what kinds of clothes a person wears) or an
organization (people on the job make decisions as to which products the
firm should use).
• Consumer behavior involves the use and disposal of products as well as
the study of how they are purchased. Product use is often of great
interest to the marketer, because this may influence how a product is
best positioned or how we can encourage increased consumption. Since
many environmental problems result from product disposal (e.g., motor
oil being sent into sewage systems to save the recycling fee, or garbage
piling up at landfills) this is also an area of interest.
• Consumer behavior involves services and ideas as well as tangible
products.

• The impact of consumer behavior on society is also of relevance. For

example, aggressive marketing of high fat foods, or aggressive marketing
of easy credit, may have serious repercussions for the national health
and economy.

There are four main applications of consumer behavior:

• The most obvious is for marketing strategy—i.e., for making better

marketing campaigns. For example, by understanding that consumers
 are more receptive to food advertising when they are hungry, we learn
to schedule snack advertisements late in the afternoon. By
understanding that new products are usually initially adopted by a few
consumers and only spread later, and then only gradually, to the rest of
the population, we learn that (1) companies that introduce new products
must be well financed so that they can stay afloat until their products
become a commercial success and (2) it is important to please initial
customers, since they will in turn influence many subsequent customers’
brand choices.
• A second application is public policy. In the 1980s, Accutane, a near
miracle cure for acne, was introduced. Unfortunately, Accutane resulted
in severe birth defects if taken by pregnant women. Although physicians
were instructed to warn their female patients of this, a number still
became pregnant while taking the drug. To get consumers’ attention,
the Federal Drug Administration (FDA) took the step of requiring that
very graphic pictures of deformed babies be shown on the medicine
containers.
• Social marketing involves getting ideas across to consumers rather than
selling something. Marty Fishbein, a marketing professor, went on
sabbatical to work for the Centers for Disease Control trying to reduce
the incidence of transmission of diseases through illegal drug use. The
best solution, obviously, would be if we could get illegal drug users to
stop. This, however, was deemed to be infeasible. It was also
determined that the practice of sharing needles was too ingrained in the
drug culture to be stopped. As a result, using knowledge of consumer
attitudes, Dr. Fishbein created a campaign that encouraged the cleaning
of needles in bleach before sharing them, a goal that was believed to be
more realistic.
• As a final benefit, studying consumer behavior should make us better
consumers. Common sense suggests, for example, that if you buy a 64
liquid ounce bottle of laundry detergent, you should pay less per ounce
than if you bought two 32 ounce bottles. In practice, however, you often
pay a size premium by buying the larger quantity. In other words, in this
case, knowing this fact will sensitize you to the need to check the unit
cost labels to determine if you are really getting a bargain.

There are several units in the market that can be analyzed. Our main thrust in
this course is the consumer. However, we will also need to analyze our own
firm’s strengths and weaknesses and those of competing firms. Suppose, for
example, that we make a product aimed at older consumers, a growing
segment. A competing firm that targets babies, a shrinking market, is likely to
consider repositioning toward our market. To assess a competing firm’s
potential threat, we need to examine its assets (e.g., technology, patents,
market knowledge, awareness of its brands) against pressures it faces from the
market. Finally, we need to assess conditions (the marketing environment). For
example, although we may have developed a product that offers great appeal
for consumers, a recession may cut demand dramatically.

Consumer Research Methods

Market research is often needed to ensure that we produce what customers
really want and not what we think they want.

Primary vs. secondary research methods.? There are two main approaches to
marketing.? Secondary ?research involves using information that others have
already put together.? For example, if you are thinking about starting a
business making clothes for tall people, you don?? need to question people
about how tall they are to find out how many tall people exist??hat information
has already been published by the U.S. Government.? Primary research, in
contrast, is research that you design and conduct yourself.? For example, you
may need to find out whether consumers would prefer that your soft drinks be
sweater or tarter.

Research will often help us reduce risks associated with a new product, but it
cannot take the risk away entirely.? It is also important to ascertain whether
the research has been complete.? For example, Coca Cola did a great deal of
research prior to releasing the New Coke, and consumers seemed to prefer the
taste.? However, consumers were not prepared to have this drink replace
traditional Coke.

Secondary Methods.? For more information about secondary market research

tools and issues, please see http://buad307.com/PDF/Secondary.pdf .

Primary Methods. Several tools are available to the market researcher??.g.,

mail questionnaires, phone surveys, observation, and focus groups.? Please see
http://buad307.com/PDF/ResearchMethods.pdf for advantages and
disadvantages of each.

Surveys are useful for getting a great deal of specific information.? Surveys can
contain open-ended questions (e.g., ??n which city and state were you born?
____________??) or closed-ended, where the respondent is asked to select
answers from a brief list (e.g., ??_Male ___ Female.?? Open ended questions
have the advantage that the respondent is not limited to the options listed,
and that the respondent is not being influenced by seeing a list of responses.?
However, open-ended questions are often skipped by respondents, and coding
them can be quite a challenge.? In general, for surveys to yield meaningful
responses, sample sizes of over 100 are usually required because precision is
essential.? For example, if a market share of twenty percent would result in a
loss while thirty percent would be profitable, a confidence interval of 20-35% is
too wide to be useful.

Surveys come in several different forms.? Mail surveys are relatively

inexpensive, but response rates are typically quite low??ypically from 5-20%.?
Phone-surveys get somewhat higher response rates, but not many questions can
be asked because many answer options have to be repeated and few people are
willing to stay on the phone for more than five minutes.? Mall intercepts are a
convenient way to reach consumers, but respondents may be reluctant to
discuss anything sensitive face-to-face with an interviewer.

Surveys, as any kind of research, are vulnerable to bias.? The wording of a

question can influence the outcome a great deal.? For example, more people
answered no to the question ??hould speeches against democracy be allowed???
than answered yes to ??hould speeches against democracy be forbidden??? For
face-to-face interviews, interviewer bias is a danger, too.? Interviewer bias
occurs when the interviewer influences the way the respondent answers.? For
example, unconsciously an interviewer that works for the firm manufacturing
the product in question may smile a little when something good is being said
about the product and frown a little when something negative is being said.?
The respondent may catch on and say something more positive than his or her
real opinion.? Finally, a response bias may occur??f only part of the sample
responds to a survey, the respondents?? answers may not be representative of
the population.

Focus groups are useful when the marketer wants to launch a new product or
modify an existing one.? A focus group usually involves having some 8-12 people
come together in a room to discuss their consumption preferences and
experiences.? The group is usually led by a moderator, who will start out
talking broadly about topics related broadly to the product without mentioning
the product itself.? For example, a focus group aimed at sugar-free cookies
might first address consumers?? snacking preferences, only gradually moving
toward the specific product of sugar-free cookies.? By not mentioning the
product up front, we avoid biasing the participants into thinking only in terms
of the specific product brought out.?? Thus, instead of having consumers think
primarily in terms of what might be good or bad about the product, we can ask
them to discuss more broadly the ultimate benefits they really seek.? For
example, instead of having consumers merely discuss what they think about
some sugar-free cookies that we are considering releasing to the market, we
can have consumers speak about their motivations for using snacks and what
general kinds of benefits they seek.? Such a discussion might reveal a concern
about healthfulness and a desire for wholesome foods.? Probing on the meaning
of wholesomeness, consumers might indicate a desire to avoid artificial
ingredients.? This would be an important concern in the marketing of sugar-
free cookies, but might not have come up if consumers were asked to comment
directly on the product where the use of artificial ingredients is, by virtue of
the nature of the product, necessary.

Focus groups are well suited for some purposes, but poorly suited for others.?
In general, focus groups are very good for getting breadth??.e., finding out
what kinds of issues are important for consumers in a given product category.?
Here, it is helpful that focus groups are completely ??pen-ended:?? The
consumer mentions his or her preferences and opinions, and the focus group
moderator can ask the consumer to elaborate.? In a questionnaire, if one did
not think to ask about something, chances are that few consumers would take
the time to write out an elaborate answer.? Focus groups also have some
drawbacks, for example:

• They represent small sample sizes.? Because of the cost of running focus
groups, only a few groups can be run.? Suppose you run four focus groups
with ten members each. This will result in an n of 4(10)=40, which is too
small to generalize from.? Therefore, focus groups cannot give us a good
idea of:
• What proportion of the population is likely to buy the product.
• What price consumers are willing to pay.
• The groups are inherently social.? This means that:
• Consumers will often say things that may make them look good (i.e.,
they watch public television rather than soap operas or cook fresh meals
for their families daily) even if that is not true.
• Consumers may be reluctant to speak about embarrassing issues (e.g.,
weight control, birth control).

Personal interviews involve in-depth questioning of an individual about his or

her interest in or experiences with a product.? The benefit here is that we can
get really into depth (when the respondent says something interesting, we can
ask him or her to elaborate), but this method of research is costly and can be
extremely vulnerable to interviewer bias.

To get a person to elaborate, it may help to try a common tool of psychologists

and psychiatrists??imply repeating what the person said.? He or she will often
become uncomfortable with the silence that follows and will then tend to
elaborate.? This approach has the benefit that it minimizes the interference
with the respondent?? own ideas and thoughts.? He or she is not influenced by a
new question but will, instead, go more in depth on what he or she was saying.

Personal interviews are highly susceptible to inadvertent ??ignaling?? to the

respondent.? Although an interviewer is looking to get at the truth, he or she
may have a significant interest in a positive consumer response.?
Unconsciously, then, he or she may inadvertently smile a little when something
positive is said and frown a little when something negative is said.?
Consciously, this will often not be noticeable, and the respondent often will
not consciously be aware that he or she is being ??einforced?? and ??unished??
for saying positive or negative things, but at an unconscious level, the
cumulative effect of several facial expressions are likely to be felt.? Although
this type of conditioning will not get a completely negative respondent to say
all positive things, it may ??wing?? the balance a bit so that respondents are
more likely to say positive thoughts and withhold, or limit the duration of,
negative thoughts.

Projective techniques are used when a consumer may feel embarrassed to

admit to certain opinions, feelings, or preferences.? For example, many older
executives may not be comfortable admitting to being intimidated by
computers.?? It has been found that in such cases, people will tend to respond
more openly about ??omeone else.?? Thus, we may ask them to explain reasons
why a friend has not yet bought a computer, or to tell a story about a person
in a picture who is or is not using a product.? The main problem with this
method is that it is difficult to analyze responses.

Projective techniques are inherently inefficient to use.? The elaborate context

that has to be put into place takes time and energy away from the main
question.? There may also? be real differences between the respondent and the
third party.? Saying or thinking about something that ??its too close to home??
may also influence the respondent, who may or may not be able to see through
the ruse.

Observation of consumers is often a powerful tool.? Looking at how consumers

select products may yield insights into how they make decisions and what they
look for.? For example, some American manufacturers were concerned about
low sales of their products in Japan.? Observing Japanese consumers, it was
found that many of these Japanese consumers scrutinized packages looking for
a name of a major manufacturer??he product specific-brands that are common
in the U.S. (e.g., Tide) were not impressive to the Japanese, who wanted a
name of a major firm like Mitsubishi or Proctor & Gamble.? Observation may
help us determine how much time consumers spend comparing prices, or
whether nutritional labels are being consulted.

A question arises as to whether this type of ??pying?? inappropriately invades

the privacy of consumers.?? Although there may be cause for some concern in
that the particular individuals have not consented to be part of this research, it
should be noted that there is no particular interest in what the individual
customer being watched does.? The question is what consumers??ither as an
entire group or as segments??o.? Consumers benefit, for example, from stores
that are designed effectively to promote efficient shopping.? If it is found that
women are more uncomfortable than men about others standing too close, the
areas of the store heavily trafficked by women can be designed accordingly.?
What is being reported here, then, are averages and tendencies in response.?
The intent is not to find ??uicy?? observations specific to one customer.
The video clip with Paco Underhill that we saw in class demonstrated the
application of observation research to the retail setting.? By understanding the
phenomena such as the tendency toward a right turn, the location of
merchandise can be observed.? It is also possible to identify problem areas
where customers may be overly vulnerable to the ??ut brush,?? or overly close
encounter with others.? This method can be used to identify problems that the
customer experiences, such as difficulty finding a product, a mirror, a changing
room, or a store employee for help.

Online research methods.? The Internet now reaches the great majority of
households in the U.S., and thus, online research provides new opportunity and
has increased in use.

One potential benefit of online surveys is the use of ??onditional branching.?? In

conventional paper and pencil surveys, one question might ask if the
respondent has shopped for a new car during the last eight months.? If the
respondent answers ??o,?? he or she will be asked to skip ahead several
questions??.g., going straight to question 17 instead of proceeding to number
9.? If the respondent answered ??es,?? he or she would be instructed to go to
the next question which, along with the next several ones, would address
issues related to this shopping experience.? Conditional branching allows the
computer to skip directly to the appropriate question.? If a respondent is asked
which brands he or she considered, it is also possible to customize brand
comparison questions to those listed.? Suppose, for example, that the
respondent considered Ford, Toyota, and Hyundai, it would be possible to ask
the subject questions about his or her view of the relative quality of each
respective pair??n this case, Ford vs. Toyota, Ford vs. Hyundai, and Toyota vs.
Hyundai.

