Chapter #1:

Basic Consumption Process

- Basic Consumption Process

o Need (something to fulfil a life requirement)
o Want (way of addressing a need)
o Exchange (give up something for something)
o Cost and Benefits (negative and positive)
o Reaction (feelings developed over time)
o Value (perception)
- Consumer Value Framework (CVF)

What is Consumer Behavior?

- It involves the thoughts and feelings of people as well as the actions they perform in the
consumption process
- It includes all things in the environment that may influence the thoughts, feelings, and actions

Consumer Value: Value is a personal assessment of the net worth obtained from an activity

Hedonic Value: Value derived from the immediate gratification that comes from some activity

Utilitarian Value: Gratification derived because something helps a consumer solve a problem or
accomplish some type of task

Total Value Concept: Every products value is made up of basic benefits, plus the augmented product,
plus the “Feel” benefits

- This is practiced when companies operate with the understanding that products provide value in
multiple ways

Customer Lifetime Value (CLV): The approximate worth of a customer to a company in economic terms.
Think of it as the total revenue a company can bring in from one customer

Marketing Strategy

- Marketing Strategy: The way a company foes about creating value for customers
o Corporate Strategy: Deals with how the firm will be defined and with setting general
goals
o Marketing Strategy: This strategy involves the way in which a company goes about
creating value for its customers while taking competition and obsolescence into
consideration
o Tactics: Tactics are the ways in which marketing management is Implemented. They
involve price, promotion, product, and distribution decisions

Blue Ocean Strategy

- Positioning a firm far away from competitors positions so that is:

o Creates an industry of its own
o Isolates itself from competitors
Chapter #11: Consumers in Situations

Consumer Environment

- The VALUE the consumer obtains from a purchase or consumption act VARIES based on the
CONTEXT in which the act takes place
o i.e. Information Gathering, Consumption, Shopping

3 Categories of Situational Influences

1. Place/Environment
a. Both Virtual and Physical
2. Time
3. Conditions
a. Physical Surroundings
b. Social Surroundings
c. Task at Hand
d. Time
e. Antecedent States

Place Physical Surroundings

- MUSIC is likely to be slow and soft as shoppers walk in time with the tempo
o Playing unfamiliar music has also been shown to make people shop for longer
o Classical music slows us down and encourages us to make a more considered and higher
price purchase
o Pop and Rock music speeds us up to get us to buy more quickly
- Lighting
o Bright lighting can make us feel more activated and soft lighting can relax us
o Specials are often highlighted or lit up
o People are often self-conscious when trying on clothes, so changing room mirrors are
often softly lit to create a flattering effect
o Some retailers place extra mirrors around the store to appeal to our vanity, as we linger
longer to check our reflection
- Color
o Color is one of the most powerful methods of design
o Can alter the perception of what the consumer is purchasing
- Atmospherics: Conscious designing of space and dimensions to evoke certain
effects/emotions/feelings
- Servicescape: The physical environment in which consumer services are performed

Time & Temporal Factors

- Time Pressure: Heuristics used

- Time of Year: Impacts not only what you purchase, but when you shop
- Time of Day: Circadian cycle (12/6 & 1/3). People have less energy during these times
- Perception of Time: Clock/No Clock & Strength of Goal
- Queuing: Mathematical Theory of Wait Times
 - Advertiming: Running ads when people will be more receptive to the message
o Time of Day
o Season
o Online Ads

Shopping

- Takes place in specific places, overtime and under specific contexts. It is a set of value seeking
activities that increase likelihood of purchase
- 4 Different Shopping Activity Types:
o Acquisitional
o Epistemic (gathering info)
o Experiential
o Impulsive

Shopping Value

- Personal Shopping Value (PSV): The overall subjective worth of a shopping activity considering
all associated costs and benefits
- Utilitarian Shopping Value: Shopping task is completed successfully
- Hedonic Shopping Value: Time spent on activity itself is personally gratifying (i.e. social
experience, instant status, thrill of the hunt)
o Both dimensions are related to customer share and customer loyalty

