Unit 6

Question 1

Define consumer behaviour.

Answer 1

The acts of individuals in obtaining goods and services, including the decision processes that precede and determine these acts.

Question 2

What are B-Corps?

Answer 2

B Corps are for-profit companies that are part of a global movement to use business as a force for good. These firms commit to social and environmental missions as well as traditional profit-making goals.

Question 3

What influences a purchase decision?

Answer 3

• The purchase of a particular brand or product could be the result of an endorsement by a celebrity or a friend (ie. word-of-mouth endorsements)
• When making a buying decision, consumers process a lot of information from social media, family, friends, and their own personal experiences
• Research has found that past contact with a brand is the most important factor in a purchase decision
• Other important factors, but with lower response rates:
  Quality comparisons with other brands, price, recommendations from others, manufacturer’s reputation, and how well known and well advertised a product is

Question 4

What are the steps of the consumer purchase decision process?

Answer 4

1. Problem recognition
2. Information search
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase evaluation

These steps may not be followed depending on the type of purchase.

Question 5

Differentiate between routine and complex purchases.

Answer 5

Routine purchases - toothpaste, coffee, razor blades, and deodorant are usually based on product satisfaction.
No need to follow a prescribed buying procedure.

Complex purchases - automobile, an extended vacation, smartphone, or major household appliance require a lot of time, effort, money, and a proper evaluation of alternatives. It is likely that all steps in the buying process are followed.

Question 6

What are purchase activities?

Answer 6

• How consumers acquire products
• The steps consumers take in this process
• Includes the purchase decision process

Question 7

What are consumption activities?

Answer 7

• When, where, how, why people use products
• Not all products have a functional purpose in our lives
• Instead, the products communicate a message
• May include symbolic meaning
  Eg. High-end luxury items

Question 8

Define problem recognition.

Answer 8

In the consumer buying process, a stage in which a consumer discovers a need or an unfulfilled desire.

Question 9

Describe the difference between actual state and ideal state

Answer 9

Actual state - who we are

Ideal state - who we want to be

Question 10

Define needs recognition.

Answer 10

Identify need, actual state declines, act to reach ideal state.

Eg. In your current state, you identify a need for food; in your actual state, you are letting yourself become hungrier and hungrier until you reach your ideal state by eating food and being satisfied

Question 11

Define opportunity recognition.

Answer 11

Identify opportunity, ideal state moves up, act to reach ideal state

Opportunity: Desirable circumstances that can improve our current state

Eg. In your current state (actual state), you own a reliable car; you see a commercial for a nicer car and want to buy the new car, but do not need it; the car represents an opportunity but you are not willing to buy it yet; over time, cars become nicer and nicer; you reach a point where all the cars are new; the ideal state moves further from your current state so it kickstarts a purchase

Question 12

Define information search.

Answer 12

Conducted by an individual once a problem or need has been defined. The extent of the search varies with the nature of the purchase as well as the level of importance a consumer gives to the decision - known as consumer involvement.

Question 13

Differentiate between internal and external search.

Answer 13

Internal:

• Effective when prior knowledge exists
• Memory, past experiences

External:

• No or limited prior knowledge likely
• Personal sources, public sources, market-dominated sources
• Personal sources - family members, close friends
• Public sources - YouTube, forums
• Market-dominated sources - Nike’s website

Question 14

Define consumer involvement.

Answer 14

Perceived interest and importance that a consumer attaches to the purchase and consumption of a product or service.

If it is a routine and low involvement purchase with little risk, no information may be sought.

If it is a complex and high involvement decision that involves a higher degree of risk, numerous sources of information may be investigated.

Question 15

Describe the evaluation of alternatives step.

Answer 15

This step evaluate and compares all products on attributes that have the ability to deliver the benefit that they are seeking.

Question 16

Describe awareness set.

Answer 16

Awareness Set:

• Evoked Set (Consideration Set) - positive impression
• Insert Set - no impression
• Inept Set - negative impression

Question 17

Define evoked set.

Answer 17

A group of brands that a person would consider acceptable among competing brands in a class of product.

Question 18

Describe the purchase decision step.