There are certain drawbacks to online surveys. Some consumers may be more
comfortable with online activities than others??nd not all households will have
access.? Today, however, this type of response bias is probably not significantly
greater than that associated with other types of research methods.? A more
serious problem is that it has consistently been found in online research that it
is very difficult??f not impossible??o get respondents to carefully read
instructions and other information online??here is a tendency to move quickly.?
This makes it difficult to perform research that depends on the respondent??
reading of a situation or product description.

Online search data and page visit logs provides valuable ground for analysis.? It
is possible to see how frequently various terms are used by those who use a
firm?? web site search feature or to see the route taken by most consumers to
get to the page with the information they ultimately want.? If consumers use a
certain term frequently that is not used by the firm in its product descriptions,
the need to include this term in online content can be seen in search logs.? If
consumers take a long, ??orturous?? route to information frequently accessed, it
may be appropriate to redesign the menu structure and/or insert hyperlinks
in ??ntermediate?? pages that are found in many users?? routes.

Scanner data.? Many consumers are members of supermarket ??lubs.?? In return

for signing p for a card and presenting this when making purchases, consumers
are often eligible for considerable discounts on selected products.

Researchers use a more elaborate version of this type of program in some

communities.? Here, a number of consumers receive small payments and/or
other incentives to sign up to be part of a research panel.? They then receive a
card that they are asked to present any time they go shopping.? Nearly all
retailers in the area usually cooperate.? It is now possible to track what the
consumer bought in all stores and to have a historical record.

The consumer?? shopping record is usually combined with demographic

information (e.g., income, educational level of adults in the household,
occupations of adults, ages of children, and whether the family owns and rents)
and the family?? television watching habits.? (Electronic equipment run by firms
such as A. C. Nielsen will actually recognize the face of each family member
when he or she sits down to watch).

It is now possible to assess the relative impact of a number of factors on the

consumer?? choice??.g.,

• What brand in a given product category was bought during the last, or a
series of past, purchase occasions;
 • Whether, and if so, how many times a consumer has seen an ad for the
brand in question or a competing one;
• Whether the target brand (and/or a competing one) is on sale during the
store visit;
• Whether any brand had preferential display space;
• The impact of income and/or family size on purchase patterns; and
• Whether a coupon was used for the purchase and, if so, its value.

A ??plit cable?? technology allows the researchers to randomly select half the
panel members in a given community to receive one advertising treatment and
the other half another.? The selection is truly random since each household, as
opposed to neighborhood, is selected to get one treatment or the other.? Thus,
observed differences should, allowing for sampling error, the be result of
advertising exposure since there are no other systematic differences between
groups.

Interestingly, it has been found that consumers tend to be more influenced by

commercials that they ??ap?? through while channel surfing even if they only
see part of the commercial.? This most likely results from the reality that one
must pay greater attention while channel surfing than when watching a
commercial in order to determine which program is worth watching.

Scanner data is, at the present time, only available for certain grocery item
product categories??.g., food items, beverages, cleaning items, laundry
detergent, paper towels, and toilet paper.? It is not available for most non-
grocery product items.? Scanner data analysis is most useful for frequently
purchased items (e.g., drinks, food items, snacks, and toilet paper) since a
series of purchases in the same product category yield more information with
greater precision than would a record of one purchase at one point in time.?
Even if scanner data were available for electronic products such as printers,
computers, and MP3 players, for example, these products would be purchased
quite infrequently.? A single purchase, then, would not be as effective in
effectively distinguishing the effects of different factors??.g., advertising, shelf
space, pricing of the product and competitors, and availability of a coupon??
ince we have at most one purchase instance during a long period of time during
which several of these factors would apply at the same time.? In the case of
items that are purchased frequently, the consumer has the opportunity to buy
a product, buy a competing product, or buy nothing at all depending on the
status of the brand of interest and competing brands.? In the case of the
purchase of an MP3 player, in contrast, there may be promotions associated
with several brands going on at the same time, and each may advertise.? It may
also be that the purchase was motivated by the breakdown of an existing
product or dissatisfaction or a desire to add more capabilities.

Physiological measures are occasionally used to examine consumer response.?

For example, advertisers may want to measure a consumer?? level of arousal
during various parts of an advertisement.? This can be used to assess possible
discomfort on the negative side and level of attention on the positive side.

By attaching a tiny camera to plain eye glasses worn by the subject while
watching an advertisement, it is possible to determine where on screen or
other ad display the subject focuses at any one time.? If the focus remains
fixed throughout an ad sequence where the interesting and active part area
changes, we can track whether the respondent is following the sequence
intended.? If he or she is not, he or she is likely either not to be paying as much
attention as desired or to be confused by an overly complex sequence.? In
situations where the subject?? eyes do move, we can assess whether this
movement is going in the intended direction.

Mind-reading would clearly not be ethical and is, at the present time, not
possible in any event.? However, it is possible to measure brain waves by
attaching electrodes.? These readings will not reveal what the subject actually
thinks, but it is possible to distinguish between beta waves??ndicating active
thought and analysis??nd alpha waves, indicating lower levels of attention.

An important feature of physiological measures is that we can often track

performance over time.? A subject may, for example, be demonstrating good
characteristics??uch as appropriate level of arousal and eye movement??uring
some of the ad sequence and not during other parts.? This, then, gives some
guidance as to which parts of the ad are effective and which ones need to be
reworked.

In a variation of direct physiological measures, a subject may be asked, at

various points during an advertisement, to indicate his or her level of interest,
liking, comfort, and approval by moving a lever or some instrument (much like
one would adjust the volume on a radio or MP3 player).? Republican strategist
used this technique during the impeachment and trial of Bill Clinton in the late
1990s.? By watching approval during various phases of a speech by the former
President, it was found that viewers tended to respond negatively when he
referred to ??peaking truthfully?? but favorably when the President referred to
the issues in controversy as part of his ??rivate life.?? The Republican
researchers were able to separate average results from Democrats,
Independents, and Republicans, effectively looking at different segments to
make sure that differences between each did not cancel out effects of the
different segments.? (For example, if at one point Democrats reacted positively
and Republicans responded negatively with the same intensity, the average
result of apparent indifference would have been very misleading).

Research sequence.? In general, if more than one type of research is to be

used, the more flexible and less precise method??uch as focus groups and/or
individual interviews??hould generally be used before the less flexible but more
precise methods (e.g., surveys and scanner data) are used.? Focus groups and
interviews are flexible and allow the researcher to follow up on interesting
issues raised by participants who can be probed.? However, because the sample
sizes are small and because participants in a focus group are influenced by
each other, few data points are collected.? If we run five focus groups with
eight people each, for example, we would have a total of forty responses.?
Even if we assume that these are independent, a sample size of forty would
give very imprecise results.? We might conclude, for example, that somewhere
between 5% and 40% of the target market would be interested in the product
we have to offer.? This is usually no more precise than what we already
reasonably new.? Questionnaires, in contrast, are highly inflexible.? It is not
possible to ask follow-up questions.? Therefore, we can use our insights from
focus groups and interviews to develop questionnaires that contain specific
questions that can be asked to a larger number of people.? There will still be
some sampling error, but with a sample size of 1,000+ responses, we may be
able to narrow the 95% confidence interval for the percentage of the target
market that is seriously interested in our product to, say, 17-21%, a range that
is much more meaningful.

Cautions.? Some cautions should be heeded in marketing research.? First, in

general, research should only be commissioned when it is worth the cost.?
Thus, research should normally be useful in making specific decisions (what
size should the product be?? Should the product be launched?? Should we
charge $1.75 or $2.25?)

Secondly, marketing research can be, and often is, abused.? Managers
frequently have their own ??gendas?? (e.g., they either would like a product to
be launched or would prefer that it not be launched so that the firm will have
more resources left over to tackle their favorite products).? Often, a way to
get your way is to demonstrate through ??bjective?? research that your opinions
make economic sense. One example of misleading research, which was
reported nationwide in the media, involved the case of ??he Pentagon Declares
War on Rush Limbaugh.?? The Pentagon, within a year of the election of
Democrat Bill Clinton, reported that only 4.2% of soldiers listening to the
Armed Forces Network wanted to hear Rush Limbaugh.? However, although this
finding was reported without question in the media, it was later found that the
conclusion was based on the question ??hat single thing can we do to improve
programming??? If you did not write in something like ??arry Rush Limbaugh,??
you were counted as not wanting to hear him.

Culture and Subculture

NOTE: This topic is also discussed in the International Marketing section of this
site.
Culture is part of the external influences that impact the consumer.?That is,
culture represents influences that are imposed on the consumer by other
individuals.

The definition of culture offered in one textbook is ??hat complex whole which
includes knowledge, belief, art, morals, custom, and any other capabilities and
habits acquired by man person as a member of society.?? From this definition,
we make the following observations:

• Culture, as a ??omplex whole,?? is a system of interdependent

components.
• Knowledge and beliefs are important parts.? In the U.S., we know and
believe that a person who is skilled and works hard will get ahead. In
other countries, it may be believed that differences in outcome result
more from luck.? ??hunking,?? the name for China in Chinese, literally
means ??he Middle Kingdom.?? The belief among ancient Chinese that
they were in the center of the universe greatly influenced their thinking.
• Other issues are relevant.? Art, for example, may be reflected in the
rather arbitrary practice of wearing ties in some countries and wearing
turbans in others.? Morality may be exhibited in the view in the United
States that one should not be naked in public.? In Japan, on the other
hand, groups of men and women may take steam baths together without
perceived as improper.? On the other extreme, women in some Arab
countries are not even allowed to reveal their faces.? Notice, by the
way, that what at least some countries view as moral may in fact be
highly immoral by the standards of another country.? For example, the
law that once banned interracial marriages in South Africa was named
the ??mmorality Act,?? even though in most civilized countries this law,
and any degree of explicit racial prejudice, would itself be considered
highly immoral.

Culture has several important characteristics:? (1)? Culture is comprehensive.?

This means that all parts must fit together in some logical fashion.? For
example, bowing and a strong desire to avoid the loss of face are unified in
their manifestation of the importance of respect.? (2)? Culture is learned
rather than being something we are born with.? We will consider the mechanics
of learning later in the course.? (3)? Culture is manifested within boundaries of
acceptable behavior.? For example, in American society, one cannot show up to
class naked, but wearing anything from a suit and tie to shorts and a T-shirt
would usually be acceptable.? Failure to behave within the prescribed norms
may lead to sanctions, ranging from being hauled off by the police for indecent
exposure to being laughed at by others for wearing a suit at the beach.? (4)?
Conscious awareness of cultural standards is limited.? One American spy was
intercepted by the Germans during World War II simply because of the way he
held his knife and fork while eating.? (5)? Cultures fall somewhere on a
continuum between static and dynamic depending on how quickly they accept
change.? For example, American culture has changed a great deal since the
1950s, while the culture of Saudi Arabia has changed much less.

Dealing with culture.? Culture is a problematic issue for many marketers since
it is inherently nebulous and often difficult to understand.? One may violate
the cultural norms of another country without being informed of this, and
people from different cultures may feel uncomfortable in each other??
presence without knowing exactly why (for example, two speakers may
unconsciously continue to attempt to adjust to reach an incompatible
preferred interpersonal distance).

Warning about stereotyping.? When observing a culture, one must be careful

not to over-generalize about traits that one sees.? Research in social
psychology has suggested a strong tendency for people to perceive an ??
utgroup?? as more homogenous than an ??ngroup,?? even when they knew what
members had been assigned to each group purely by chance.? When there is
often a ??rain of truth?? to some of the perceived differences, the temptation
to over-generalize is often strong.? Note that there are often significant
individual differences within cultures.

Cultural lessons.? We considered several cultural lessons in class; the

important thing here is the big picture.? For example, within the Muslim
tradition, the dog is considered a ??irty?? animal, so portraying it as ??an?? best
friend?? in an advertisement is counter-productive.? Packaging, seen as a
reflection of the quality of the ??eal?? product, is considerably more important
in Asia than in the U.S., where there is a tendency to focus on the contents
which ??eally count.?? Many cultures observe significantly greater levels of
formality than that typical in the U.S., and Japanese negotiator tend to
observe long silent pauses as a speaker?? point is considered.

Cultural characteristics as a continuum.? There is a tendency to stereotype

cultures as being one way or another (e.g., individualistic rather than
collectivistic).? Note, however, countries fall on a continuum of cultural traits.?
Hofstede?? research demonstrates a wide range between the most
individualistic and collectivistic countries, for example??ome fall in the middle.

