Key concepts book From expousure to comprehension Consumer inferances – the conclusions the consumer draw or interpretations they form based o the message (Marketing ad for example. Those can be based on: - Price (high price good quality) Product apperanace ( pattern origin) Message wording Attributes and benefits Brand names and symbols Retail atmosphere, display, distribution Absolute treshold – the minimum level of stimulus intensity needed for a stimulus to be percieved Differential treshold – the intensity difference between 2 stimuli needed before people can percieve that the stimuli is different (just noticeable difference) Just noticeable difference - The minimum amount that one brand can differ from another (or from its previous version) with the difference still being noticed Weber's law – The stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different. Subliminal perception – the activation of sensory receptors by stimuli presented below the perceptual threshold. Preattentive processing – the nonconscious processing of stimuli, such as in peripheral vision. Preattentive processing makes a brand name familiar, affects consumers’ consideration of a product, activates consumers’ emotions. Factors affecting consumer attention: - Affective state Environmental prominence Involvement Social influences Reference group is a set of people with whom a consumer compare themselves for guidance in developing their own attitudes, knowledge, and/or behavior Aspirational reference group – a group that consumer admire and wish to be like but is not currently a member of it Associative reference group – a group which consumer currently belong Dissociative reference group – a group whose values, attitudes, behavior consumer dissaprove of and do not wish to emulate. Norms - Collective decision about what constitutes appropriate behavior Normative influence implies that consumers will be sanctioned, punished, or ridiculed if they do not follow the norms, just as it also implies that they will be rewarded for performing the expected behaviors. - Brand choice congruence – the purchase of the same brand as a member of a group Conformity – the tendency to behave in a expected way Compliance – doing what a group/social influencer say Reactance – completley opposite from compliance What affects normative influence strenght: - Product characteristics Group characteristics (coercive power – the extent to which the group has the capacity to deliver rewards and sanctions) Consumer characteristics (how susceptible are consumers to influence by others) Marketing implications – actions taken based on normative influences: - Creating norms for group behavior Demonstrating rewards and sanctions for product use/nonuse Stimulating referrals Creating conformity pressures Using compliance techniques Asking consumers to predict their own behavior Providing freedom of choice Using service providers similar to customers Injunctive norms reflect people's perceptions of what behaviors are approved or disapproved by others. They assist an individual in determining what is acceptable and unacceptable social behavior. - Subjective norms refer to the belief that an important person or group of people will approve and support a particular behaviour. Subjective norms are determined by the perceived social pressure from others for an individual to behave in a certain manner and their motivation to comply with those people's views. - Introjected personal norms are motivated by guilt avoidance or expression of pride. Introjection means taking in the cause of doing something but not fully accepting it. An example would be a student who spends lots of time practicing piano for a recital because she believes if she doesn't do well, she won't play well, and others will look down on her. Descriptive norms involve perceptions of which behaviors are typically performed. They normally refer to the perception of others' behavior. These norms are based on observations of those around you. Values, Personality, and Lifestyles Values are enduring beliefs about abstract outcomes and behaviors. A value is an enduring belief that a specific mode of conduct or endstate of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence. A value system is an enduring organization of beliefs concerning preferable modes of conduct or end-states of existence along acontinuum of relative importance. Terminal values – highly desired end states such as social recognition and pleasure. Instrumental values – the values needed to achieve the desired end states such as ambition and cheerfulness. Hofstede’s cultural dimensions: - Individualism versus collectivism - Uncertainty avoidance - Masculinity versus femininity - Power distance Means-end chain analysis - a technique that can explain how values link to attributes in products and services. It help us understand how attributes of a product are percieved and valued by a consumer. Value laddering – determining the root values related to product attributes that are important to consumers. Personality consists of the distinctive patterns of behaviors, tendencies, qualities, or personal dispositions that make one individual different from