Unplanned, Impulse and Compulsive CB

- Impulsivity: Represents how sensitive a consumer is to immediate rewards

- Consumer self-regulation: A tendency for consumers to inhibit outside, or situational, influences
from interfering with shopping intentions
o Action-oriented: High capacity to self-regulate
o State-oriented: Low capacity to self-regulate

Chapter #12: Consumer Decision Making - Need Recognition & Search

Consumer Decision Making Process

- Decision Making and Value: Both utilitarian value and hedonic value are associated with
consumer decision making
- Decision Making and Motivation: Motivations are the inner reasons or driving forces behind
human actions as consumers are driven to address needs
- Decision Making and Emotion: Consumer decision making is also closely related to emotion. The
decision making process can be very emotional depending on the type of product being
considered or the need that has arisen
Search Behavior

- Once there is an imbalance and desire to change the situation search begins
o Search for…
 Number of alternatives available
 Price of various alternatives
 Relevant attributes that should be considered and their importance
- Factors that influence search:
o Product experience
o Involvement
o Perceived risk
o Time availability
o Personal factors
o Situational influences
o Personal Factors
 Search tends to increase as a consumer’s level of education and income
increases
o Situational Influencers
 Situational factors also influence the amount of search that takes place.
Perceived urgency for example can impact search behavior

Consideration Set

- Universal Set: All possible solutions to a recognized need

- Awareness Set: Set of alternatives the customer is aware
- Consideration Set (or “evoked set”): This set includes the alternatives that are considered
acceptable
- Inert Set: This set includes those alternative to which consumers are indifferent or to which
strong feelings are not held
- Inept Set: This set includes those alternatives that are deemed to be unacceptable for further
consideration

External Search

- External Search: Gathering information from sources external to the consumer such as friends,
family, sales people, and advertising
o This is information on a product or brand received from and obtained by friends or
family
Decision Making Approaches Depends On…

- Involvement: The degree of personal relevance that a consumer finds in pursuing value from a
given act
o Types of Risk:
 Financial
 Social
 Performance
 Physical
 Time

Decision Making Perspectives

- Rational Decision
o Traditional approach to decision-making
o Assumes that consumers diligently gather information about purchases, carefully
compare various brands of products on salient attributes, and make informed decisions
regarding what brand to buy
- Behavioral Influence Decision
o Assumes that many decisions are actually learned responses to environmental
influences
 Behavior is influenced by environmental forces rather than by cognitive decision
making
- Experiential Decision
o Assumes consumers often make purchases and reach decisions based on the affect, or
feeling, attached to the product or behavior under consideration
 (Example: Consumer decides to spend time at a day spa)

Decision Making Approaches

- Habitual (Routine) Decision Making:

o Brand Loyalty: Buy regardless of situational influences that can lead to switching
 Loyalty Programs: value product and incentives
o Brand Inertia: Simply buys a product without any real attachment
- Satisficing decision-making process: Use discounts for memberships; advertise convenience and
value for the money of an annual membership
- Optimizing decision-making process: Promote the amenities: the various types of equipment,
the fitness classes, the food and beverages available, and the ambiance of the facility
Chapter #13: Decision Making 2: Alternative Evaluation and Choice

Evaluative Criteria

- The attributes, features, or potential benefits that consumers consider when reviewing possible
solutions to a problem

Determinant Criteria

- The evaluative criteria that are most carefully considered and are directly related to the actual
choice that is made
- LARGELY DEPENDENT ON THE SITUATION
- Remember price and quality are typically always part of the attributes considered
o Low prices can lead to perceptions of low quality
o High prices can lead to perceptions of high quality

Value Affects Evaluation of Alternatives

- Value Equation: Value = What you get (Bennies) – What you give (Costs)
- Hedonic criteria – emotional symbolic, and subjective attributes or benefits that are associated
with an alternative
- Utilitarian criteria: Functional or economic aspects associated with an alternative