Hofstede?? Dimensions.? Gert Hofstede, a Dutch researcher, was able to

interview a large number of IBM executives in various countries, and found that
cultural differences tended to center around four key dimensions:

• Individualism vs. collectivism:? To what extent do people believe in

individual responsibility and reward rather than having these measures
aimed at the larger group?? Contrary to the stereotype, Japan actually
ranks in the middle of this dimension, while Indonesia and West Africa
rank toward the collectivistic side.? The U.S., Britain, and the
Netherlands rate toward individualism.
 • Power distance:? To what extent is there a strong separation of
individuals based on rank?? Power distance tends to be particularly high
in Arab countries and some Latin American ones, while it is more modest
in Northern Europe and the U.S.
• Masculinity vs. femininity involves a somewhat more nebulous
concept.?? ??asculine?? values involve competition and ??onquering??
nature by means such as large construction projects, while ??eminine??
values involve harmony and environmental protection.?? Japan is one of
the more masculine countries, while the Netherlands rank relatively
low.? The U.S. is close to the middle, slightly toward the masculine side.
( The fact that these values are thought of as ??asculine?? or ??eminine??
does not mean that they are consistently held by members of each
respective gender??here are very large ??ithin-group?? differences.?
There is, however, often a large correlation of these cultural values with
the status of women.)
• Uncertainty avoidance involves the extent to which a ??tructured??
situation with clear rules is preferred to a more ambiguous one; in
general, countries with lower uncertainty avoidance tend to be more
tolerant of risk.? Japan ranks very high.? Few countries are very low in
any absolute sense, but relatively speaking, Britain and Hong Kong are
lower, and the U.S. is in the lower range of the distribution.

Although Hofstede?? original work did not address this, a fifth dimension of
long term vs. short term orientation has been proposed.? In the U.S., managers
like to see quick results, while Japanese managers are known for take a long
term view, often accepting long periods before profitability is obtained.

High vs. low context cultures:? In some cultures, ??hat you see is what you
get??�?he speaker is expected to make his or her points clear and limit
ambiguity.? This is the case in the U.S.??f you have something on your mind,
you are expected to say it directly, subject to some reasonable standards of
diplomacy.? In Japan, in contrast, facial expressions and what is not said may
be an important clue to understanding a speaker?? meaning.? Thus, it may be
very difficult for Japanese speakers to understand another?? written
communication.? The nature of languages may exacerbate this phenomenon??
hile the German language is very precise, Chinese lacks many grammatical
features, and the meaning of words may be somewhat less precise.? English
ranks somewhere in the middle of this continuum.

Ethnocentrism and the self-reference criterion.? The self-reference criterion

refers to the tendency of individuals, often unconsciously, to use the standards
of one?? own culture to evaluate others.? For example, Americans may perceive
more traditional societies to be ??ackward?? and ??nmotivated?? because they
fail to adopt new technologies or social customs, seeking instead to preserve
traditional values.? In the 1960s, a supposedly well read American psychology
professor referred to India?? culture of ??ick?? because, despite severe food
shortages, the Hindu religion did not allow the eating of cows.? The
psychologist expressed disgust that the cows were allowed to roam free in
villages, although it turns out that they provided valuable functions by offering
milk and fertilizing fields.? Ethnocentrism is the tendency to view one?? culture
to be superior to others.? The important thing here is to consider how these
biases may come in the way in dealing with members of other cultures.

It should be noted that there is a tendency of outsiders to a culture to

overstate the similarity of members of that culture to each other.? In the
United States, we are well aware that there is a great deal of heterogeneity
within our culture; however, we often underestimate the diversity within other
cultures.? For example, in Latin America, there are great differences between
people who live in coastal and mountainous areas; there are also great
differences between social classes.

Language issues.? Language is an important element of culture.? It should be

realized that regional differences may be subtle.? For example, one word may
mean one thing in one Latin American country, but something off-color in
another.? It should also be kept in mind that much information is carried in
non-verbal communication.? In some cultures, we nod to signify ??es?? and
shake our heads to signify ??o;?? in other cultures, the practice is reversed.?
Within the context of language:

• There are often large variations in regional dialects of a given language.?

The differences between U.S., Australian, and British English are
actually modest compared to differences between dialects of Spanish
and German.
• Idioms involve ??igures of speech?? that may not be used, literally
translated, in other languages.? For example, baseball is a
predominantly North and South American sport, so the notion of ??n the
ball park?? makes sense here, but the term does not carry the same
meaning in cultures where the sport is less popular.
• Neologisms involve terms that have come into language relatively
recently as technology or society involved.? With the proliferation of
computer technology, for example, the idea of an ??dd-on?? became
widely known.? It may take longer for such terms to ??iffuse?? into other
regions of the world.? In parts of the World where English is heavily
studied in schools, the emphasis is often on grammar and traditional
language rather than on current terminology, so neologisms have a wide
potential not to be understood.
• Slang exists within most languages.? Again, regional variations are
common and not all people in a region where slang is used will
necessarily understand this.? There are often significant generation gaps
in the use of slang.
Writing patterns, or the socially accepted ways of writing, will differs
significantly between cultures.?

In English and Northern European languages, there is an emphasis on

organization and conciseness.? Here, a point is made by building up to it
through background.? An introduction will often foreshadow what is to be said.?
In Romance languages such as Spanish, French, and Portuguese, this style is
often considered ??oring?? and ??nelegant.?? Detours are expected and are
considered a sign of class, not of poor organization.? In Asian languages, there
is often a great deal of circularity.? Because of concerns about potential loss of
face, opinions may not be expressed directly.? Instead, speakers may hint at
ideas or indicate what others have said, waiting for feedback from the other
speaker before committing to a point of view.

Because of differences in values, assumptions, and language structure, it is not

possible to meaningfully translate ??ord-for-word?? from one language to
another.? A translator must keep ??nspoken understandings?? and assumptions
in mind in translating.? The intended meaning of a word may also differ from
its literal translation.? For example, the Japanese word hai? is literally
translated as ??es.?? To Americans, that would imply ??es, I agree.?? To the
Japanese speaker, however, the word may mean ??es, I hear what you are
saying?? (without any agreement expressed) or even ??es, I hear you are saying
something even though I am not sure exactly what you are saying.??

Differences in cultural values result in different preferred methods of speech.?

In American English, where the individual is assumed to be more in control of
his or her destiny than is the case in many other cultures, there is a preference
for the ??ctive?? tense (e.g., ?? wrote the marketing plan??) as opposed to the
passive (e.g., ??he marketing plan was written by me.??)

Because of the potential for misunderstandings in translations, it is dangerous

to rely on a translation from one language to another made by one person.? In
the ??ecentering?? method, multiple translators are used.?
The text is first translated by one translator??ay, from German to Mandarin
Chinese.? A second translator, who does not know what the original German
text said, will then translate back to German from Mandarin Chinese
translation.? The text is then compared.? If the meaning is not similar, a third
translator, keeping in mind this feedback, will then translate from German to
Mandarin.? The process is continued until the translated meaning appears to be
satisfactory.

Different perspectives exist in different cultures on several issues; e.g.:

• Monochronic cultures tend to value precise scheduling and doing one

thing at a time; in polychronic cultures, in contrast, promptness is
valued less, and multiple tasks may be performed simultaneously.? (See
text for more detail).
• Space is perceived differently.? Americans will feel crowded where
people from more densely populated countries will be comfortable.
• Symbols differ in meaning.? For example, while white symbols purity in
the U.S., it is a symbol of death in China.? Colors that are considered
masculine and feminine also differ by culture.
• Americans have a lot of quite shallow friends toward whom little
obligation is felt; people in European and some Asian cultures have
fewer, but more significant friends.? For example, one Ph.D. student
from India, with limited income, felt obligated to try buy an airline
ticket for a friend to go back to India when a relative had died.
• In the U.S. and much of Europe, agreements are typically rather precise
and contractual in nature; in Asia, there is a greater tendency to settle
issues as they come up.? As a result, building a relationship of trust is
more important in Asia, since you must be able to count on your partner
being reasonable.
• In terms of etiquette, some cultures have more rigid procedures than
others.? In some countries, for example, there are explicit standards as
to how a gift should be presented.? In some cultures, gifts should be
presented in private to avoid embarrassing the recipient; in others, the
gift should be made publicly to ensure that no perception of secret
bribery could be made.

Demographics
Demographics are clearly tied to subculture and segmentation. Here, however,
we shift our focus from analyzing specific subcultures to trying to understand
the implications for an entire population of its makeup.

Some articles of possible interest:

Coffee, Lipsticks, and the Economy

The 2008 Tax Rebate and Consumer Behavior
Gasoline Prices and Consumer Behavior

Several issues are useful in the structure of a population. For example, in some
rapidly growing countries, a large percentage of the population is concentrated
among younger generations. In countries such as Korea, China, and Taiwan, this
has helped stimulate economic growth, while in certain poorer countries, it
puts pressures on society to accommodate an increasing number of people on a
fixed amount of land. Other countries such as Japan and Germany, in contrast,
experience problems with a "graying" society, where fewer non-retired people
are around to support an increasing number of aging seniors. Because Germany
actually hovers around negative population growth, the German government
has issued large financial incentives, in the forms of subsidies, for women who
have children. In the United States, population growth occurs both through
births and immigration. Since the number of births is not growing, problems
occur for firms that are dependent on population growth (e.g., Gerber, a
manufacturer of baby food).

Social class is a somewhat nebulous subject that involves stratifying people into
groups with various amounts of prestige, power, and privilege. In part because
of the pioneering influence in American history, status differentiations here are
quite vague. We cannot, for example, associate social class with income,
because a traditionally low status job as a plumber may today come with as
much income as a traditionally more prestigious job as a school teacher. In
certain other cultures, however, stratification is more clear-cut. Although the
caste system in India is now illegal, it still maintains a tremendous influence on
that society. While some mobility exists today, social class awareness is also
somewhat greater in Britain, where social status is in part reinforced by the
class connotations of the accent with which one speaks.

Textbooks speak of several indices that have been used to "compute" social
class in the United States, weighing factors such as income, the nature of one’s
employment, and level of education. Taken too literally, these indices are not
very meaningful; more broadly speaking, they illustrate the reality that social
status is a complex variable that is determined, not always with consensus
among observers, by several different variables.
Segmentation, Targeting, and Positioning
?Segmentation, targeting, and positioning together comprise a three stage
process.? We first (1) determine which kinds of customers exist, then (2) select
which ones we are best off trying to serve and, finally, (3) implement our
segmentation by optimizing our products/services for that segment and
communicating that we have made the choice to distinguish ourselves that
way.

Segmentation involves finding out what kinds of consumers with different

needs exist.? In the auto market, for example, some consumers demand speed
and performance, while others are much more concerned about roominess and
safety.? In general, it holds true that ??ou can?? be all things to all people,??
and experience has demonstrated that firms that specialize in meeting the
needs of one group of consumers over another tend to be more profitable.

Generically, there are three approaches to marketing.? In the undifferentiated

strategy, all consumers are treated as the same, with firms not making any
specific efforts to satisfy particular groups.? This may work when the product is
a standard one where one competitor really can?? offer much that another one
can??.? Usually, this is the case only for commodities.? In the concentrated
strategy, one firm chooses to focus on one of several segments that exist while
leaving other segments to competitors.? For example, Southwest Airlines
focuses on price sensitive consumers who will forego meals and assigned
seating for low prices.? In contrast, most airlines follow the differentiated
strategy:? They offer high priced tickets to those who are inflexible in that they
cannot tell in advance when they need to fly and find it impractical to stay
over a Saturday.? These travelers??sually business travelers??ay high fares but
can only fill the planes up partially.? The same airlines then sell some of the
remaining seats to more price sensitive customers who can buy two weeks in
advance and stay over.
Note that segmentation calls for some tough choices.? There may be a large
number of variables that can be used to differentiate consumers of a given
product category; yet, in practice, it becomes impossibly cumbersome to work
with more than a few at a time.? Thus, we need to determine which variables
will be most useful in distinguishing different groups of consumers.? We might
thus decide, for example, that the variables that are most relevant in
separating different kinds of soft drink consumers are (1) preference for taste
vs. low calories, (2) preference for Cola vs. non-cola taste, (3) price
sensitivity??illingness to pay for brand names; and (4) heavy vs. light
consumers.? We now put these variables together to arrive at various
combinations.
Several different kinds of variables can be used for segmentation.?

• Demographic variables essentially refer to personal statistics such as

income, gender, education, location (rural vs. urban, East vs. West),
ethnicity, and family size.? Campbell?? soup, for instance, has found that
Western U.S. consumers on the average prefer spicier soups??hus, you
get a different product in the same cans at the East and West coasts.?
Facing flat sales of guns in the traditional male dominated market, a
manufacturer came out with the Lady Remmington, a more compact,
handier gun more attractive to women.? Taking this a step farther, it is
also possible to segment on lifestyle and values.??
• Some consumers want to be seen as similar to others, while a different
segment wants to stand apart from the crowd.?
• Another basis for segmentation is behavior.? Some consumers are ??rand
loyal??�?.e., they tend to stick with their preferred brands even when a
competing one is on sale.? Some consumers are ??eavy?? users while
others are ??ight?? users.? For example, research conducted by the wine
industry shows that some 80% of the product is consumed by 20% of the
consumers??resumably a rather intoxicated group.?
• One can also segment on benefits sought, essentially bypassing
demographic explanatory variables.? Some consumers, for example, like
scented soap (a segment likely to be attracted to brands such as Irish
Spring), while others prefer the ??lean?? feeling of unscented soap (the ??
vory?? segment).? Some consumers use toothpaste primarily to promote
oral health, while another segment is more interested in breath
freshening.