another and lead to a consistent response to environmental stimuli. Psychoanalytic approach – personality arises from a set of dynamic, unconscious internal struggles within the mind (Sigmund Freud). Phenomenological approaches – personality is largely shaped by an individual’s interpretation of life events. A key concept of phenomenological approaches is locus of control, or people’s interpretations of why specific things happen, attributing the cause of events to the self (internal) or to others (external). Social-psychological theories – focuses on social rather than on more biological explanations of personality, proposing that individuals act in social situations to meet their needs. Behavior can be characterized by three major orientations: - Compliant individuals are dependent on others and are humble, trusting and tied to a group. Aggressive individuals need power, move against others, and are outgoing, assertive, self-confident, and tough-minded. Detached individuals are independent and self-sufficient but suspicious and introverted. One of the most widely known psychographic tools is VALS, formerly known as Values and Lifestyles. It analyzes the behavior of US consumers based on two factors: - The first factor is resources, including self-confidence, innovativeness, intellectualism, novelty seeking, impulsiveness, leadership, energy level, and vanity. - The second factor is primary motivation: ideals, achievement or selfexpression Motivation, Ability and Oppurtunity Felt involvement – the consumer‘s experience of being motivated with respect to a product or service, or decisions and actions about these. The felt involvement can be: enduring, situational, affective or cognitive. Motivation is influenced by: - Motivation o Personal relevance (to self-concept, values, needs, goals and self control) o Percieved risk o Discrepancy of information o Moderate inconsistency - Ability o Cognitive, financial, emotional, phsyical, social, cultural resource o Demographics - Oppurtunity o Amount and repetition of information o Time and distraction o Complexity, control of information A need is an internal state of tension experienced as a discrepancy between the current state and an ideal or desired state Maslow hierarchy of needs (bottom to top) - Physiological (air, water, shelter, clothing, reproduction) - Safety (personal safety, health, employment) - Social (friendship, intimacy, family, sense of connection) - Estem /Egoistic ( respect, self estem, recognition, freedom, strenght) - Self concept (desire to become the most one can become) Motivation reflects an inner state of activation that moves the consumer to engage in goalrelevant behaviors, effortful information processing, and detailed decision-making Appraisal Theory – a theory of emotion that proposes that emotions are based on an individual’s assessment of a situation or an outcome and its relevance to his or her goals. Emotions can have wide-ranging long- and short-term consequences for consumer behavior - When consumer feel guilty compensating in other domains Feel sad Make an impatient choice Feel rejected riskier financial decision Consumers seeking to exert self-control are caught in a psychological conflict between desire, which is a short-term, hedonic force and willpower, which is a long-term, more utilitarian force. Mental effort involved in making these decisions between which goal to pursue may result in ego depletion. Percieved risk tend to be higher: - The offering is new The offering has a high price Brands differ fairly substantialy in quality Consumer has little confidence or experience in evaluating the offering The opinion of others are important Little information about an offering Typed of percieved risk - Performance risk Financial risk Physical (safety) risk Social Psychological risk Time risk From Expousure to Comprehension Expousure Attention Perception Comprehension Expousure: The process where the consumer comes in contact with the stimulus → Exposure does however not guarantees the active engagement of customer with the product Attention is the amount of mental activity a consumer devotes to a stimulus. Attention is - Selective; consumers decide what to focus on at any given time Divided; consumers can allocate some attention to one task and some to another task, or rapidly switch between task. Limited; consumer can miss some stimuli, especially in unfamilliar soroundings Preattentive processing – the nonconscious processing of stimuli, such as in peripheral vision. Preattentive processing makes a brand name familiar, affects consumers’ consideration of a product, activates consumers’ emotions. Factors influencing consumer attention are: environment prominence, affective state and level of involvement. Stimuli attract more attention when they are: personally relevant, pleasant, surprising and easy to process. Perception: is the process of determining whether the stimulus is coming to us and how are we perceiving it with our senses. It is the process of determining the properties of stimuli using touch, smell, hearing, taste, and vision. Absolute Threshold – the minimum level of stimulus intensity needed for a stimulus to be