mktg370 exam 1

define consumption

study of the processes involved when individuals/groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs & desires

consumption path

acquisition → exchange → possession → grooming → divestment

why should firms understand consumer behavior

retention

consumer lifetime value

product development

define needs

things that you need to survive

define wants

needs that intersect w culture, society, & personality

→ types of food, drink

define demand

wants backed by buying power

darksides of consumption

• consumer terrorism

• addictive/compulsive consumption ~ consumed consumers → organ selling, human trafficking

• anti consumption - culture jamming

sensory marketing

sight, sound, smell, touch, taste

→ sephora

define perception

process by which people select, organize, & interpret sensations via the 5 senses

information processing model

exposure → attention → interpretation → memory

selective exposure

when consumers avoid ad exposure

voluntary exposure

consumers actively seek ad exposure (superbowl)

interpretation

set of 7 psychological principles that explain how the human visual system perceives/organizes images

closure principle

people will “close the gaps” in an image to complete it

principle of similarity

people will group objects that share the same characteristics

figure ground principle

one part of the stimulus dominates, the other parts recede into the background

positioning

the way consumers perceive a product on important features relative to competing products

how to draw a perceptual map

1. identify product/service

2. identify 2 attributes

   1. quantifiable, represent interesting trade off (don’t correlate)

3. identify competitors

4. develop simple survey

5. fill in attributes for each competitor

6. create map

7. identify saturated markets & market opportunities

preference map

captures ideal points

how to create a preference map

1. identify consumer ideal points (D) through a survey, use same attributes as perceptual map

2. create map

3. identify demand clusters

4. compare perceptual & preference maps to identify true opportunities

motivations

processes that lead people to behave as they do

drive theory

focuses on biological needs that produce unpleasant states of arousal which consumers are motivated to reduce - return to balanced state of homeostasis

expectancy theory

expectations of achieving desirable outcomes motivate our behavior - focuses on cognitive needs

utilitarian needs

needs of practical/functional use - dishwasher, washing machine

hedonic needs

emotional needs that are fun based - collecting comics, shoes

maslows hierarchy

humans are motivated by unfulfilled needs & one or more levels of needs may be present at one time; lower levels must be satisfied before moving up

freud’s psychoanalytical theory of personality

the id

the superego

the ego

the id

desire to gratify primal & instinctive needs

superego

internalization of societal norms

→ serves as conscience

ego

balances the urges/impulses of id & superego & meets needs of both

rational model of consumer decision making

event trigger/problem recognition → information search → evaluation of alternatives → product choice → outcome (purchase/acquisition)

attitudes

general evaluation of people, objects, advertisements, issues

affect attitude

consumer emotion/feeling towards an object

behavior attitude

consumer actions towards the product

cognition attitude

consumer thoughts on an object, willingness to pay

hierarchies of attitudes

• standard

• low involvement

• experiental

standard attitude hierarchy

cognition → affect → behavior

low involvement hierarchy

cognition → behavior → affect

experiental hierarchy

affect → behavior → cognition

attitude formation

4 theories

• cognitive dissonance

• balance theory

• self perception theory

• social judgment theory

cognitive dissonance

when confronted w inconsistencies among attitudes, we will take action to resolve that inconsistency ~ buyer’s remorse w justification of the purchase, ego similarity

balance theory

considers how a person perceives relations among different objects & how attitudes are altered such that they are consistent

self perception theory

must have positive attitude toward object if we consumer it

social judgement theory

people form attitudes about objects in light of what they know/feel - framing bias

taste tests

use: diagnose problems & evaluating components of marketing mix

discrimination test

preference test

discrimination test

shows if people can tell the difference between brands but does not show preference

preference test

shows if one brand is preferred over another

involvement

the way we purchase changes depending on involvement levels

low involvement

heuristics: buy on a whim, out of habit, cheap, familiar, available

high involvement

heuristics: buy what works, is the best, what we like → we care

irrational decision making

variety seeking: seeking new alternatives over familiar ones, switch to ones we like less (ice cream example)