In the next step, we decide to target one or more segments.? Our choice should
generally depend on several factors.? First, how well are existing segments
served by other manufacturers?? It will be more difficult to appeal to a
segment that is already well served than to one whose needs are not currently
being served well.? Secondly, how large is the segment, and how can we expect
it to grow?? (Note that a downside to a large, rapidly growing segment is that it
tends to attract competition).? Thirdly, do we have strengths as a company
that will help us appeal particularly to one group of consumers?? Firms may
already have an established reputation.? While McDonald?? has a great
reputation for fast, consistent quality, family friendly food, it would be
difficult to convince consumers that McDonald?? now offers gourmet food.?
Thus, McD?? would probably be better off targeting families in search of
consistent quality food in nice, clean restaurants.

Positioning involves implementing our targeting.? For example, Apple

Computer has chosen to position itself as a maker of user-friendly computers.?
Thus, Apple has done a lot through its advertising to promote itself, through its
unintimidating icons, as a computer for ??on-geeks.?? The Visual C software
programming language, in contrast, is aimed a ??echies.??

Michael Treacy and Fred Wiersema suggested in their 1993 book The Discipline
of Market Leaders that most successful firms fall into one of three categories:

• Operationally excellent firms, which maintain a strong competitive

advantage by maintaining exceptional efficiency, thus enabling the firm
to provide reliable service to the customer at a significantly lower cost
than those of less well organized and well run competitors.? The
emphasis here is mostly on low cost, subject to reliable performance,
and less value is put on customizing the offering for the specific
customer.? Wal-Mart is an example of this discipline.? Elaborate
logistical designs allow goods to be moved at the lowest cost, with
extensive systems predicting when specific quantities of supplies will be
needed.
• Customer intimate firms, which excel in serving the specific needs of
the individual customer well.? There is less emphasis on efficiency,
which is sacrificed for providing more precisely what is wanted by the
customer.? Reliability is also stressed.? Nordstrom?? and IBM are
examples of this discipline.
 • Technologically excellent firms, which produce the most advanced
products currently available with the latest technology, constantly
maintaining leadership in innovation. ?These firms, because they work
with costly technology that need constant refinement, cannot be as
efficient as the operationally excellent firms and often cannot adapt
their products as well to the needs of the individual customer.? Intel is
an example of this discipline.

Treacy and Wiersema suggest that in addition to excelling on one of the three
value dimensions, firms must meet acceptable levels on the other two.? Wal-
Mart, for example, does maintain some level of customer service.? Nordstrom??
and Intel both must meet some standards of cost effectiveness.? The emphasis,
beyond meeting the minimum required level in the two other dimensions, is on
the dimension of strength.
Repositioning involves an attempt to change consumer perceptions of a brand,
usually because the existing position that the brand holds has become less
attractive.? Sears, for example, attempted to reposition itself from a place
that offered great sales but unattractive prices the rest of the time to a store
that consistently offered ??veryday low prices.?? Repositioning in practice is
very difficult to accomplish.? A great deal of money is often needed for
advertising and other promotional efforts, and in many cases, the repositioning
fails.

To effectively attempt repositioning, it is important to understand how one??

brand and those of competitors are perceived.? One approach to identifying
consumer product perceptions is multidimensional scaling.? Here, we identify
how products are perceived on two or more ??imensions,?? allowing us to plot
brands against each other.? It may then be possible to attempt to ??ove?? one??
brand in a more desirable direction by selectively promoting certain points.?
There are two main approaches to multi-dimensional scaling.? In the a priori
approach, market researchers identify dimensions of interest and then ask
consumers about their perceptions on each dimension for each brand.? This is
useful when (1) the market researcher knows which dimensions are of interest
and (2) the customer?? perception on each dimension is relatively clear (as
opposed to being ??ade up?? on the spot to be able to give the researcher a
desired answer).? In the similarity rating approach, respondents are not asked
about their perceptions of brands on any specific dimensions.? Instead, subjects
are asked to rate the extent of similarity of different pairs of products (e.g.,
How similar, on a scale of 1-7, is Snicker?? to Kitkat, and how similar is
Toblerone to Three Musketeers?)? Using a computer algorithms, the computer
then identifies positions of each brand on a map of a given number of
dimensions.? The computer does not reveal what each dimension means??hat
must be left to human interpretation based on what the variations in each
dimension appears to reveal.? This second method is more useful when no
specific product dimensions have been identified as being of particular interest
or when it is not clear what the variables of difference are for the product
category.

Information Search and Decision Making

Problem Recognition.? One model of consumer decision making involves
several steps. The first one is problem recognition??ou realize that something is
not as it should be.? Perhaps, for example, your car is getting more difficult to
start and is not accelerating well.??? The second step is information search??hat
are some alternative ways of solving the problem?? You might buy a new car,
buy a used car, take your car in for repair, ride the bus, ride a taxi, or ride a
skateboard to work.? The third step involves evaluation of alternatives.? A
skateboard is inexpensive, but may be ill-suited for long distances and for rainy
days.?? Finally, we have the purchase stage, and sometimes a post-purchase
stage (e.g., you return a product to the store because you did not find it
satisfactory).? In reality, people may go back and forth between the stages.?
For example, a person may resume alternative identification during while
evaluating already known alternatives.

Consumer involvement will tend to vary dramatically depending on the type of

product.? In general, consumer involvement will be higher for products that are
very expensive (e.g., a home, a car) or are highly significant in the consumer??
life in some other way (e.g., a word processing program or acne medication).

It is important to consider the consumer?? motivation for buying products.? To

achieve this goal, we can use the Means-End chain, wherein we consider a
logical progression of consequences of product use that eventually lead to
desired end benefit.? Thus, for example, a consumer may see that a car has a
large engine, leading to fast acceleration, leading to a feeling of performance,
leading to a feeling of power, which ultimately improves the consumer?? self-
esteem.? A handgun may aim bullets with precision, which enables the user to
kill an intruder, which means that the intruder will not be able to harm the
consumer?? family, which achieves the desired end-state of security.? In
advertising, it is important to portray the desired end-states.? Focusing on the
large motor will do less good than portraying a successful person driving the
car.

Information search and decision making.? Consumers engage in both internal

and external information search.?

Internal search involves the consumer identifying alternatives from his or her
memory.? For certain low involvement products, it is very important that
marketing programs achieve ??op of mind?? awareness.? For example, few
people will search the Yellow Pages for fast food restaurants; thus, the
consumer must be able to retrieve one?? restaurant from memory before it will
be considered.? For high involvement products, consumers are more likely to
use an external search.? Before buying a car, for example, the consumer may
ask friends?? opinions, read reviews in Consumer Reports, consult several web
sites, and visit several dealerships.? Thus, firms that make products that are
selected predominantly through external search must invest in having
information available to the consumer in need??.g., through brochures, web
sites, or news coverage.

A compensatory decision involves the consumer ??rading off?? good and bad
attributes of a product.? For example, a car may have a low price and good gas
mileage but slow acceleration.? If the price is sufficiently inexpensive and gas
efficient, the consumer may then select it over a car with better acceleration
that costs more and uses more gas.? Occasionally, a decision will involve a non-
compensatory strategy.? For example, a parent may reject all soft drinks that
contain artificial sweeteners.?? Here, other good features such as taste and low
calories cannot overcome this one ??on-negotiable?? attribute.

The amount of effort a consumer puts into searching depends on a number of

factors such as the market (how many competitors are there, and how great
are differences between brands expected to be?), product characteristics (how
important is this product?? How complex is the product?? How obvious are
indications of quality?), consumer characteristics (how interested is a
consumer, generally, in analyzing product characteristics and making the best
possible deal?), and situational characteristics (as previously discussed).

Two interesting issues in decisions are:

• Variety seeking (where consumers seek to try new brands not because
these brands are expected to be ??etter?? in any way, but rather because
the consumer wants a ??hange of pace,?? and
• ??mpulse?? purchases??nplanned buys. This represents a somewhat ??
uzzy?? group.? For example, a shopper may plan to buy vegetables but
only decide in the store to actually buy broccoli and corn.? Alternatively,
a person may buy an item which is currently on sale, or one that he or
she remembers that is needed only once inside the store.

A number of factors involve consumer choices.? In some cases, consumers will

be more motivated.? For example, one may be more careful choosing a gift for
an in-law than when buying the same thing for one self.? Some consumers are
also more motivated to comparison shop for the best prices, while others are
more convenience oriented.? Personality impacts decisions.? Some like variety
more than others, and some are more receptive to stimulation and excitement
in trying new stores.? Perception influences decisions.? Some people, for
example, can taste the difference between generic and name brand foods
while many cannot.? Selective perception occurs when a person is paying
attention only to information of interest.? For example, when looking for a new
car, the consumer may pay more attention to car ads than when this is not in
the horizon.? Some consumers are put off by perceived risk.? Thus, many
marketers offer a money back guarantee.? Consumers will tend to change their
behavior through learning??.g., they will avoid restaurants they have found to
be crowded and will settle on brands that best meet their tastes.? Consumers
differ in the values they hold (e.g., some people are more committed to
recycling than others who will not want to go through the hassle).? We will
consider the issue of lifestyle under segmentation.

Families and Family Decision Making

The Family Life Cycle. Individuals and families tend to go through a "life
cycle:" The simple life cycle goes from

For purposes of this discussion, a "couple" may either be married or merely

involve living together. The breakup of a non-marital relationship involving
cohabitation is similarly considered equivalent to a divorce.

In real life, this situation is, of course, a bit more complicated. For example,
many couples undergo divorce. Then we have one of the scenarios:

Single parenthood can result either from divorce or from the death of one
parent. Divorce usually entails a significant change in the relative wealth of
spouses. In some cases, the non-custodial parent (usually the father) will not
pay the required child support, and even if he or she does, that still may not
leave the custodial parent and children as well off as they were during the
marriage. On the other hand, in some cases, some non-custodial parents will be
called on to pay a large part of their income in child support. This is
particularly a problem when the non-custodial parent remarries and has
additional children in the second (or subsequent marriages). In any event,
divorce often results in a large demand for:

• Low cost furniture and household items

• Time-saving goods and services
Divorced parents frequently remarry, or become involved in other non-marital
relationships; thus, we may see

Another variation involves

Here, the single parent who assumes responsibility for one or more children
may not form a relationship with the other parent of the child.

Integrating all the possibilities discussed, we get the following depiction of the
Family Life Cycle:

Generally, there are two main themes in the Family Life Cycle, subject to
significant exceptions:

• As a person gets older, he or she tends to advance in his or her career

and tends to get greater income (exceptions: maternity leave, divorce,
retirement).
• Unfortunately, obligations also tend to increase with time (at least until
one’s mortgage has been paid off). Children and paying for one’s house
are two of the greatest expenses.
Note that although a single person may have a lower income than a married
couple, the single may be able to buy more discretionary items.

Family Decision Making. Individual members of families often serve different

roles in decisions that ultimately draw on shared family resources. Some
individuals are information gatherers/holders, who seek out information about
products of relevance. These individuals often have a great deal of power
because they may selectively pass on information that favors their chosen
alternatives. Influencers do not ultimately have the power decide between
alternatives, but they may make their wishes known by asking for specific
products or causing embarrassing situations if their demands are not met. The
decision maker(s) have the power to determine issues such as:

• Whether to buy;
• Which product to buy (pick-up or passenger car?);
• Which brand to buy;
• Where to buy it; and
• When to buy.

Note, however, that the role of the decision maker is separate from that of the
purchaser. From the point of view of the marketer, this introduces some
problems since the purchaser can be targeted by point-of-purchase (POP)
marketing efforts that cannot be aimed at the decision maker. Also note that
the distinction between the purchaser and decision maker may be somewhat
blurred:

• The decision maker may specify what kind of product to buy, but not
which brand;
• The purchaser may have to make a substitution if the desired brand is
not in stock;
• The purchaser may disregard instructions (by error or deliberately).

It should be noted that family decisions are often subject to a great deal of
conflict. The reality is that few families are wealthy enough to avoid a strong
tension between demands on the family’s resources. Conflicting pressures are
especially likely in families with children and/or when only one spouse works
outside the home. Note that many decisions inherently come down to values,
and that there is frequently no "objective" way to arbitrate differences. One
spouse may believe that it is important to save for the children’s future; the
other may value spending now (on private schools and computer equipment) to
help prepare the children for the future. Who is right? There is no clear answer
here. The situation becomes even more complex when more parties—such as
children or other relatives—are involved.

