-Individual influences on consumer buying decisions -Psychological influences on consumer buying decisions [SLIDE 1] Along with societal factors, individual factors impact buying decisions. There are three main areas: gender, age and family lifecycle stage, and personality/lifestyle. Gender Until recent years, gender marketing was a simple focus on men and women, with the associations being limited to anatomical identity. Advertisements were focused simply on the concept of which person was expected to perform which household tasks and then aiming the message at gender assumptions. However, in recent years, America’s society has changed in two major ways regarding gender: -The standard household roles of men and women are breaking down and people are sharing roles, with men doing more purchasing -The realization that gender is more fluid and identities are more complex, leading to more ads that can be more broadly focused for a wide variety of consumers Because of patterns of shopping related to gender, advertising should use different tools. Men are more focused on price and do not wish to spend as much time shopping. One result is that more than 70% of men shop online and almost 50% use mobile devices. A Harris Interactive poll found that, “men have become the chief coupon-cutters of the mobile era”. [SLIDE 2] Age & Family Lifecycle Stage A previous lesson described age cohorts (Generation X, Millennial), but that is not the only breakdown based on age. While it used to be that a “family with newborn” used to be assumed to be very young, that lifestyle has moved across decades of physical age. Categories such as “young singles”, “middle-aged married without children” and other narrower definitions are blending age with lifestyle stages that define purchase interest. For instance, researchers have found that the presence of children in a household is the most significant determinant of the type of vehicle that is purchased. As with gender, there are more examples today and larger populations of people with nontraditional life cycles. For instance, the large growth of single-parent households is considered nontraditional, but it is also a key marketing segment that should not be ignored just because it is not traditional. Today, married couples with children make up 23% of households while people living alone or with nonfamily members is more than 30%. Careers and parenthood create major time constraints for single parents, creating strong opportunity for time-saving products and services. In some ways, instead of looking at age it is better to focus on life events such as birth, marriage, divorce, home purchase, retirement and death to see how household consumption might change. [SLIDE 3] Each consumer has a unique personality, a way of organizing and grouping the consistencies of an individuals’ reactions to situations. A personality is the combination of environmental, social and individual forces that define a person. That personality drives choices in purchases the same way it does other aspects of life. Self-concept is how consumers perceive themselves in terms of attitudes, perceptions, beliefs, and self-evaluations. Through the self-concept, individuals define their identity. The self-concept combines two types of self-image: -Ideal self-image: the way an individual would like to be perceived. -Real self-image: the way an individual actually perceives himself/herself. People attempt to live a life that advances the real self-image towards the ideal self-image. One example of the difference is in the growth of the SUV over the minivan. Younger couples with children are often hesitant to move to a minivan or mid-sized sedan because it implies that they are becoming like their parents. The are more likely to move to more stylish and powerful SUVs. Toyota tried a new marketing campaign to focus on passion and fun rather than the image of a "soccer mom". [SLIDE 4] Unlike the previous three influencers, psychology can be more easily changed based on current environment because psychological factors change based on circumstance. The three key psychological factors which marketing can influence are perception, motivation and learning. Perception is the process by which people select, organize, and interpret stimuli into a meaningful and coherent picture. Everyone has, at one time or another, purchased what looked like a prime fruit or vegetable, only to get home, cut into it, and see it was rotten. The perception did not meet the reality. People cannot perceive every stimulus in the environment, and that leads to issues. There are three kinds of selective perceptions: -Selective exposure: Consumers notice certain stimuli and ignore others. We see thousands of ads a day but remember very few. -Selective distortion: Consumers change or distort information that conflicts with feelings or beliefs. After a Dell computer is purchased, a buyer might ignore benefits of an Asus laptop in order to justify the purchase. -Selective retention: Consumers remember only that information that supports personal beliefs. Consumers might see a negative news story on a store, but only remember it was negative rather than remembering why. Marketers must focus on the messages that consumers will retain, whether it be price, quality, or another factor. Providing too much information risks the key points being lost. Also focus on perceptions of words used. Brand names using words Santa Fe, Dakota, or Texas convey a sense of openness and freedom, but other locations might do the opposite. Perception also shows up when resizing a food product, such as a candy bar, providing less for the same price, as opposed to raising price. Where is the value point from a consumer perception point from those options? Finally, think back to the lessons on global markets. Perception is influenced by culture. For instance, in Japan there is often French or English on product labels, even if the customers cannot read the words or even if the words are nonsense. Foreign languages can help customers perceive a product as exotic, expensive, and high quality. [SLIDE 5] Motivation is the driving force that causes a person to take action to satisfy specific needs. The most famous description of the types of needs is Maslow’s Hierarch of Needs with four levels: -Physiological: survival needs addressing things such as hunger or thirst -Safety: housing, insurance and other products and services that provide security and freedom from pain and discomfort -Social: a sense of belonging, love, acceptance Esteem: self-esteem, self-respect, and a sense of accomplishment, often the driver for purchase of luxury goods -Self-actualization: self-fulfillment and self-expression, people feel they are where they should be Physiological needs are the most basic and must be satisfied before others can be addressed. On the other extreme, self-actualization is a motivation that matters only after the others have been satisfied. [SLIDE 6] The search and analysis portions of the buying decision rely on learning, the ability to add knowledge and information to improve understanding of options. There are two types of learning: -Experiential: learning from actual, direct, experience -Conceptual: learning based on reasoning For instance, if you taste a diet drink and do not like it, that is experiential. When you ignore a diet drink because a friend says the sweetener tastes bad, that is conceptual. Reinforcement and repetition can improve learning. Reinforcement can be positive or negative. If you like a flavor (positive reinforcement) you are more likely to try the brand again than you are if you dislike the taste (negative reinforcement). Repetition helps retention of idea as it can break through the flood of messages. However, repetition should be spread out over time. For instance, seeing the same ad at every commercial break can quickly turn positive reinforcement to negative. Two types of learning concepts can apply to marketing: -Stimulus generalization: when one response is extended to a second stimulus similar to the first -Stimulus discrimination: a learned ability to differentiate among similar products The clearest example of stimulus generalization is branding. Unilever has multiple household products and hopes that helps a consumer to decide on purchasing their newest product. Sony and other movie studies also use the generalization effect to get people to watch their productions. Why choose one of the many American mainstream beers, or from the many providers of automobile gasoline? Branding to focus on an image or a minor feature differentiation is stimulus discrimination, getting people to identify and choose one of a number of fairly similar products. Bayer's "doctors recommend most" is an example of stimulus discrimination.