Answer 18

1. What will be purchased
2. From whom to purchase
   - Price point - consumers will choose seller with best price
   - Return policy - consumers will go to seller with return policy because it is low risk
   - Convenience - online shopping
   - Knowledge of/experience with seller - positive experience causes people to return to seller again, negative experience prevents people from returning to seller
3. When to purchase
   - Sales/promotions - eg. back to school promotions
   - Shopping experience - eg. the organization, atmosphere, helpfulness of a store
   - Time pressure to buy - eg. personal pressure depending on current need; low stock of an item
   - Finances - the amount of money you have to buy a product

Question 19

Describe the post-purchase evaluation step.

Answer 19

• Compare product to expectations to assess satisfaction
• The purchase of routine ideas is based on past experience and satisfaction. Creates a positive, secure feeling after the purchase
• Other purchases may result in dissatisfaction leading to brand switching, a process involving more purchases and evaluations
• Dissatisfaction results in cognitive dissonance

Question 20

Define cognitive dissonance (theory by Leon Festinger).

Answer 20

An individual’s unsettled state of mind after an action he or she has taken.

The presence of cognitive dissonance suggests that the consumer is not confident that he or she has made the right decision. This can be overcome by taking certain actions. Eg. Read online reviews, review the purchase, talk to a friend about the purchase, etc.

The organization should follow-up to ease the customer’s mind.

Question 21

What influences consumer behaviour?

Answer 21

• The purchase decisions of Canadian consumers are primarily influenced by psychological, personal, social, and cultural factors
• Decisions about product, price, availability, and marketing communications are designed to positively influence customers

Question 22

Define lifestyle.

Answer 22

A person’s pattern of living as expressed in his or her activities, interests, opinions, and values.

Question 23

Why are psychographics and demographics important?

Answer 23

• Tthe psychographic profile that indicates differences between people and why similar people buy different products
• Psychographic research determines the activities (work, sports, and hobbies), interests (family, friends, and social attitudes), and opinions (social, issues, businesses, or politics) of consumers
• When information about a person’s lifestyle is combined with demographic data, a more complete picture of an individual emerges; a picture that allows marketers to understand how someone interacts with others and their surroundings
• Psychographic information shows how an individual’s interest in a particular product depends on his or her lifestyle
• Psychographics allow the marketing organization to position its products effectively in the marketplace and to communicate better with its target buyers

Question 24

What is AIOS?

Answer 24

AIOS - activities, interests, and opinions.

Question 25

What is the life-cycle theory?

Answer 25

Life-cycle theory is based on the changing needs of a family as its members progress through the various stages. Marketers tend to define their target markets on the basis of age and life cycle, and devise appropriate marketing strategies suited to particular stages.

Question 26

How does technology influence buying behaviour?

Answer 26

Factors are combined to dramatically change the way in which consumers buy goods and services. These factors include the growing numbers of time-pressed consumers, the availability of information through the Internet and social media networks, and our growing obsession with mobile devices.

Question 27

How does technology affect companies?

Answer 27

- Marketers can monitor where consumers are and what they are purchasing with the amount of data and available technology - Retailers can also create detailed consumer profiles and target individual customers - The Internet and social media networks offer an effective and efficient means to communicate directly with people and are an essential component of the marketing communications mix

Question 28

Define location-based targeting.

Answer 28

Location-based targeting refers to opportunities for marketers to locate consumers as they move around and communicate directly with them.

Question 29

How does the current economic situation affect purchase decisions?

Answer 29

- The economy directly or indirectly influences the attitudes, values, and lifestyles of people in Canada - The cyclical nature of the economy shapes purchase decisions

Question 30

What results due to a recession?

Answer 30

- Unemployment may be on the rise, and the discretionary income of consumers may be low - Major and new purchases will be delayed and consumers will make products last longer

Question 31

What happens due to a boom?

Answer 31

Consumers are more likely to purchase more goods and services.

Question 32

How does the economy affect companies?

Answer 32

- An organization will adjust its marketing strategies based on changes in the economy - A business organization remains conservative in hard times and is more aggressive in good times

Question 33

What is the theory about "too much" choice?

Answer 33

The theory hypothesized that extensive choices can be demotivating, preventing people from purchasing.

Question 34

What was the experiment conduced by Lyengar and Lepper?

Answer 34

The researchers compared limited (psychologically manageable) choice and extensive (psychologically excessive) choice with experiments that observed the actions of individuals when presented with limited vs. extensive choices.