Some family members may resort to various strategies to get their way. One is
bargaining—one member will give up something in return for someone else. For
example, the wife says that her husband can take an expensive course in
gourmet cooking if she can buy a new pickup truck. Alternatively, a child may
promise to walk it every day if he or she can have a hippopotamus. Another
strategy is reasoning—trying to get the other person(s) to accept one’s view
through logical argumentation. Note that even when this is done with a sincere
intent, its potential is limited by legitimate differences in values illustrated
above. Also note that individuals may simply try to "wear down" the other party
by endless talking in the guise of reasoning (this is a case of negative
reinforcement as we will see subsequently). Various manipulative strategies
may also be used. One is impression management, where one tries to make
one’s side look good (e.g., argue that a new TV will help the children see
educational TV when it is really mostly wanted to see sports programming, or
argue that all "decent families make a contribution to the church"). Authority
involves asserting one’s "right" to make a decision (as the "man of the house,"
the mother of the children, or the one who makes the most money). Emotion
involves making an emotional display to get one’s way (e.g., a man cries if his
wife will not let him buy a new rap album).

Group Influences
Humans are inherently social animals, and individuals greatly influence each
other.

A useful framework of analysis of group influence on the individual is the so

called reference group—the term comes about because an individual uses a
relevant group as a standard of reference against which oneself is compared.
Reference groups come in several different forms.

• The aspirational reference group refers to those others against whom

one would like to compare oneself. For example, many firms use
athletes as spokespeople, and these represent what many people would
ideally like to be.
• Associative reference groups include people who more realistically
represent the individuals’ current equals or near-equals—e.g.,
coworkers, neighbors, or members of churches, clubs, and organizations.
Paco Underhill, a former anthropologist turned retail consultant and
author of the book Why We Buy has performed research suggesting that
among many teenagers, the process of clothes buying is a two stage
process. In the first stage, the teenagers go on a "reconnaissance"
mission with their friends to find out what is available and what is "cool."
This is often a lengthy process. In the later phase, parents??ho will need
to pay for the purchases??re brought. This stage is typically much
briefer.
 • Finally, the dissociative reference group includes people that the
individual would not like to be like. For example, the store literally
named The Gap came about because many younger people wanted to
actively dissociate from parents and other older and "uncool" people.
The Quality Paperback Book Club specifically suggests in its advertising
that its members are "a breed apart" from conventional readers of
popular books.

Reference groups come with various degrees of influence. Primary reference

groups come with a great deal of influence—e.g., members of a
fraternity/sorority. Secondary reference groups tend to have somewhat less
influence—e.g., members of a boating club that one encounters only during
week-ends are likely to have their influence limited to consumption during that
time period.

Another typology divides reference groups into the informational kind

(influence is based almost entirely on members’ knowledge), normative
(members influence what is perceived to be "right," "proper," "responsible," or
"cool"), or identification. The difference between the latter two categories
involves the individual’s motivation for compliance. In case of the normative
reference group, the individual tends to comply largely for utilitarian reasons—
dressing according to company standards is likely to help your career, but there
is no real motivation to dress that way outside the job. In contrast, people
comply with identification groups’ standards for the sake of belonging—for
example, a member of a religious group may wear a symbol even outside the
house of worship because the religion is a part of the person’s identity.

Perception
Background.? Our perception is an approximation of reality.? Our brain
attempts to make sense out of the stimuli to which we are exposed.? This
works well, for example, when we ??ee?? a friend three hundred feet away at
his or her correct height; however, our perception is sometimes ??ff??�?or
example, certain shapes of ice cream containers look like they contain more
than rectangular ones with the same volume.

Factors in percpetion.? Several sequential factors influence our perception.

Exposure involves the extent to which we encounter a stimulus.? For example,
we are exposed to numerous commercial messages while driving on the
freeway:? bill boards, radio advertisements, bumper-stickers on cars, and signs
and banners placed at shopping malls that we pass.? Most of this exposure is
random??e don?? plan to seek it out.? However, if we are shopping for a car, we
may deliberately seek out advertisements and ??une in?? when dealer
advertisements come on the radio.
Exposure is not enough to significantly impact the individual??t least not based
on a single trial (certain advertisements, or commercial exposures such as
the ??woosh?? logo, are based on extensive repetition rather than much
conscious attention).? In order for stimuli to be consciously processed,
attention is needed.? Attention is actually a matter of degree??ur attention
may be quite high when we read directions for getting an income tax refund,
but low when commercials come on during a television program.? Note,
however, that even when attention is low, it may be instantly escalated??or
example, if an advertisement for a product in which we are interested comes
on.

Interpretation involves making sense out of the stimulus.? For example, when
we see a red can, we may categorize it as a Coke?.

Weber?? Law suggests that consumers?? ability to detect changes in stimulus

intensity appear to be strongly related to the intensity of that stimulus to begin
with.? That is, if you hold an object weighing one pound in your hand, you are
likely to notice it when that weight is doubled to two pounds.? However, if you
are holding twenty pounds, you are unlikely to detect the addition of one
pound?? change that you easily detected when the initial weight was one
pound.? You may be able to eliminate one ounce from a ten ounce container,
but you cannot as easily get away with reducing a three ounce container to two
(instead, you must accomplish that gradually??.g., 3.0? --> 2.7 --> 2.5 --> 2.3
--> 2.15 ??> 2.00).

Several factors influence the extent to which stimuli will be noticed.? One
obvious issue is relevance.? Consumers, when they have a choice, are also more
likely to attend to pleasant stimuli (but when the consumer can?? escape, very
unpleasant stimuli are also likely to get attention??hus, many very irritating
advertisements are remarkably effective).? One of the most important factors,
however, is repetition.? Consumers often do not give much attention to a
stimuli??articularly a low priority one such as an advertisement??t any one time,
but if it is seen over and over again, the cumulative impact will be greater.

Surprising stimuli are likely to get more attention??urvival instinct requires us

to give more attention to something unknown that may require action.? A
greater contrast (difference between the stimulus and its surroundings) as well
as greater prominence (e.g., greater size, center placement) also tend to
increase likelihood of processing.

Subliminal stimuli.? Back in the 1960s, it was reported that on selected

evenings, movie goers in a theater had been exposed to isolated frames with
the words ??rink Coca Cola?? and ??at Popcorn?? imbedded into the movie.?
These frames went by so fast that people did not consciously notice them, but
it was reported that on nights with frames present, Coke and popcorn sales
were significantly higher than on days they were left off.? This led Congress to
ban the use of subliminal advertising.? First of all, there is a question as to
whether this experiment ever took place or whether this information was
simply made up.? Secondly, no one has been able to replicate these findings.?
There is research to show that people will start to giggle with embarrassment
when they are briefly exposed to ??irty?? words in an experimental machine.?
Here, again, the exposure is so brief that the subjects are not aware of the
actual words they saw, but it is evident that something has been recognized by
the embarrassment displayed.

Learning and Memory

Background. Learning involves "a change in the content or organization of long
term memory and/or behavior." The first part of the definition focuses on what
we know (and can thus put to use) while the second focuses on concrete
behavior. For example, many people will avoid foods that they consumed
shortly before becoming ill. Learning is not all knowledge based. For example,
we may experience the sales people in one store being nicer to us than those in
the other. We thus may develop a preference for the one store over the other;
however, if pressed, we may not be able to give a conscious explanation as to
the reason for our preference.

Much early work on learning was actually done on rats and other animals (and
much of this research was unjustifiably cruel, but that is another matter).

Classical conditioning. Pavlov?? early work on dogs was known as classical

conditioning. Pavlov discovered that when dogs were fed meat powder they
salivated. Pavlov then discovered that if a bell were rung before the dogs were
fed, the dogs would begin salivating in anticipation of being fed (this was
efficient, since they could then begin digesting the meat powder immediately).
Pavlov then found that after the meat had been "paired" with the meat powder
enough times, Pavlov could ring the bell without feeding the dogs and they
would still salivate.

In the jargon of classical conditioning, the meat powder was an unconditioned

stimulus (US) and the salivation was, when preceded by the meat powder, an
unconditioned response (UR). That is, it is a biologically "hard-wired" response
to salivate when you are fed. By pairing the bell with the unconditioned
stimulus, the bell became a conditioned stimulus (CS) and salivation in
response to the bell (with no meat powder) became a conditioned response
(CR).

Many modern day advertisers use classical conditioning in some way. Consider
this sequence:
Operant conditioning. Instrumental, or operant, conditioning, involves a
different series of events, and this what we usually think of as learning. The
general pattern is:

There are three major forms of operant learning. In positive reinforcement, an

individual does something and is rewarded. He or she is then more likely to
repeat the behavior. For example, you eat a candy bar (behavior), it tastes
good (consequence), and you are thus more likely to eat a similar candy bar in
the future (behavioral change).
Punishment is the opposite. You eat what looks like a piece of candy
(behavior), only to discover that it is a piece of soap with a foul taste
(consequences), and subsequently you are less likely to eat anything that looks
remotely like that thing ever again (changed behavior).

It should be noted that negative reinforcement is very different from

punishment. An example of negative reinforcement is an obnoxious sales
person who calls you up on the phone, pressuring you into buying something
you don?? want to do (aversive stimulus). You eventually agree to buy it
(changed behavior), and the sales person leaves you alone (the aversive
stimulus is terminated as a result of consequences of your behavior).

In general, marketers usually have relatively little power to use punishment or

negative reinforcement. However, parking meters are often used to discourage
consumers from taking up valuable parking space, and manufacturers may void
warranties if the consumers take their product to non-authorized repair
facilities.

Several factors influence the effectiveness of operant learning. In general, the

closer in time the consequences are to the behavior, the more effective the
learning. That is, electric utilities would be more likely to influence consumers
to use less electricity at peak hours if the consumers actually had to pay when
they used electricity (e.g., through a coin-slot) rather than at the end of the
month. Learning is also more likely to occur when the individual can
understand a relationship between behavior and consequences (but learning
may occur even if this relationship is not understood consciously).

Another issue is schedules of reinforcement and extinction. Extinction occurs

when behavior stops having consequences and the behavior then eventually
stops occurring. For example, if a passenger learns that yelling at check-in
personnel no longer gets her upgraded to first class, she will probably stop that
behavior. Sometimes, an individual is rewarded every time a behavior is
performed (e.g., a consumer gets a soft drink every time coins are put into a
vending machine). However, it is not necessary to reward a behavior every
time for learning to occur. Even if a behavior is only rewarded some of the
time, the behavior may be learned. Several different schedules of
reinforcement are possible:

• Fixed interval: The consumer is given a free dessert on every Tuesday

when he or she eats in a particular restaurant.
• Fixed ratio: Behavior is rewarded (or punished) on every nth occasion
that it is performed. (E.g., every tenth time a frequent shopper card is
presented, a free product is provided).
• Variable ratio: Every time an action is performed, there is a certain
percentage chance that a reward will be given. For example, every time
the consumer enters the store, he or she is given a lottery ticket. With
each ticket, there is a 20% chance of getting a free hamburger. The
consumer may get a free hamburger twice in a row, or he or she may go
ten times without getting a hamburger even once.

Variable ratio reinforcement is least vulnerable to extinction.

Sometimes, shaping may be necessary to teach the consumer the desired

behavior. That is, it may be impossible to teach the consumer to directly
perform the desired behavior. For example, a consumer may first get a good
product for free (the product itself, if good, is a reward), then buy it with a
large cents off coupon, and finally buy it at full price. Thus, we reinforce
approximations of the desired behavior. Rather than introducing Coca Cola
directly in Indonesia, fruit flavored soft drinks were first introduced, since
these were more similar to beverages already consumed.

Vicarious learning. The consumer does not always need to go through the
learning process himself or herself??ometimes it is possible to learn from
observing the consequences of others. For example, stores may make a big
deal out of prosecuting shop lifters not so much because they want to stop that
behavior in the those caught, but rather to deter the behavior in others.
Similarly, viewers may empathize with characters in advertisements who
experience (usually positive) results from using a product. The Head ????
Shoulders advertisement, where a poor man is rejected by women until he
treats his dandruff with an effective cure, is a good example of vicarious
learning.

Memory ranges in duration on a continuum from extremely short to very long

term.? Sensory memory includes storage of stimuli that one might not actually
notice (e.g., the color of an advertisement some distance away).? For slightly
longer duration, when you see an ad on TV for a mail order product you might
like to buy, you only keep the phone number in memory until you have dialed
it.? This is known as short term memory.? In order for something to enter into
long term memory, which is more permanent, you must usually ??ehearse?? it
several times.? For example, when you move and get a new phone number, you
will probably repeat it to yourself many times.? Alternatively, you get to learn
your driver?? license or social security numbers with time, not because you
deliberately memorize them, but instead because you encounter them
numerous times as you look them up.

