Study Guide Consumer behavior Exam 1 Segmentation- targeting a brand only to specific groups of consumers rather than to everybody.

Demographics Psychographics Benefits sought Relationship level Similar people and/or users respond to similar offerings product benefits, messages-Determine 1) capability to appeal to segment, 2) competitive viable and 3) worthwhile, or profitable Consumer Behavior-It is the study of the processes involved when individuals or groups select, purchase, use or dispose of products, services, ideas or experiences to satisfy needs and desires. Segmented by marketers by demographics Influenced by peer groups Exposed to competing brands seeking her loyalty Evaluates products by the appearance, taste, texture, smell Demographics-characteristics of a population (age, gender, family, structure, social class, income race) Psychographics-Aspects of a persons lifestyle & personality, the things we value, how we view ourselves, and what we do in our spare time Relationship marketing: interact regularly; provide reasons to maintain a bond with the company Business ethics: rules of conduct that guide actions in the marketplace Department of Agriculture Federal Trade Commission Food and Drug Administration Securities and Exchange Commission Environmental Protection Agency Cultural differences in ethics: Codes of ethics less formal in Mexico U.S. Foreign Corrupt Practices Act prohibits use of bribery by U.S. business people. Bribery commonly practiced in other countries Perception is the process by which sensations are selected, organized, and interpreted. Prior knowledge is also a key factor in interpretation 3 steps Exposure-occurs when a stimulus comes within range of someones sensory receptors Attention Interpretation (prior knowledge is a key component in this point) Sensation is the immediate response of our sensory receptors (eyes, ears, nose, mouth, and fingers) to basic stimuli (light, color, sound, odor, and texture). Schema-set of beliefs , to which we assign it Absolute threshold: the minimum amount of stimulation that can be detected on a given sensory channel Differential Threshold: ability to notice a difference between two stimuli

Attention is the extent to which processing activity is devoted to a particular stimulus, Consumers are often in a state of sensory overload Personal Selection Factors Perceptual vigilance-consumers are more likely to be aware of stimuli that relate to their current needs Perceptual defense-people see what they want to see and dont see what they dont want to see Adaptation-the degree to which consumers continue to notice stimuli over time Gestalt: the whole is greater than the sum of its parts Closure: people perceive an incomplete picture as complete Similarity: consumers group together objects that share similar physical characteristics Figure-ground: one part of the stimulus will dominate (the figure) while the other parts recede into the background (ground Brand perceptions = functional attributes + symbolic attributes Learning-is a relatively permanent change in behavior that experience causes Classical conditioning-occurs when a stimulus that elicits a response is paired with another stimulus that initially does not elicit a response on its own. Over time the second stimulus causes a similar response. Instrumental or Operant Learning- occurs when we learn to perform behaviors that produce positive outcomes & avoid those that yield negative outcomes. Instrumental conditions occurs in one of these ways Positive reinforcement Negative reinforcement Punishment Extinction Cognitive Theory of Learning-it stresses the importance of internal mental processes. This perspective views people as problem solvers who actively use information from the world around them to master their environments. Observational Learning- occurs when people watch the actions of others and note the reinforcements they receive for the behaviors, learning is a result of vicarious rather than direct experience Incidental learning: casual, unintentional acquisition of knowledge Hofstedes Cultural Dimensions- measures a country on 4 dimensions. Power Distance- the extent to which less powerful members of an organizations & institutions accept & expect that power is distributed unequally Individualism- degree to which individuals are integrated into groups Masculinity- Distribution of roles between genders Uncertainty Avoidance- societys tolerance associated with uncertainty and ambiguity Value- a belief that some condition is preferable to the opposite They are usually based off of priorities of a community 1) Terminal value-is the desired end state 2) Instrumental value- is the actions we need to take too achieve the terminal values. Drive Theory- focuses on biological needs that produce unpleasant states of arousal Expectancy Theory- suggests that expectations we will achieve desirable outcomes- positive incentives, rather than being pushed from within motivate our behavior Utilitarian Need- we emphasize on the object, tangible attributes of products. Looking for a practical benefit, as when a person loads up on green vegetables for nutritional reasons. Hedonic Needs- are subjective & experimental; here we look to a product to meet our needs for excitement, self-confidence. Also focuses on fantasies and emotional responses

Homeostasis- unpleasant state activates goal-oriented behavior, which attempts to reduce or eliminate this unpleasant state & return to a balanced one. Goals- the end is the desired end state. Goals have valence, they can be negative or positive Drive- the degree of arousal, the magnitude of the tension it creates determines the urgency the consumer feels to reduce it. Motivation- refers to the processes that lead people to behave as they do. It occurs when a need is aroused that the consumer wishes to satisfy. Motivational Strength- the degree to which a person will expend energy to reach one goal as opposed to another reflects his or her motivation to attain that goal. Instinct- the innate patterns of behavior that are universal in species Tautology- the circular explanation of instinct that disproves that theory Drive theory, homeostasis, and expectant theories are all driving forces for motivation. Involvement- is a persons perceived relevance of the object based on their inherent needs, values and interests. Involvement= f(person, situation, object), the level of the involvement may be influenced by one or more of these factors. Interactions among persons, situation, and object factors are likely to occur. 1) Inertia- describes the low end of involvement, where we make decisions out of habit because we lack the motivation to consider alternatives. 2) Flow State- when consumers are truly involved with a product, an ad, or a Web site. Flow state is an optimal experience Memory- is a process of acquiring information and storing it over time so that it will be available when we need it. Three stages 1) Encoding- info is placed in memory 2) Storage-info is retained in memory 3) Retrieval- info stored in memory is found as needed Episodic Memories-relate to events that are personally relevant, as a result a persons motivation to retain these memories are high Explicit Knowledge: Results from learning facts that or about something Tacit Knowledge: Results from learning how to perform some task or behavior. The two types are actually interdependent. - Explicit & Tacit also represent opposite ends of a continuum. - All knowledge lies somewhere along this continuum at varying degrees - Initially: semantic memory & episodic memory - Later: automatic or mindless Semantic Memories- refers to symbolic associations, such as the idea that rich people drink champagne or that fashionable women have navel piercings Sensory Memory- store the information we receive from our senses, very temporary storage, lasts a couple of seconds at the most Narrative: memories store information we acquire in story form Spreading Activation- allows us to shift back and forth among levels of meaning. The way we store a piece of information depends on the type of meaning we initially assign it.

Associative Network- incoming info gets stored here; it contains many bits of related info. We have organized systems of concepts that relate to brands etc. - Categorization & interpretation in perception - Prior knowledge and learning - Memory recall Maslows Hierarchy 1) Physiological 2) Safety 3) Belonginess 4) Ego Needs 5) Self- Actualization

A fundamental principle of successful brand development is that: A brand transforms a product into something larger than the products themselves Consumer-Based Brand Equity: Difference between value of the brand with marketing efforts & value of the brand without marketing efforts