reversal of independence of irrelevant alternatives

A is preferred to B out of choice set A/B, when C is introduced, expanding the choice set to A/B/C, must not make B preferable to A

prospect theory

when a choice is framed one way, people may display risk aversion, but when offered the same choice another way, may display risk seeking behavior

low involvement inertia vs. brand loyalty

inertia: repeat purchase w low involvement/emotional attachment

→ brand switching when items are unavailable

high involvement rules

• lexicographic rule

• elimination by aspects ratio

• conjunctive rule

lexicographic rule

rational; consumer will purchase product that performs best on most important attribute

elimination by aspects ratio

application of lexicographic rule; consumers will use a filtering rule to eliminate alternatives

→ ex: only buy silver cars

conjunctive rule

consumers will only consider alternatives from 1 brand

conjoint analysis definition

method to eliminate structure of consumer’s preferences given their overall evaluation of a set of alternatives

→ x1 = body style of car, x2 = base price, x3 = charge time/mpg/tank size

assumptions of conjoint analysis

conjoint analysis is indirect elicitation technique that assumes consumers are not good at articulating wants but good at choosing from a given set & comparing options

→ assumes people are highly rational, carefully weigh options & make calculated decisions

outcomes of conjoint analysis

used by managers to assess monetary relative importance to individual features of product

→ goal of conjoint analysis is selection of optimal design to maximize consumer utility

define partworth

estimated value a consumer places on a specific feature of a product/service

limitations of conjoint analysis

• better for durable products; harder to do for services/intangible objects

• partworth values indicate relative importance, but not magnitude

• partworths do not indicate monetary value

• introducing new attributes can alter results; must redo conjoint analysis

long tail theory argument

businesses can profit by offering a vast selection of unique, niche items in small quantities, rather than only focusing on high volume popular products

→ “sell less of more”: sell more variety at smaller quantities

3 forces of the long tail

• democratizing the tools of production

• democratizing the tools of distribution

• connect supply & demand

6 themes of the long tail

1. there are far more niche goods than hits

2. the costs of reaching those niches are falling dramatically

3. filters can drive demand down the tail

4. the demand curve flattens

5. there are so many niche products that collectively they can comprise a market rivaling the hits

6. natural shape of demand is revealed

define metaverse

blend of digital stuff

→ immersive digital entry ~ gaming, virtual concerts, VR/AR

phygital product

digital & physical product/service w tie-ins that intersect

metaverse experience

events, tours, fan activation that solidifies brand engagement

metaverse marketing

use of immersive digital environments - virtual worlds, gaming platforms, VR, phygital - to transform products, services, & brands in ways that transcend geographic & physical boundaries

3 phase model of metaverse marketing

1. brainstorm a metaverse collaboration → roblox, fortnite, minecraft

2. add phygital tie-in → packaging, QR codes, limited edition products

3. plan a culminating real world/hybrid experience

digital marketing

messaging to consumers through digital channels

percentage of internet sales

15.6%

online buyer penetration rate

79.9%

percentage of americans who use social networking sites - young & old

91%

what do companies use social media for

brand building

what is the most popular measure of social media impact

clickthroughs

percentage of adults 50-64 use social media

73%

what is a major concern for marketers

highly selective nature of consumer exposure

what depends on how the consumer frames the product

utilitarian/ego expression

→ ex: wearing collectible shoes vs not wearing them

what describes a low involvement repeat purchase

inertia

to control for fatigue, researchers set the number of attributes they are testing to __ or less

9

what is the self perception theory similar to

low involvement hierarchy of attitudes

what do perceptual maps NOT assess

consumer ideal points

the quantitative formula for taste tests does what

eliminates guessers who guessed correctly

what is the 2nd force of the Long Tail defined by

aggregates who sell/distribute hit & niche products

define the 1st force of the long tail theory

reduction in cost/complexity of creating content/products

define 3rd force of the long tail theory 

use filters & recommendations to help consumers find niche products from an immense inventory filled w their interests