Several techniques can be used to enhance the memorability of information.? ??

hunking?? involves rearranging information so that fewer parts need to be
remembered.? For example,? consider the phone number (800) 444-1000.? The
eight digits can be more economically remembered as an 800 number (1 piece),
four repeated 3 times (2 pieces), and 1000 (1-2 pieces).? ??ehearsal?? involves
the consumer repeating the information over and over so that it can be
remembered; this is often done so that a phone number can be remembered
while the ??emoree?? moves to the phone to dial it.? ??ecirculation?? involves
repeated exposure to the same information; the information is not learned
deliberately, but is gradually absorbed through repetition.? Thus, it is to the
advantage to a marketer to have an advertisement repeated extensively??
specially the brand name.? ??laboration?? involves the consumer thinking about
the object??.g., the product in an advertisement??nd thinking about as many
related issues as possible.? For example, when seeing an ad for Dole bananas,
the person may think of the color yellow, going to the zoo seeing a monkey
eating a banana, and her grandmother?? banana-but bread.? The Dole brand
name may then be activated when any of those stimuli are encountered.

Memories are not always easily retrievable.? This could be because the
information was given lower priority than something else??.g., we have done a
lot of things since last buying a replacement furnace filter and cannot
remember where this was bought last.? Other times, the information can be
retrieved but is not readily ??vailable??�?.g., we will be able to remember the
location of a restaurant we tried last time we were in Paris, but it may take
some thinking before the information emerges.

??preading activation?? involves the idea of one memory ??riggering?? another

one.? For example, one might think of Coke every time one remembers a
favorite (and very wise) professor who frequently brought one to class.? Coke
might also be tied a particular supermarket that always stacked a lot of these
beverages by the entrance, and to baseball where this beverage was consumed
after the game.? It is useful for firms to have their product be activated by as
many other stimuli as possible.

There are numerous reasons why retrieval can fail or, in less fancy terms,? how
we come to forget.? One is decay.? Here, information that is not accessed
frequently essentially ??usts?? away.? For example, we may not remember the
phone number of a friend to whom we have not spoken for several months and
may forget what brand of bullets an aunt prefers if we have not gone
ammunition shopping with her lately.? Other times, the problem may rest in
interference.? Proactive interference involves something we have learned
interfering with what we will late later.? Thus, if we remember that everyone
in our family always used Tide, we may have more difficulty later remembering
what other brands are available.? You may be unable to remember what a new,
and less important, friend?? last name is if that person shares a first name with
an old friend.? For example, if your best friend for many years has been
Jennifer Smith, you may have difficulty remembering that your new friend
Jennifer?? last name is Silverman.? In retroactive interference, the problem is
the reverse??earning something new blocks out something old.? For example, if
you once used WordPerfect than then switched to Microsoft Word, you may
have trouble remembering how to use WordPerfect at a friend?? house??ore so
than if you had merely not used any word processing program for some time.

Memorability can be enhanced under certain conditions.? One is more likely to

remember favorable??r likable stimuli (all other things being equal).? Salience??
r the extent to which something is highly emphasized or very clearly evident??
acilitates memory.? Thus, a product which is very visible in an ad, and handled
and given attention by the actors, will more likely be remembered.?
Prototypicality involves the extent to which a stimulus is a ??erfect?? example
of a category.? Therefore, people will more likely remember Coke or Kleenex
than competing brands.? Congruence involves the ??it?? with a situation.? Since
memory is often reconstructed based on what seems plausible, something
featured in an appropriate setting??.g., charcoal on a porch next to a grill
rather than in a garage or kitchen??s more likely to be remembered (unless the
incongruence triggers an elaboration??ife is complicated!)? Redundancies
involve showing the stimulus several times.? Thus, if a given product is shown
several places in a house??nd if the brand name is repeated??t is more likely to
be remembered.

Priming involves tying a stimulus with something so that if ??hat something?? is

encountered, the stimulus is more likely to be retrieved.? Thus, for example,
when one thinks of anniversaries, the Hallmark brand name is more likely to be
activated.? (This is a special case of spreading activation discussed earlier).

A special issue in memory are so called ??cripts,?? or procedures we remember

for doing things. Scripts involve a series of steps for doing various things (e.g.,
how to send a package).? In general, it is useful for firms to have their brand
names incorporated into scripts (e.g., to have the consumer reflexively ask the
pharmacist for Bayer rather than an unspecified brand of aspirin).

Positioning involves implementing our targeting.? For example, Apple Computer

has chosen to position itself as a maker of user-friendly computers.? Thus,
Apple has done a lot through its advertising to promote itself, through its
unintimidating icons, as a computer for ??on-geeks.?? The Visual C software
programming language, in contrast, is aimed a ??echies.??
Repositioning involves an attempt to change consumer perceptions of a brand,
usually because the existing position that the brand holds has become less
attractive.? Sears, for example, attempted to reposition itself from a place
that offered great sales but unattractive prices the rest of the time to a store
that consistently offered ??veryday low prices.?? Repositioning in practice is
very difficult to accomplish.? A great deal of money is often needed for
advertising and other promotional efforts, and in many cases, the repositioning
fails.

Diffusion of Innovation
Products tend to go through a life cycle. Initially, a product is introduced.
Since the product is not well known and is usually expensive (e.g., as
microwave ovens were in the late 1970s), sales are usually limited. Eventually,
however, many products reach a growth phase??ales increase dramatically.
More firms enter with their models of the product. Frequently, unfortunately,
the product will reach a maturity stage where little growth will be seen. For
example, in the United States, almost every household has at least one color
TV set. Some products may also reach a decline stage, usually because the
product category is being replaced by something better. For example,
typewriters experienced declining sales as more consumers switched to
computers or other word processing equipment. The product life cycle is tied
to the phenomenon of diffusion of innovation. When a new product comes out,
it is likely to first be adopted by consumers who are more innovative than
others??hey are willing to pay a premium price for the new product and take a
risk on unproven technology. It is important to be on the good side of
innovators since many other later adopters will tend to rely for advice on the
innovators who are thought to be more knowledgeable about new products for
advice.
At later phases of the PLC, the firm may need to modify its market strategy.
For example, facing a saturated market for baking soda in its traditional use,
Arm ? Hammer launched a major campaign to get consumers to use the product
to deodorize refrigerators. Deodorizing powders to be used before vacuuming
were also created.
It is sometimes useful to think of products as being either new or existing.

Many firms today rely increasingly on new products for a large part of their
sales. New products can be new in several ways. They can be new to the
market??oone else ever made a product like this before. For example, Chrysler
invented the minivan. Products can also be new to the firm??another firm
invented the product, but the firm is now making its own version. For example,
IBM did not invent the personal computer, but entered after other firms
showed the market to have a high potential. Products can be new to the
segment??.g., cellular phones and pagers were first aimed at physicians and
other price-insensitive segments. Later, firms decided to target the more
price-sensitive mass market. A product can be new for legal purposes. Because
consumers tend to be attracted to ??ew and improved?? products, the Federal
Trade Commission (FTC) only allows firms to put that label on reformulated
products for six months after a significant change has been made.

The diffusion of innovation refers to the tendency of new products, practices,

or ideas to spread among people.? Usually, when new products or ideas come
about, they are only adopted by a small group of people initially; later, many
innovations spread to other people.?

The bell shaped curve frequently illustrates the rate of adoption of a new
product.? Cumulative adoptions are reflected by the S-shaped curve.? The
saturation point is the maximum proportion of consumers likely to adopt a
product.
In the case of refrigerators in the U.S., the saturation level is nearly one
hundred percent of households; it well below that for video games that, even
when spread out to a large part of the population, will be of interest to far
from everyone.

Several specific product categories have case histories that illustrate important
issues in adoption.? Until some time in the 1800s, few physicians bothered to
scrub prior to surgery, even though new scientific theories predicted that small
microbes not visible to the naked eye could cause infection.? Younger and more
progressive physicians began scrubbing early on, but they lacked the stature to
make their older colleagues follow.

ATM cards spread relatively quickly.? Since the cards were used in public,
others who did not yet hold the cards could see how convenient they were.?
Although some people were concerned about security, the convenience factors
seemed to be a decisive factor in the ??ug-of-war?? for and against adoption.

The case of credit cards was a bit more complicated and involved a ??hicken-
and-egg?? paradox.? Accepting credit cards was not a particularly attractive
option for retailers until they were carried by a large enough number of
consumers.? Consumers, in contrast, were not particularly interested in cards
that were not accepted by a large number of retailers.? Thus, it was necessary
to ??ump start?? the process, signing up large corporate accounts, under
favorable terms, early in the cycle, after which the cards became worthwhile
for retailers to accept.

Rap music initially spread quickly among urban youths in large part because of
the low costs of recording.? Later, rap music became popular among a very
different segment, suburban youths, because of its apparently authentic
depiction of an exotic urban lifestyle.

Hybrid corn was adopted only slowly among many farmers.? Although hybrid
corn provided yields of about 20% more than traditional corn, many farmers
had difficulty believing that this smaller seed could provide a superior harvest.
They were usually reluctant to try it because a failed harvest could have
serious economic consequences, including a possible loss of the farm.?
Agricultural extension agents then sought out the most progressive farmers to
try hybrid corn, also aiming for farmers who were most respected and most
likely to be imitated by others.? Few farmers switched to hybrid corn outright
from year to year.? Instead, many started out with a fraction of their land, and
gradually switched to 100% hybrid corn when this innovation had proven itself
useful.

Several forces often work against innovation.? One is risk, which can be either
social or financial.? For example, early buyers of the CD player risked that few
CDs would be recorded before the CD player went the way of the 8 track
player. Another risk is being perceived by others as being weird for trying a ??
ringe?? product or idea.? For example, Barbara Mandrell sings the song ?? Was
Country When Country Wasn?? Cool.?? Other sources of resistance include the
initial effort needed to learn to use new products (e.g., it takes time to learn
to meditate or to learn how to use a computer) and concerns about
compatibility with the existing culture or technology.? For example, birth
control is incompatible with strong religious influences in countries heavily
influenced by Islam or Catholicism, and a computer database is incompatible
with a large, established card file.

Innovations come in different degrees.? A continuous innovation includes slight

improvements over time.? Very little usually changes from year to year in
automobiles, and even automobiles of the 1990s are driven much the same way
that automobiles of the 1950 were driven.? A dynamically continuous
innovation involves some change in technology, although the product is used
much the same way that its predecessors were used??.g., jet vs. propeller
aircraft.? A discontinous innovation involves a product that fundamentally
changes the way that things are done??.g., the fax and photocopiers.? In
general, discontinuous innovations are more difficult to market since greater
changes are required in the way things are done, but the rewards are also often
significant.

Several factors influence the speed with which an innovation spreads.? One
issue is relative advantage (i.e., the ratio of risk or cost to benefits).? Some
products, such as cellular phones, fax machines, and ATM cards, have a strong
relative advantage.? Other products, such as automobile satellite navigation
systems, entail some advantages, but the cost ratio is high.? Lower priced
products often spread more quickly, and the extent to which the product is
trialable (farmers did not have to plant all their land with hybrid corn at once,
while one usually has to buy a cellular phone to try it out) influence the speed
of diffusion.? Finally, the extent of switching difficulties influences speed??any
offices were slow to adopt computers because users had to learn how to use
them.
Some cultures tend to adopt new products more quickly than others, based on
several factors:?

• Modernity:? The extent to which the culture is receptive to new things.

In some countries, such as Britain and Saudi Arabia, tradition is greatly
valued??hus, new products often don?? fare too well.? The United States,
in contrast, tends to value progress.
• Homophily:? The more similar to each other that members of a culture
are, the more likely an innovation is to spread??eople are more likely to
imitate similar than different models.? The two most rapidly adopting
countries in the World are the U.S. and Japan.? While the U.S.
interestingly scores very low, Japan scores high.
• Physical distance:? The greater the distance between people, the less
likely innovation is to spread.?
• Opinion leadership:? The more opinion leaders are valued and
respected, the more likely an innovation is to spread.? The style of
opinion leaders moderates this influence, however.? In less innovative
countries, opinion leaders tend to be more conservative, i.e., to reflect
the local norms of resistance.

It should be noted that innovation is not always an unqualifiedly good thing.?

Some innovations, such as infant formula adopted in developing countries, may
do more harm than good.? Individuals may also become dependent on the
innovations.? For example, travel agents who get used to booking online may
be unable to process manual reservations.

Sometimes innovations are disadopted.? For example, many individuals

disadopt cellular phones if they find out that they don?? end up using them
much.

Attitudes
Introduction. Consumer attitudes are a composite of a consumer?? (1) beliefs
about, (2) feelings about, (3) and behavioral intentions toward some object--
within the context of marketing, usually a brand or retail store.? These
components are viewed together since they are highly interdependent and
together represent forces that influence how the consumer will react to the
object.
Beliefs.? The first component is beliefs.? A consumer may hold both positive
beliefs toward an object (e.g., coffee tastes good) as well as negative beliefs
(e.g., coffee is easily spilled and stains papers).? In addition, some beliefs may
be neutral (coffee is black), and some may be differ in valance depending on
the person or the situation (e.g., coffee is hot and stimulates--good on a cold
morning, but not good on a hot summer evening when one wants to sleep).?
Note also that the beliefs that consumers hold need not be accurate (e.g., that
pork contains little fat), and some beliefs may, upon closer examination, be
contradictory (e.g., that a historical figure was a good person but also owned
slaves).