perceived. Differential Threshold – the intensity difference needed between two stimuli before people can perceive that the stimuli are different (Just Noticeable Difference or JND) Weber’s Law – the stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different. Subliminal perception – the activation of sensory receptors by stimuli presented below the perceptual threshold. Comprehension – the process of extracting higher-order meaning from what consumers have perceived in the context of what they already know. Consumer inferences – the conclusions that consumers draw or interpretations that they form based on the message. They can be based on: price, brand symbols, message wording, product features, packaging, retail atmosphere, display.. Memory and Knowledge Working memory, particulary imagery processing, has several implications on maketers: - Imagery can improve the amount of information that can be processed Can stimulate future choice Realistic imagery can improve customer satisfaction Two types of long term memory: Episodic and semantic memory. Various techniques can leverage the power of episodic memory for marketing: - Can play a role in creating in identification with the consumers Advertisement shows a common problem that you can identify with, and then shows the problem - Creates feeling of Nostalgia Nintendo re-doing they're old consoles, Coca Cola Christmas commercials - Help reinterpret consumer experiences Oreo showing how to eat a cookie Explicit information is not automatically in the LTM. To transfer the information to LTM, we know different techniques: - Chunking, Rehearsal (actively engaging with the content → repeating the content) Recirculation (Not actively trying to remember, but you are over and over exposed) Elaboration: Transferring information into long- term memory Schema – Group of associations or associative network linked to an object or person. Association vary in the context and can contain: attributes, benefits, values, consumption occasions.. Associations in schemas vary in 3 dimensions: - Salience – How easily association comes to mind Uniqnues – The extent to which associations are also related to other products Favorability – How favorably consumers evaluate the brand Consumers have the natural tendency to group objects and people together in categories that share certain characteristics, called taxonomic categories. A taxonomic category is a specifically defined division within an orderly classification of objects with similar objects in the same category. Taxonomic categories can be hierarchically organized into basic, subordinate and superordinate levels: - Superordinate level is the broadest (e.g.; bevarage) Basic level has finer discrimination ( e.g: Soft drink) Subordinate level is the finest level of discrimination (e.g.: diet) Then is category member/example (e.g.; diet coke) Construal level theory describes the different levels of abstractness in the associations that a consumer has & how the consumer’s psychological distance from these concepts influences behavior. Cognitive learning: People interpret information in the environment and create new knowledge or meaning (direct personal use experience, vicarious product experiences, interpretation of product-related information) Accretion – adding new knowledge, meanings and beliefs to the exiting knowledge structures Tuning – adjusting knowledge structures to make them more accurate and generalizable Restructuring – revision of the entire associative network of knowledge (might include creation of entirely new meaning structures and/or reorganization of an old knowledge structure) What enhances retrieval: - The characteristics of the stimulus itself (salience, prototypicality, redundant cues, medium) What stimulus is linked to (retrieval cue) The way the stimulus is processed Consumer’s characteristics (mood, expertise, …) Attitudes – High effort Attitude is an overall evaluation that express how much we like or dislike an object, person, issue or an action. Attitude reflect our overall evaluation based on the associations linked to it. The characteristics of attitudes: Favorability, Accesibility, Persitance, Resistance, Confidence, and Ambivalence. Attitudes based on cognition and high effort central route processing - Attitude based on direct or imagined experience Value driven attitude Reasoning by analogy or category Social identity based Analytical attitude construction Attitudes based on cognition and low effort peripheral route processing - Simple beliefs Unconsious influences The environment Attitudes based on affect and high effort central route processing - Affective response Attitude toward ad Emotional processing Attitudes based on affect and low effort peripheral route processing - Classical and evaluative conditioning Attitude toward the ad Mere exposure effect Mood Multiattribute-Attitude Model - Overall attitude is a function of two factors: - Strengths of the salient beliefs associated with the object Evaluation of those salient beliefs The theory of Reasoned action: The model assumes that consumers consciously consider the consequences of the alternative behaviors and choose the one that leads to the most desirable