2 Types of Evaluation Processes

- Affect-Based Evaluation: Evaluate products based on the overall feeling that is evoked by the
alternative.
o Emotions and Mood play a big part
o “I am not sure why I bought this, I just fell in love with it.”
- Attribute-Based Evaluation: Evaluate alternatives across a set of attributes that are considered
relevant to the purchase situation.
o Assume people make comparisons
Importance of Product Categories in Evaluation Process

- One of the first things we do with information is try and make sense of it
- Product Categories are mental representations of stored knowledge about groups of products
o Knowledge about existing category is transferred to the item
o We draw on this knowledge to guide us in developing our attitudes and expectations
about a product or service
- Schema: A cognitive representation of a phenomenon that provide meaning to an entity
- Product Category Levels:
o Superordinate
 Abstract
o Subordinate
 More detailed: Evaluations generally more meaningful at this level because
specific difference can be noticed and evaluated

Evaluation of Alternatives

- Consumers often use perceptual attributes to make inferences about underlying attributes
- Perceptual Attributes
o Things you can see and are easily recognizable:
 Shape
 Size
 Color
 Price
- Underlying Attributes
o Not readily apparent and often learned through experience:
 Product Quality
 Durability
 Reliability
- Factors Determining Evaluative Criteria Used:
o Situational influences
o Product knowledge
o Social influences
o Expert opinions
o Online sources
o Marketing communications

Issues Affecting Consumer Judgements

- Just Noticeable Difference

o The difference threshold (or “Just Noticeable Difference”) is the minimum amount by
which stimulus intensity must be changed in order to produce a noticeable variation in
sensory experience
- Quality Perceptions
o Where you buy is just as important as what you buy
o Objective Quality vs Perceived Quality
 - Attribute Correlation
o Consumers often make judgements about featured based on their perceived relationship
with other features
 Marketers find this out through market research and perceptual maps/conjoint analysis
- Brand Name Associations

Consumer Choice: Decision Rules

- Compensatory Rules: Allows consumers to select products that may perform poorly on one
attribute by compensating for the poor performance by good performance on another attribute
- Non-compensatory Rules: Strict guidelines are set prior to selection, and any option that
doesn’t mee the specifications is eliminated from consideration
o Noncompensatory Models:
 Conjunctive Rule: Rejects anything that fails to meet cutoff points on all features
 Disjunctive Rule: The product that meets or exceeds highest cutoff on any
feature is selected
 Lexicographic Rule: Product that performs the best on the most important
attribute is selected
 Elimination-by-aspects Rule (EBA): Process of elimination based on importance
of attribute and rating

Chapter #14: Consumption and Satisfaction

Consumption Process

- Process that converts time and goods, services, or ideas into value
- Differences take place between…
o Durable goods- Goods consumed over long periods of time
o Nondurable goods- Consumed quickly
- Meaning Transference: Process through which culture meaning is transferred to product and
onto a consumer

Expectations

- Types of Expectations:
o Predective – what you think will occur
o Normative – based on past experience
o Ideal – what you really want to happen
o Equitable- what should happen based on the level of work put into the experience
- Expectations have Sources:
o Friends and Family
o Companies
o Marketing
o Personal Factors (past experience with products)
Theories of post-consumption reactions

- Expectancy/Disconfirmation
o Enter with predetermined expectations of a products performance
o Performance perceptions are benchmarks which we use to judge
o They lead to positive disconfirmation (leads to satisfaction) or negative disconfirmation
(leads to dissatisfaction)
o It’s a satisfaction judgement
o It’s a cognitive appraisal
o Appraisals are tied to Expectations (the probability that something will occur and the
evaluation of that potential occurrence)

Attribution theory

- Focuses on explaining why a certain event has occurred

- Elements:
o Locus – judgements of who is responsible for an event
o Control
o Stability
o Satisfaction may or may noy be impacted

Chapter #3: Perception

Perception and Learning

- Learning: Change in behavior resulting from interaction between a person and a stimulus
- Perception: Consumer’s awareness and interpretation of reality
o Shapes learning and behavior