Since a consumer holds many beliefs, it may often be difficult to get down to
a ??ottom line?? overall belief about whether an object such as McDonald?? is
overall good or bad.? The Multiattribute (also sometimes known as the
Fishbein) Model attempts to summarize overall attitudes into one score using
the equation:

That is, for each belief, we take the weight or importance (Wi) of that belief
and multiply it with its evaluation (Xib).? For example, a consumer believes
that the taste of a beverage is moderately important, or a 4 on a scale from 1
to 7.? He or she believes that coffee tastes very good, or a 6 on a scale from 1
to 7.? Thus, the product here is 4(6)=24.? On the other hand, he or she believes
that the potential of a drink to stain is extremely important (7), and coffee
fares moderately badly, at a score -4, on this attribute (since this is a negative
belief, we now take negative numbers from -1 to -7, with -7 being worst).?
Thus, we now have 7(-4)=-28.? Had these two beliefs been the only beliefs the
consumer held, his or her total, or aggregated, attitude would have been 24+(-
28)=-4.? In practice, of course, consumers tend to have many more beliefs that
must each be added to obtain an accurate measurement.

Affect.? Consumers also hold certain feelings toward brands or other objects.?
Sometimes these feelings are based on the beliefs (e.g., a person feels
nauseated when thinking about a hamburger because of the tremendous
amount of fat it contains), but there may also be feelings which are relatively
independent of beliefs.? For example, an extreme environmentalist may
believe that cutting down trees is morally wrong, but may have positive affect
toward Christmas trees because he or she unconsciously associates these trees
with the experience that he or she had at Christmas as a child.

Behavioral Intention.? The behavioral intention is what the consumer plans to

do with respect to the object (e.g., buy or not buy the brand).? As with affect,
this is sometimes a logical consequence of beliefs (or affect), but may
sometimes reflect other circumstances--e.g., although a consumer does not
really like a restaurant, he or she will go there because it is a hangout for his
or her friends.

Attitude-Behavior Consistency.? Consumers often do not behave consistently

with their attitudes for several reasons:

 Ability.? He or she may be unable to do so.? Although junior high school

student likes pick-up trucks and would like to buy one, she may lack a
driver?? license.
 Competing demands for resources.? Although the above student would
like to buy a pickup truck on her sixteenth birthday, she would rather
have a computer, and has money for only one of the two.
 Social influence.? A student thinks that smoking is really cool, but since
his friends think it?? disgusting, he does not smoke.
 Measurement problems.? Measuring attitudes is difficult.? In many
situations, consumers do not consciously set out to enumerate how
positively or negatively they feel about mopeds, and when a market
researcher asks them about their beliefs about mopeds, how important
these beliefs are, and their evaluation of the performance of mopeds
with respect to these beliefs, consumers often do not give very reliable
answers.? Thus, the consumers may act consistently with their true
attitudes, which were never uncovered because an erroneous
measurement was made.

Attitude Change Strategies.? Changing attitudes is generally very difficult,

particularly when consumers suspect that the marketer has a self-serving
agenda in bringing about this change (e.g., to get the consumer to buy more or
to switch brands).
Changing affect.? One approach is to try to change affect, which may or may
not involve getting consumers to change their beliefs.? One strategy uses the
approach of classical conditioning try to ??air?? the product with a liked
stimulus.? For example, we ??air?? a car with a beautiful woman.? Alternatively,
we can try to get people to like the advertisement and hope that this liking will
??pill over?? into the purchase of a product.? For example, the Pillsbury
Doughboy does not really emphasize the conveyance of much information to
the consumer; instead, it attempts to create a warm, fuzzy image.? Although
Energizer Bunny ads try to get people to believe that their batteries last
longer, the main emphasis is on the likeable bunny.? Finally, products which
are better known, through the mere exposure effect, tend to be better liked--
that is, the more a product is advertised and seen in stores, the more it will
generally be liked, even if consumers to do not develop any specific beliefs
about the product.

Changing behavior.? People like to believe that their behavior is rational; thus,
once they use our products, chances are that they will continue unless
someone is able to get them to switch.? One way to get people to switch to our
brand is to use temporary price discounts and coupons; however, when
consumers buy a product on deal, they may justify the purchase based on that
deal? (i.e., the low price) and may then switch to other brands on deal later.?
A better? way to get people to switch to our brand is to at least temporarily
obtain better shelf space so that the product is more convenient.? Consumers
are less likely to use this availability as a rationale for their purchase and may
continue to buy the product even when the product is less conveniently
located.? (Notice, by the way, that this represents a case of shaping).

Changing beliefs.? Although attempting to change beliefs is the obvious way to

attempt attitude change, particularly when consumers hold unfavorable or
inaccurate ones, this is often difficult to achieve because consumers tend to
resist.? Several approaches to belief change exist:

1. Change currently held beliefs.? It is generally very difficult to attempt

to change beliefs that people hold, particularly those that are strongly
held, even if they are inaccurate.? For example, the petroleum industry
advertised for a long time that its profits were lower than were
commonly believed, and provided extensive factual evidence in its
advertising to support this reality.? Consumers were suspicious and
rejected this information, however.
2. Change the importance of beliefs.? Although the sugar manufacturers
would undoubtedly like to decrease the importance of healthy teeth, it
is usually not feasible to make beliefs less important--consumers are
likely to reason, why, then, would you bother bringing them up in the
first place?? However, it may be possible to strengthen beliefs that favor
us--e.g., a vitamin supplement manufacturer may advertise that it is
extremely important for women to replace iron lost through
 menstruation.? Most consumers already agree with this, but the belief
can be made stronger.
3. Add beliefs.? Consumers are less likely to resist the addition of beliefs so
long as they do not conflict with existing beliefs.? Thus, the beef
industry has added beliefs that beef (1) is convenient and (2) can be
used to make a number of creative dishes.? Vitamin manufacturers
attempt to add the belief that stress causes vitamin depletion, which
sounds quite plausible to most people.
4. Change ideal.? It usually difficult, and very risky, to attempt to change
ideals, and only few firms succeed.? For example, Hard Candy may have
attempted to change the ideal away from traditional beauty toward
more unique self expression.

One-sided vs. two-sided appeals.? Attitude research has shown that consumers
often tend to react more favorably to advertisements which either (1) admit
something negative about the sponsoring brand (e.g., the Volvo is a clumsy car,
but very safe) or (2) admits something positive about a competing brand (e.g.,
a competing supermarket has slightly lower prices, but offers less service and
selection).? Two-sided appeals must, contain overriding arguments why the
sponsoring brand is ultimately superior--that is, in the above examples, the ??
ut?? part must be emphasized.

The Elaboration Likelihood Model (ELM) and Celebrity Endorsements.? The

ELM suggests that consumers will scrutinize claims more in important situations
than in unimportant ones.? For example, we found that in the study of people
trying to get ahead of others in a line to use photo copiers, the compliance
rate was about fifty percent when people just asked to get ahead.? However,
when the justification ??... because I have to make copies?? was added,
compliance increased to 80%.? Since the reason offered really did not add
substantive information, we conclude that it was not extensively analyzed--in
the jargon of the theory, ??laboration?? was low.
The ELM suggests that for ??nimportant?? products, elaboration will be low, and
thus Bill Cosby is able to endorse Coke and Jell-O without having any special
credentials to do so.? However, for products which are either expensive or
important for some other reason (e.g., a pain reliever given to a child that
could be harmed by using dangerous substances), elaboration is likely to be
more extensive, and the endorser is expected to be ??ongruent,?? or
compatible, with the product.? For example, a basket ball player is likely to be
effective in endorsing athletic shoes, but not in endorsing automobiles.? On the
other hand, a nationally syndicated auto columnist would be successful in
endorsing cars, but not athletic shoes.? All of them, however, could endorse
fast food restaurants effectively.

Appeal Approaches.? Several approaches to appeal may be used.? The use of

affect to induce empathy with advertising characters may increase attraction
to a product, but may backfire if consumers believe that people?? feelings are
being exploited.? Fear appeals appear to work only if (1) an optimal level of
fear is evoked--not so much that people tune it out, but enough to scare
people into action and (2) a way to avoid the feared stimulus is explicitly
indicated--e.g., gingivitis and tooth loss can be avoided by using this mouth
wash.? Humor appears to be effective in gaining attention, but does not appear
to increase persuasion in practice.? In addition, a more favorable attitude
toward the advertisement may be created by humorous advertising, which may
in turn? result in increased sales.? Comparative advertising, which is illegal in
many countries, often increases sales for the sponsoring brand, but may
backfire in certain cultures.

Electronic Commerce
Online marketing can serve several purposes:

• Actual sales of products??.g., Amazon.com.

• Promotion/advertising:? Customers can be quite effectively targeted in
many situations because of the context that they, themselves, have
sought out.? For example, when a consumer searches for a specific term
in a search engine, a ??anner?? or link to a firm selling products in that
area can be displayed.? Print and television advertisements can also
feature the firm?? web address, thus inexpensively drawing in those who
would like additional information.
• Customer service:? The site may contain information for those who no
longer have their manuals handy and, for electronic products, provide
updated drivers and software patches.
• Market research:? Data can be collected relatively inexpensively on the
Net.? However, the response rates are likely to be very unrepresentative
and recent research shows that it is very difficult to get consumers to
read instructions.? This is one of the reasons why the quality of data
collected online is often suspect.
 ECONOMICS OF ELECTRONIC COMMERCE:
SELLING ONLINE IS USUALLY MORE EXPENSIVE

????????? Some people have suggested that the Internet may be a less expensive
way to distribute products than traditional ??rick-and-mortar?? stores.?
However, in most cases, selling online will probably be more costly than selling
in traditional stores due to the high costs of processing orders and direct
shipping to the customer.?? Some products may, however, be economically
marketed online.? Some factors that are relevant in assessing the potential for
e-commerce to be an effective way to sell a specific products are:

• ??alue-to-bulk?? ratio.? Products that have a lot of value squeezed into a

small volume (e.g., high end jewelry and certain electronic products)
are often more cost-effective to ship to end-customers than are bulkier
products with less value (e.g., low end furniture).
• Absolute margins.? Some products may have a rather high percentage
margin??.g., a scarf bought at wholesale at $10 and marked up 100% to
be sold at $20.? However, the absolute margin is only $20-$10=$10.? In
contrast, a laptop computer may be bought at $1,000 and be marked up
by only 15%, or $150, for a total price of $1,150.? Here, however, the
absolute margin will be larger--$150.? This allows the merchant to spend
money on processing, packaging, and shipping the order.? Ten dollars, in
contrast, can only cover a small amount of employee time and very
limited packaging and shipping.? Some online merchants do charge for
shipping, but doing so will ultimately make the online merchant less
competitive.
• Extent of customization needed.? Some products need to be
customized??.g., checks have to be personalized and airline tickets have
to be issued for a specific departure site, destination time, and travel
time.? Here, online processing may be useful because the customer can
do much of the work.
• Willingness of customers to pay for convenience.? Some consumers may
be willing to pay for the convenience of having products delivered to
their door.? For example, delivering high bulk, generally low value
groceries is generally not efficient.? However, for some customers, it
may be worthwhile to pay to avoid an inconvenient trip to the grocery
store.
• Geographic dispersal of customers.? Electronic commerce, when value-
to-bulk ratios and absolute margins are not favorable, is often not viable
when customers are located conveniently close to a retail outlet.?
However, for some products??.g., bee keeping equipment??ustomers are
widely geographically dispersed and thus, a centralized distribution
center may be more economically viable.? Specialty books??.g., for
 collectors of vintage automobiles??ay not be worthwhile for bookstores
to stock, and these may thus be economically sold online.
• Vulnerability of inventory to loss of value.? Some products??specially
high tech products??ave a very high effective carrying costs.? It has been
estimated that because of the rapid technological progress made in the
computer field, computer parts may lose as much as 1.5% of their value
per week.? If shipping directly to the customer can reduce the channel
time by five weeks, this potentially ??escues?? as much as 7.5% of the
product value.? In such a situation, then, trying to reach the customer
directly may make sense, even if the direct costs of distribution are
higher, because of the inventory value issue.

There are a number of economic realities of online competition:

• As discussed, costs of handling online orders is often higher than that of

distributing through traditional stores.
• Even if online selling is more cost effective in some situations, a firm
selling online will, in the long run, be competing with other online
merchants??ot just against traditional ??rick-and-mortar?? stores.? By the
forces of supply and demand, online prices will then be driven down so
that the profit from selling online will be no greater than that from
traditional retailing.? Any reduced costs would then be expected to go to
customers.
• Competition will be greater for products that have large markets than
for those where markets are smaller and more specialized.?
Amazon.com, for example, has found it necessary to discount best
selling books deeply.? Higher prices??loser to the list price??an be
charged for specialty books, but for a large part of the market,
competition will be intense.
• A new online merchant will face competition from established
traditional merchants.? These will often have the cash reserves to stay in
business for a long time even with temporary competition.? The online
merchant, if it has no cash reserves other than stockholders??
investment, may run out of cash before it can become profitable.