consequences. Behavior is therefore influenced by: - Attitude toward the specific behavior o Belief that behavior leads to salient consequences o Evaluation of those salient consequences o o Subjectiv norm about a specific behavior Motivation to comply Intensity of normative influence Marketers can change attitudes, intentions, and behavior through these major strategies: - Change belief Add a new belief Change evaluation Encourage attitude formation based on imagined experience Target normative beliefs What influences cognitivley based attitudes? - Communication source – credibility, expert, status.. Message characteristics – quality, type of information... One sided message – only positive information presented - Two sided message – bost postive and negative information presented Comparative message – how much better a product A is against product B Attitudes based on affect and high effort central route processing - Affective response o when consumers generate feelings and images in response to a message. - Attitude toward ad Emotional processing How affectively based attitudes are influenced? - Communication source characteristics – attractiveness - Message characteristics – using appeals to elicit emotions - Fear appeals – attempt to elicit fear or anxiety by stressing the negative consequences of either engaging or not engaging in a particular behavior. Three major characteristics lead to a positive attitude toward an ad in the context of high effort: - When an ad provides information; When an ad creates positive feelings; When an ad arouses curiosity and attracts attention Attitude-behavior gap - Level of involvement/elaboration Knowledge and experience Analysis of reasons Accessibility of attitudes Attitude confidence Specificity of attitudes Attitude-behavior relationship over time Emotional attachment Situational factors Normative factors Personality variables Attitudes – Low effort When processing effort is low, consumers are passive recipients of the message and usually do not form strong beliefs or accessible, persistent, resistant or confident attitudes. Attitudes based on cognition and low effort peripheral route processing - Simple beliefs Unconsious influences (thin slice judgements and body feedback) The environment Attitudes based on affect and low effort peripheral route processing - Classical and evaluative conditioning Attitude toward the ad Mere exposure effect Mood Peripheral route to persuasion – aspects other than key message arguments that are used to influence attitudes. Peripheral cues – easily processed aspects of a message, such as music, attractive source, pictures, humor… When processing effort is low, consumers may acquire simple beliefs by forming simple inferences – beliefs based on peripheral cues: - Price = quality Product apperance = origins Color = attribute Heuristics – simple “rules of thumb“ that are used to make judgements. Frequency heuristics – belief based simply on the number of supporting arguments or amount of repetition. Truth effect – when consumers believe a statement simply because it has been repeated a number of times. Classical conditioning: Process by which a neutral stimulus becomes capable of eliciting a response because it was repeatedly paired with a stimulus that naturally causes the response. Under the control of autonomic nervous system. Evaluative conditioning – produces affective response by repeatedly pairing a neutral conditioned stimulus with an emotionally charged unconditioned stimulus. Operant conditioning: Process of altering the probability of a behavior being emitted by changing the consequences of the behavior. Operant conditioning deals with behaviors that are usually under the conscious control of the individual. Operant behaviors are emitted because of consequences that occur after the behavior. Operant conditioning has occurred when the probability that an individual will emit a behavior is altered by changing the consequences of that behavior. It happens in a few ways: - Positive reinforcment: where a reward is delivered following a response - Negative reinforcement: removing aversive stimuli, where a negative outcome is avoided by not performing a response (buy to avoid the pushing salesperson) - Extinction – not meeting expectation or lowering excitement (not finding your favourite brand in a store) - Punishment – where a response is followed by unpleasant events (don’t see rude customer service again) Shaping Process of arranging conditions that change the probabilities of certain behaviors not as ends in themselves but to increase the probabilities of other behaviors. Problem recognition & high effort judgement and decision making Problem recognition – the perceived difference between an actual and an ideal state How is consumer ideal state formed? - Everyday consumption and expectations Simple expecations Future goals and ambitions Social class Culture Reference group Suddent life changes How is consumer actual state formed? - External stimulus Needs Pyhisical factors Internal information search - Recall of brands o Brand familliarity o Brand preferences o Goals and usage situation o Prototypicality o Retrieval cues - Recall of