Exposure

- Exposure: Refers to the process of bringing some stimulus within the proximity of a consumer so
that it can be sensed by one of the five human senses (sight, smell, taste, touch [tactile], sound)
o Sensation: A term used to describe a consumer’s immediate response to this
information
- Subliminal Processing: Way we sense very low stimuli that occur BELOW the level of conscious
awareness (the absolute threshold of perception)
o This type of learning is unintentional
o When something is sensed and influences us below conscious awareness it is said to be
subliminal
- Supraliminal Processing: ABOVE the level of threshold consciousness
o Contains a stimulus that people can actually notice, but since people don’t know that it’s
influencing their behavior
Selective Perception

- Selective Exposure: Involves screening out most stimuli and exposing oneself to only a small
portion of the stimuli present
- Selective Affirmation: Involves paying attention to only certain stimuli
- Selective Distortion: Process by which consumers interpret information in ways that are biased
by their previously held beliefs. This can be an either conscious or unconscious process

JND

- Just Noticeable Difference (JND): Represents how much stronger one stimulus needs to be
relative to another stimulus so that consumers can notice that the two are not the same
o Discussing changes in strength of stimuli and how strong it can be
 Here we are working ABOVE absolute threshold

JMD

- Just Meaningful Distance (JMB): Represents the smallest amount of change in a stimulus that
would influence consumer consumption and choice
o Retailers generally follow a rule stating that there needs to be at least a 20% drop in
prices for the stimulus to be considered effective or meaningful.

Memory

- Pre-attentive effects such as the mere exposure effect, result in implicit memory
o Implicit Memory: Pertains to retaining memory for information that a person was not
trying to remember and involves learning passively and unintentionally

Attention

- Attention: The purposeful allocation of information-processing capacity toward developing an

understanding of some stimuli.
o Consumers tend to be selective in their attention spans due to the amount of stimuli
that we are exposed to on a daily basis
- Factors that help with creating attention:
o Intensity of stimuli
 Consumers tend to pay attention to stronger stimuli than to weaker stimuli
o Contrast
 Marketers show consumers who stand out from the crowd as a means of
capturing attention
o Movement
 Flashing lights and “pointing” signage are effective tools used
o Surprising Stimuli
 Unexpected stimuli gain consumers attention
o Size of stimuli
 Larger items garner more attention than smaller ones
o Involvement
 Personal relevance a consumer feels towards a particular product
Comprehension

- Comprehension: Occurs when the consumer attempts to derive meaning from information that
is received.

Intentional vs. Unintentional Learning

- Unintentional Learning: Consumers simply send and react (or respond) to the environment. In
this way, consumers “learn” without trying to learn
o Mere exposure effect/Product placement
o Learn without trying
- Intentional Learning: Consumers set out to specifically learn information devoted to a certain
subject
o Higher Involvement

Chapter #4: Comprehension

Message Characteristics

- Message Congruity
o Is it internally consistent and fits surrounding information?
o If the goal is to get people to remember info
 Inconsistent is good
o If the goal is to create favorable attitude
 Consistent is good
- Gestalt Principles (Figure & Ground)
o Focus of message can impact comprehension
 Figure is what is used to capture person’s attention
 Ground – or background – less important
o Figure-ground distinction – the contrast between the two
o Comprehension gets muddled with consumer mixes the two up
- Message Source
o Likeability
o Expertise
o Trustworthiness
 E+T = Credibility
o Attractiveness

Receiver Characteristics

- Intelligence/Ability
o More intelligent and educated are more likely to comprehend information
- Prior Knowledge
o Pre-existing information
- Involvement
o Highly involved pay more attention
 - Familiarity/Habituation
o People like the familiar (linking)
o Too familiar can lower motivation to process information
o Habituation is the process by which continuous exposure to a stimulus affects the
comprehension of and response to stimulus
 Adaption Level – the level of stimulus to which consumer has been accustomed

Characteristics of the Environment

- Information Intensity
o Amount of info available for consumer to process in an environment
o Overload impacts ability to process
o Exposed from 600-5000 messages a day
- Framing
o Information can change meaning based on when and how information is presented (aka
prospect theory – the way info is framed)
- Timing
o Amount of time a person has to process a message
o Point in time a person receives a message
 Morning
 Night
 Summer
 Winter