ISSUES IN WEB SITE DESIGN

Web site design:? The web designer must make various issues into
consideration:

• Speed vs. aesthetics:? As we saw, some of the fancier sites have serious
problems functioning practically.? Consumers may be impressed by a
fancy site, or may lack confidence in a firm that offers a simple one.?
Yet, fancier sites with extensive graphics take time to download??
articularly for users dialing in with a modem as opposed to being ??ard??
wired??nd may result in site crashes.
 • Keeping users on the site:? A large number of ??askets?? are abandoned
online as consumers fail to complete the ??heck-out?? process for the
products they have selected.? One problem here is that many consumers
are drawn away from a site and then are unlikely to come back.? A large
number of links may be desirable to consumers, but they tend to draw
people away.? Taking banner advertisers on your site from other sites
may be profitable, but it may result in customers lost.
• Information collection:? An increasing number of consumers resist collection
of information about them, and a number of consumers have set up their browsers
to disallow ??ookies,?? files that contain information about their computers and
shopping habits.
•
Cyber-consumer behavior:? In principle, it is fairly easy to search and
compare online, and it was feared that this might wipe out all margins online.?
More recent research suggests that consumers in fact do not tend to search very
intently and that large price differences between sites persist.? We saw above the
problem of keeping consumers from prematurely departing from one?? site.

Site content. The content of a site should generally be based on the purposes
of operating a site. For most sites, however, having a clear purpose be evident
is essential. The site should generally provide some evidence for this position.
For example, if the site claims a large selection, the vast choices offered
should be evident. Sites that claim convenience should make this evident. A
main purpose of the Internet is to make information readily available, and the
site should be designed so that finding the needed information among all the
content of the site is as easy as possible. Since it is easy for consumers to move
to other sites, the site should be made interesting. To provide the information
and options desired by customers, two-way interaction capabilities are
essential.

WEB SITE TRAFFIC GENERATION

The web is now so large that getting traffic to any one site can be difficult.
One method is search engine optimization, a topic that will be covered below.
Other methods include ??iral?? campaigns wherein current users are used to
spread the word about a site, firm, or service. For example, Hotmail attaches a
message to every e-mail sent from its service alerting the recipient that a free
e-mail account can be had there. Google offers a free e-mail account with a
full gigabyte of storage. This is available only by invitation from others who
have such e-mail accounts.? Amazon.com at one point invited people, when
they had completed a purchase, to automatically e-mail friends whose e-mail
addresses they provided with a message about what they had just bought. If
the friend bought any of the same items, both the original customer and the
friend would get a discount.
Another method of gaining traffic is through online advertising. Sites like
Yahoo! are mainly sponsored by advertisers, as are many sites for newspapers
and magazines. Individuals who see an ad on these sites can usually click to go
to the sponsor?? web site. Occasionally, a firm may advertise their sites in
traditional media. Geico, Dell Computer, and Progressive Insurance do this.
Overstock.com has also advertised a lot on traditional TV programs.
Conventional advertising may also contain a web site address as part of a larger
advertising message.

Viral marketing is more suitable for some products than for others. To get
others involved in spreading the word, the product usually must be interesting
and unique. It must also be simple enough so that it can be explained briefly. It
is most useful when switching or trial costs are low. It is more difficult, for
example, getting people to sign up for a satellite system or cellular phone
service where equipment has to be bought up front and/or a long term
contract is required makes viral marketing more difficult. Viral marketing does
raise some problems about control of the campaign. For example, if a service is
aimed at higher income countries and residents there spread the word to
consumers in lower income countries, people attracted may be unprofitable.
For Google?? one gigabyte e-mail account, for example, there are large costs
that may be covered by advertising revenues from ads aimed at people who can
afford to buy products and services. Advertisers, however, may not be willing
to pay for targets who cannot afford their products. It is also difficult to
control ??ord of mouth?? (or ??ord of keyboard??). Measuring the effectiveness
of a campaign may be difficult. When a viral campaign relies on e-mail,
messages received may be considered spam by some recipients, leading to
potential brand damage and loss of goodwill.

Online promotions. One way to generate traffic is promotions. Many sites

often offer new customers discounts or free gifts. This can be expensive, but
sometimes, the gifts can be ones that have a low marginal cost. For example,
once the firms pays for the development of a game, the cost of letting new
users download it is modest. The U.S. army uses this approach in making a
game available. To be allowed to use some of the ??ooler?? features, the user
has to go through various stages of ??asic training.??

SEARCH ENGINE OPTIMIZATION

Many Internet users find desired information and sites through search engines
such as Google. Research shows that a large proportion of the traffic goes to
the first three sites listed, and few people go so sites that appear beyond the
first ??age?? or screen. On Google, the default screen size is ten sites, so being
in the top ten is essential.
Because of the importance of search engines, getting a good ranking or coming
up early on the list for important keywords is vitally important. Many
consultants offer, for large fees, to help improve a site?? ranking.

There are several types of sites that are similar to search engines. Directories
involve sites that index information based on human analysis. Yahoo! started
out that way, but now most of the information is accessed through search
engine features. The Open Directory Project at http://www.dmoz.org indexes
sites by volunteer human analysts. Some sites contain link collections as part of
their sites??.g., business magazines may have links to business information
sites.

Several issues in search engines and directories are important. Some search
engines, such as Google, base rankings strictly on merit (although sites are
allowed to get preferred paid listings on the right side of the screen). Other
search engines allow sites to ??id?? to get listed first. Some sites may end up
paying as much as a dollar for each surfer who clicks through. If a potential
customer is valuable enough, it may be worth paying for enhanced listings.
Often, however, it is better to be listed as number two or three since only
more serious searchers are likely to go beyond the first site. The first listed site
may attract a number of people who click through without much serious
inspection of the site.

Some search engines are more specific than others. The goal of Google, Yahoo!
and MSN is to contain as many sites as possible. Others may specialize in sites
of a specific type to reduce the amount of irrelevant information that may
come up.

Search engines often have different types of strategies. Google is very much
technology oriented while Yahoo! appears to be more market oriented. Another
major goal of Google is speed. Some sites may contain more content of one
type than another. For example, AltaVista appears to have more images, as
opposed to text pages, indexed.

Search engine rankings. The order in which different sites are listed for a
given term is determined by a secret algorithm developed by the search
engine. An algorithm is a collection of rules put together to identify the most
relevant sites. The specific algorithms are highly guarded trade secrets, but
most tend to heavily weigh the number of links from other sites to a site and
the keywords involved. More credit is given for a link from a highly rated site??
hus, having a link from CNN.com would count much more than one from the
site of the Imperial Valley Press. On any given page, the weight given from a
link will depend on the total number of links on that page. Having one of one
hundred links will count less than being the only one. One source reports that
the weight appears to be proportional so that one out of one hundred links
would carry one percent of the weight of being the sole link, but that may
change and/or vary among search engines.

For Google, some of the main ranking factors appear to be:

• Number and quality of links to the site, as discussed above.

• Relevant keywords.? Note that the ranking algorithm tests for ??pam.??
Reckless repeating keywords may actually count against the rating of the
site.
• The ??lick-through?? share of the site.? Since late 2006 or early 2007,
Google reportedly fine-tunes rankings by observing the percentage of
the time that a particular site is chosen for a given set of search terms.?
Sites that are selected more frequently may improve in rank and those
less frequently selected??espite their merits presumed from the other
factors??ay move down.

Types of search engines. Some engines, such as Google, are general purpose
search engines. Some are specialized. Some are hybrids, containing some
directory structure in addition to search engine capabilities. Some ??eward??
sites such as iwon.com attract people by allowing them to enter a lottery when
doing a search. Some sites are aggregator sites??hey do not have their own
databases but instead combine the results from simultaneous searches on other
search engines.

Text optimization. It is important to repeat important words as much as

possible subject to credibility. Search engines today are increasingly
sophisticated in identifying ??pamming?? through frivolous repetition of the
same words or early use of words that are not relevant to the main content of
the site. Words that appear early in the text and on the index page will tend to
be weighted more heavily. For some search engines, it may be useful to include
common misspellings of a word so that the site will come up when that spelling
is used. For aesthetic reasons, many firms may object to having much text on
the front page, but text may be put below the graphic elements??.g., see
http://www.LarsPerner.com . Some web site owners have attempted to
include hidden text so that a search engine would find the desired words while
the visitor would see something else. Some web designers, for example, would
hide text behind a graphic, make the text in a very small font, and/or make
the font color the same, or nearly the same, as the background. Other web site
designers have made a ??egitimate?? site, only to have a command to move the
visitor to another site when they go to the searched site. Search engines today
are increasingly able to detect this type of abuse, and sites may be penalized
as a result.

Early search engines relied heavily on ??eta tags?? where the web site creator
specified what he or she believed to be appropriate keywords, content
descriptions, and titles. Because these tags are subject to a lot of abuse, these
no longer appear to be significant.

Link optimization. Many web sites engage in ??ink exchanges?? that is,
complementary sites will agree to feature links to each other. It may be useful
for a webmaster to ask firms whose content does not compete for a link. Sites
should register with the Open Directory Project at http://www.dmoz.org since,
if a site is classified favorably, this may help rankings.

The bottom line on Google.? Today, the most significant factor in search
engine rankings appears to be the ??alue?? of the links that reach a site.? Links
from ??ow value?? sites (those that are not rated highly, and especially those
considered to the ??pam??) count for very little.? Links from highly rated sites
on the relevant keywords count for literally thousands??ometimes tens and
hundreds of thousands??imes as much as less important site.? In the past, the
presence of important key terms on a site was the main driver of rankings,
subject to some rudimentary safeguards against obvious ??pamming?? sites
which used the words as a way to gain rankings without providing relevant
information.? Now, the effect of keywords is secondary except for searches
that involve a very unique key term.? Within the last year, it appears that
Google has incorporated the frequency of ??lick-through?? for a site when it is
listed in search (??rganic??) results.? That is, if a relatively high proportion of
searchers go to the site, its ranking is likely to decrease.? However, if relatively
few searchers actually end up going to a highly ranked site when it shows up in
search listings, that site is likely to lose rank. Search engines cannot usually
measure the amount of traffic that goes to a site. ? Traditionally, then, the
traffic of a site was not directly incorporated into the ranking system.? Today,
however, Google is reported to weigh the percentage that a site is chosen for
click-through when the site comes up in a search.? That is, if a site is initially
highly ranked, if a small proportion of searchers actually choose to go to that
site, this site is likely to have its rank reduced.

Google now offers a set of ??nalytics?? tools, including a set of web traffic
statistics.? Webmasters can sign up voluntarily to participate in this by placing
certain ??eta tag?? code in their web pages.? (This code is invisible to people
viewing the respective web page in its regular display mode).? Therefore, for
such sites, Google does, in principle, have access to traffic information from all
sources, including other search engines or links from other sites.? It is not clear
whether Google actually uses this information, however.

Organizational Buyers
A large portion of the market for goods and services is attributable to
organizational, as opposed to individual, buyers.? In general, organizational
buyers, who make buying decisions for their companies for a living, tend to be
somewhat more sophisticated than ordinary consumers.? However, these
organizational buyers are also often more risk averse.? There is a risk in going
with a new, possibly better (lower price or higher quality) supplier whose
product is unproven and may turn out to be problematic.? Often the fear of
running this risk is greater than the potential rewards for getting a better
deal.? In the old days, it used to be said that ??ou can?? get fired for buying
IBM.?? This attitude is beginning to soften a bit today as firms face increasing
pressures to cut costs.????

Organizational buyers come in several forms.? Resellers involve either

wholesalers or retailers that buy from one organization and resell to some
other entity.? For example, large grocery chains sometimes buy products
directly from the manufacturer and resell them to end-consumers.?
Wholesalers may sell to retailers who in turn sell to consumers.? Producers also
buy products from sub-manufacturers to create a finished product.? For
example, rather than manufacturing the parts themselves, computer
manufacturers often buy hard drives, motherboards, cases, monitors,
keyboards, and other components from manufacturers and put them together
to create a finished product.? Governments buy a great deal of things.? For
example, the military needs an incredible amount of supplies to feed and equip
troops.? Finally, large institutions buy products in huge quantities.? For
example, UCR probably buys thousands of reams of paper every month.

Organizational buying usually involves more people than individual buying.?

Often, many people are involved in making decisions as to (a) whether to buy,
(b) what to buy, (c) at what quantity, and (d) from whom.? An engineer may
make a specification as to what is needed, which may be approved by a?
manager, with the final purchase being made by a purchase specialist who
spends all his or her time finding the best deal on the goods that the
organization needs.? Often, such long purchase processes can cause long
delays.? In the government, rules are often especially stringent??.g., vendors of
fruit cake have to meet fourteen pages of specifications put out by the General
Services Administration.? In many cases, government buyers are also heavily
bound to go with the lowest price.? Even if it is obvious that a higher priced
vendor will offer a superior product, it may be difficult to accept that bid.

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