attributes: o Salience o Vividnes o Accesibility or availability o Diagnosticity o Goals - Recall of evaluations o Easier to recall overall evaluations o Evaluations form strong associative links with the brand o Evaluations more likely to be recalled by consumers who actively evaluate the brand when exposed to relevant information - Recall of experiences o From autobiographical memory o Renting skies on a trip → When buying your own pair you remember what skiis did you have last year Internal search biases Confirmation bias – refers to our tendency to recall information that reinforces or confirms our overall beliefs rather than contradicting them. Inhibition – the recall of one attribute inhibiting the recall of another. Mood – consumers are most likely to recall information, feelings, and experiences that match their mood. How much we engage in information search depends on 3 pillars: Our motivation o Involvement and perceived risk o Perceived costs and benefits o Consideration set o Relative brand uncertainty o o - Attitudes toward search (do you like it or not) Discrepancy of information Our ability: o Consumer knowledge (more you know the less you search) o Cognitive abilities (ability to process information) o Consumer affect (if we are highly affected this lead to more effective processing) o Demographic (more educated people look for more information) Our oppurtunity o Amount of information available o Time availability (under time limit we research less) o Number of items being chosen (more research when buying more items) o Information format (how information is presented) → e.g. Nutri score on food product Types of judgement: Estimation of likelihood → If you think about purchasing the last handbag, you may estimate if your friends will like it (how likely is something to occur). Judgements about the desirability of the offering feature (figure if something good or bad happens) → I want to go the the city trip to Norway, then you research that is cold. You judge this based on what you want to achieve. Go skiing or just city walking. Based on this you make a decision. Mental and emotional accounting o Mental accounting → mental account for money you keep aside for emergency, future plans.. o Emotional accounting → Emotional accounting is related with feeling → if your grandma die and leaves you 100$, you have a bad feeling about the money because it is associated with bad event. Research shows that people spend money in this occasion for more utilitarian action. Biases in judgement process Confirmation bias Self-positivity bias →judgement that bad stuff will happen to others. We don't portray it on us Negativity bias Mood bias - mood influence our information evaluation, processing.. Prior brand evaluations Prior experiences - we tend to use those experiences to later judgements Difficulty of mental calculations Difficulty of mental calculations → Want to celebrate 21 birthday in a good restaurant. Your friend tell you that chef doesn't wash his hands. This triggers the negative bias toward the restaurant and you over emphasise that information. High-effort decision-making – Cognitive models Proccessing by brand - Compensatory model o Multiattribute model Noncompensatory model o Conjunctive model: model that sets minimum cutoffs to reject “bad” options o Disnjunctive model: model that sets acceptable cutoffs to find options that are »good« Proccessing by attribue - - Compensatory model o Additive difference model; brands are compared by attribute two brands at a time. Noncompensatory model o Lexiographic model: model that compares brand by the attributes, one at the time in order of importance. The one that dominates wins. o Elimination by aspect model: consumers first order attributes in order of importance and then compare options on the most important attribute; options below the cutoff are eliminated High-effort decision-making – Affective models - Appraisals and feelings (emotions determine way we think about situations) - Affective forecasting – consumers’ predictions of what they will feel in the future - Imagery Noncomparable decision – the process of making a decision about products or services from different categories. Alternative-based strategy – making an overall evaluation of each option. Attribute-based strategy – making abstract representations of comparable attributes. What affect high effort decisions? Consumer chacarterisics: o Expertise → If you have more knowledge, you will seek more info. o Mood → good mood means you will pursue more time in seeking information o Time → time pressure o Extremness aversion → avoid very extreme options. We preffer more moderate options Metacognitive experiences → how information is processed (is it easy to evaluate, recall..). Decision chacartericis o Information availability (more info means that is easier to elaborate, to much info drives to info overload) o Information format → images, viuals etc. make info easier to transport and process o Trivial attributes → attributes that don't create any significant difference to the product performance Group context: o Self-presentation → do we want to be percieves as a part of a group or as an individual? o