Question 35

What were the conclusions after Lyengar and Lepper's experiments?

Answer 35

Results do not hold up when: - Decision-making self-efficacy is high - A clear prior preference exists - One is experiencing positive affect - If someone is feeling happy when they are in the purchase decision process, they will not feel overwhelmed with the many choices Meta-analysis that tested hypothesis found little supporting evidence: There is limited support for the hypothesis; there is no such thing as too much choice.

Question 36

What are situational influences?

Answer 36

Situational influences are factors pertaining to considerations, time, and location that impact the purchase decision process. Eg: - Physical surroundings - Social surroundings - Temporal effects - Antecedent states - Purchase task

Question 37

What are physical surroundings?

Answer 37

Physical characteristics of retail space.

Question 38

Define atmospherics.

Answer 38

Atmospherics are controllable factors that set ambience and create a sensory experience. - Appealing to sense of smell, touch, etc - Decide lighting, music - Layout: design of floor space Eg. Bread and dairy are on opposite sides of the store so that customers will have to walk the distance and be enticed to purchase additional items; directs traffic - Crowding (spatial, people) Spatial crowding is not welcoming Crowding of people increases spending because it communicates that the environment is popular and offers good products and prices

Question 39

What are social surroundings and how do they affect purchases?

Answer 39

Social surroundings are interactions with others. There is a difference in results between social shopping vs. solitary shopping in purchases made and spending. When people shop with other people, they are more likely to purchase more items and spend more money, this drives up sales and spending. Role of others in our lives (shopping behaviour, impulse buys): When people shop with friends instead of family, people are more likely to explore different things or pick up more items (browsing and perusing is more common); impulse buying is more common.

Question 40

Describe temporal effects.

Answer 40

Time of day (more variety as day progresses): - People are looking more variety in their shopping as the day progresses; they are willing to make more risks and try exciting things. - At the beginning of the day, people stick with comfort and familiarity - they are groggy and less comfortable with risk Time of year (comfort products with less daylight): - As the temperature becomes colder, people will spend more money on comfort items Amount of time available (lowest price, most recognizable): - When people have little time to shop, they will go for the lowest price or most recognizable/item used in the past if there is no preference in mind - When people are faced with many items with the same price and have not purchased the product before, they will go for the most recognizable item based on commercials, promotion, etc

Question 41

Describe antecedent states.

Answer 41

Momentary conditions: Emotional state (familiarity vs. novelty) - Positive mood → more open to novelty - Sad emotion levels → preference for familiarity Energy level (self-regulation vs. impulsive buying) - People who have more energy and are more alert will regulate their shopping and get what they need and go - People who are exhausted have little self-regulation; more susceptible to impulse buying Cash on hand - The amount of money you have at a given time will influence your buying

Question 42

Describe purchase task.

Answer 42

- Goal of a shopping trip - Casual shoppers will browse and purchase more items - Goal-directed shoppers will only get what is necessary - Embarrassing items = more items purchased Eg. Condoms, feminine hygiene products - People who purchase these embarrassing items will purchase more additional items to blend in their purchases so it is less noticeable

Question 43

What is sensory marketing?

Answer 43

Sensory marketing is marketing that engages the senses and affects consumer perception. Sensory marketing evokes memories and creates emotional responses. It aims for congruence between the sensation and environment.

Question 44

Describe sensory marketing in relation to sound (genre, volume, tempo).

Answer 44

Genre: - Category of music - Directed at target market to attract customers - Can affect spending; attract customers to spend more - Classical music is the most influential genre Volume: - Loudness of music - High volume increases stress response - Low volume can be unwelcome Tempo: - Speed of beat (bpm) - Longer browsing at slower tempos - Up tempo music can help control customer traffic; influence customers to move quicker

Question 45

Describe sensory marketing in relation to smell.

Answer 45

Ambient scents capable of: - Attracting customers - Increasing browsing time - Increasing product interaction - Increasing spending Ambient scents elevate mood, lower anxiety, increase calmness

Question 46

Define associative learning.

Answer 46

Associative learning is the process by which we come to associate certain sensations with particular feelings . Scent --> event --> emotion. A consistent pairing with events will allow you to quickly associate the scent with an emotion.