Memory

- The psychological process by which knowledge is recorded

o A Cognitive learning approach (meaning we think and process information)
o Vs. the Behavioral learning approach ( learning from changes in behavior due to
association)
- Multiple Stores Theory: Theory that explains memory as utilizing 3 different storage areas within
the human brain – sensory, workbench and long term
o Sensory Memory
 This is the area in memory where all of the things we encounter with any of the
five human senses are stored
 This portion of memory is considered to be preattentive
 The different storage mechanisms are:
 Iconic storage – Refers to storage of visual information
 Echoic storage – Refers specifically to the storage of sudatory
information
 Haptic perception – Interpretations created by the way something feels
 Unlimited Capacity
 Very perishable (maybe ½ to 3 seconds)
 Begins to fade immediately
 Strength is capacity
 Weakness is duration
 o Workbench (short-term) Memorys
 This is the area in the memory system where information is stored and encoded
for placement in lone-term memory and, eventually, retrieved for future use
 Encoding – Process by which information Is transferred from workbench
memory to long-term memory for permanent storage
 Retrieval – Process by which information is transferred back into
workbench memory for additional processing when needed
 Duration – 30 seconds or so
 Capacity – limited, 3 to 7 units
 Involvement – more involved the greater the capacity
 4 ways our workbench memory works to help us remember things:
 Repetition
o Process in which a though is held into short-term memory by
saying the thought repeatedly
o Cognitive Interference – other things vying for processing
capacity when consumer rehearses info
 Dual Coding
o Two different sensory traces are available to remember
something
 Meaningful Encoding
o A process that occurs when preexisting knowledge is used to
assist in storing new information
 Chunking
o Process of grouping stimuli by meaning so that multiple stimuli
can become a single memory unit
 Retrieval: When someone retrieve info from long-term memory it is processes
once again by work benching memory
o

Influence: Chapter 1+2

- Both humans and animals have fixed-action patterns

- Fixed- action patterns are intricate sequences of behavior that occur in virtually the same fashion
and in the same order every time (WHIRR)
- Our fixed-action patterns are initiated when we encounter trigger features
- Trigger features are often one tiny aspect of the total stimulus
- Though limited or seemingly insignificant, trigger features are important since they often
activate our fixed-action patterns:
o The automatic, fixed-action pattern of response is efficient most of the time
o Humans, like animal, have preprogrammed behavioral response tapes that usually work
to our advantage, but trigger features can cause us to activate the tape at the wrong
time

Heuristics
 - Is any approach to problem solving, learning, or discovery that employs a practical methodology
not guaranteed to be optimal or perfect, but sufficient for the immediate goals
- For human beings, heuristics can be mental shortcuts that ease the cognitive load of making a
decision
- We have words for heuristics. They are…
o Rule of thumb
o Intuition
o Stereotype
o Common Sense
o Educated Guess
- Cialdini’s 6 Weapons of influence:
o Reciprocation
o Commitment & Consistency
o Social Proof
o Liking
o Authority
o Scarcity

Judgement Heuristics

- Judgement heuristics are our shortcuts that allow for simplified thinking. Our mental shortcuts,
stereotypes, or rules of thumb allow us to classify things into groups according to key features
- When we process information using judgement heuristics, we often use cues in the message or
situation to trigger a decision
- Frequently, our judgement heuristics are efficient and effective, but they can leave us open to
occasional costly mistakes

Availability Heuristics

- Easy to recall (remember), the probability or frequency must be very high

- When asked, people will estimate that there were more men than women in the first list and
more women than men in the second list " even though the opposite is true. Why? Famous
names are easier to remember (recall) than the non-famous ones.
o This is an example of Recall availability

Controlled Responding

- Controlled responding is reacting on the basis of thorough analysis of all available information
- Laboratory research has demonstrated that people are more likely to utilize a controlled
response when they have both the desire and ability to analyze information carefully
- If an issue is important to us, we are more likely to use controlled responding rather than
judgement heuristics
- When processing information systematically, we are persuaded by the strength of the arguments
presented
Influence Chapter #3: Commitment