Minimize regret → We might go with the group decision to minimize regret o Information gathering → do we really exhange information with the group? Is that important to us? o Low-effort Judgement & Decision-making | Post-decision Processes When effort is low, individuals simplify the cognitive process by using heuristics or rules of thumb to reduce effort involved in making judgements (can be general or more specific) Represenativeness heuristics Making a judgement by simply comparing a stimulus with the category prototype (product that resembles the whole category: e.g. Iphone for smart phones). Availability heuristics Basing judgements on events that are easier to recall. More likely to recall accessible or vivid events Influences on unconscious low-effort decision making: - Evaluative conditioning Thin-slice judgments Body language or store environment Thought based decision making Performance related tactics o based on benefits, features, performance o example: Ariel is good for removing stains from clothes. So, I will go with Ariel. I will but the toothpaste that make teeths the whitest. Habit o Repeteadly buy this product; you know why you buy it o one of simplest, effortless types of decisin making o First you buy in for performance and after buying again and again it becomes a habit o You don't do any evaluations, just grab a product and go o Habit → not highly involved with the brand. Just buy it Brand loyality o Buying the same brand repeteadly because of a strong preference for it o o o o Always buying Skyr because it has the most proteing. You develop loaylity Cognitive lock in → learn how to use a certain product and just start using this one all the time. Don't want to re-learn everything from Brand loyality → you have to be highly involved with the brand Cognitive lock-in for high effort products are apple phones Price o decision heuristics based on price: price perceptions Normative influences o Direct influence → buy others or we just observe what others do o Indirect influence → being concerned about the opinions of the others (typically for when consumers are unexperienced all the time) Feeling based decision making Feeling o selecting a brand just because you like it, you really don't know why o You hear about the brand and have some positive feelings about o Affect-related tatcis use affect referral Brand familiarity o We are exposed continously to the brand o We like stuff that is familliary Variety seeking o Some consumer get bored fast and just look for more variety o Possible for hedonic purposes Impulse purchases o Having a strong feeling o Bad self control o Feeling of excitment, euphoria etc. → don't care about the consequences Post decision process Post-decision dissonance – a feeling of discomfort about whether or not the correct decision was made (most likely to occur when decision is important & more attractive options exist). Post-decision regret – occurs when consumers perceive an unfavorable comparison – between the performance of the chosen option and the performance of the options not chosen (regret can be immediate or later, short-lived or permanent) What affects learning? - Motivation (when consumers are motivated to process information, they will generate a number of hypotheses and seek out information to test them) Prior knowledge or ability Ambiguity of the information environment or lack of opportunity Processing biases (confirmation, overconfidence) Thought-based judgements of satisfaction/dissatisfaction can relate to: 1. Whether consumers’ beliefs and expectations about the offering are confirmed or disconfirmed by its actual performance (The Disconfirmation Paradigm) 2. Thoughts about causality and blame a. Locus: Is the problem consumer or marketer related? b. Controllability: Is the event under the customer’s or marketer’s control? c. Stability: Is the cause of the event temporary or permanent? 3. Thoughts about fairness and equity a. Equity theory – a theory about the fairness of exchanges between individuals b. According to equity theory, consumers form perceptions of their own inputs and outputs into a particular exchange and compare these perceptions with their perceptions of the inputs and outputs of the salesperson, dealer, or company. Satisfaction/dissatisfaction based on feelings Experience emotions (and coping with emotions) Mispredictions about emotions → we can sometimes predict about our emotions, but sometimes we can be just wrong about it. We form some expectation and then feel dissatisfacted because we don't experience that we have imagined that we would. Disposition After we acquire an offering we need to dispose it sometimes → loaning, renting, losing, destroying. Disposition can be temporary (loaning or renting the item) or involuntary (losing or destroying the item) - Permanent, voulountary disposition can be o o o personal → you as a giver get the benefits interpersonal → the recipient get benefits societal focus → society get the benefits Consumers can dispose possessions in different ways: - Give away - Trade for something else - Sell for money - Recycle for other use - Discard in socially acceptable manner - Discard in socially unacceptable manner