Chapter 11: Introduction to the Environment

CONSUMER BEHAVIOR AND MARKETING STRATEGY

by

J. Paul Peter & Jerry C. Olson

Fifth Edition

Irwin McGrawhill Companies

Copyright 1999 

United States

Megaresorts in Las Vegas

The wave of expansion in Las Vegas in the early 1990s was amazing, even by the flamboyant standards of that town. Several Megaresort properties opened in 1993, including Mirage Resorts $475 million Treasure Island hotel and casino, which featured sword flights, galleonsin full sail and a massive vidio arcade. Just down the strip was the $350 million Luxor, a hotel and casino inside a 30 story glass pyramid, guarded by a replica of the Sphinx and complete with a boat ride inside the lobby. Along with the traditional gambling games, the Luxor offered customers a mix of futuristic amusements, laser lights and elaborate waterways.

The biggest new megaresort of all is the MGM Grand. Costing over $1 billion, the Grand is an elaborate entertainment environment along with a casino. The Grand opening was an entertainment extravaganza including two concerts by Barbara Streisand; performances by Frank Sinatra, Don Rickles and Kenny Loggins; a tennis match between Jimmy Connors and Andre Agassi; and various other events. With over 5,000 rooms, the MGM Grand is the biggest hotel in the world. The Grand is so big it has its own power plant, a medical clinic with 12 full-time doctors on staff, and a restaurant that can serve 11,000 buffet meals per day. Even the casino  area is gigantic at 170,000 square feet nearly the size of four football fields.

Besides sheer size, the MGM Grand has several other features that it make it unique. Customers enter beneath a seven story lion’s head. When tired of gambling, people can relax at a pool and beach size of two football fields and watch a 30 million special effects show. Consumers can attend sporting events at a huge indoor stadium. In addition, the Grand resort include a 33 acre amusement park with 12 rides and a replica of the Emerald City Oz, complete with an animated witch that swoops down over gamblers heads. At $25 for an entrance ticket, the park alone was expected to bring in $58 million per year.

Sources: Ronald Grover, “Kirk Bets a Billion,” Business Week, December 13, 1993, p. 46; Lisa Gubernick, “The Pied Pipers of Vegas,” Forbes, December 6, 1993, pp. 235-36; Pauline Yoshihashi, “Opening Shot Is Fired in Las Vegas Megaresort War, “The Wall Street Journal, October 15, 1993, p. B1. To see a map of the attractions at the Mirage Treasure Island resort go to http://www.themirage.com/map.html; the MGM Grand homepage gives all the details on this spectaculer consumption environment at http://www.mgmgrand.com/.

This example describes some aspects of the physical and social environment that can influence people’s behaviors, cognitions and affective responses. In this chapter, we provide an overview of these environmental influences. Our goal is to present a framework for thinking about environmental influences on consumers that is useful for creating effective marketing strategies.

We begin by discussing several ways of thinking about the environment. Next we identify three environments social, physical and marketing and we review the key dimensions of each. Then we discuss the related concept of situations and show how marketers can analyze environmental factors in terms of situations. We conclude the chapter by discussing five marketing related situations information acquisition, shopping, purchasing, consumpotion and disposition.

The Environment

The environment refers to all the physical and social characteristics of a consumers external world, including physical objects (products and stores), spatial relationships (location of stores and products in stores) and the social behavior of other people (who is around and what they are doing). As part of the Wheel of Consumer Analysis (see Exhibit 2.3), the environment can influence consumers affective and cognitive responses and their behavior. For instance, consumers cognitive and affective systems respond to a new store by interpreting features of this environment and deciding what behaviors to perform to accomplish shopping goals.

Marketers are especially interested in the interpreted environment, sometimes called the functional (or perceived) environment, because this is what influences consumers actions. Because each consumer has a unique set of knowledge, meaningsand beliefs, the perceived or functional environment for each consumer will be somewhat different. However marketers are seldom interested in the idiosyncratic perceptions of individual consumers: they need to understand the interpretations of the environment shared by groups of consumers. Fortunately, marketers can ussually identify target market segments of consumers who share common cultural backgrounds and have similar interpretations. For example, large groups of American consumers probably have similar perceptions of shopping malls, credit cards, or fast food restaurants and therefore use them in similar ways.

The environment can be analyzed at two levels macro and micro. Marketers need to determine which level of environmental analysis is relevant for a marketing problem and design their research and marketing strategies appropriately. The macro environment includes large scale, general environmental factors such as the climate, economic conditions, political systems and general landscape (seashore, mountains, prairie). These macro environmental factors have a general influence on behavior, as when the state of the economy influences aggregate purchases of homes, automobiles and stocks. Highlight 11.1 describes how a change in the macro environment can create marketing opportunities.

Highlight 11.1

Causal Dress for Success

A major change in the macro environment is sweeping corporate America. Corporate dress codes are crumbling as more companies institute program such as “Causal Fridays.” More executives (men and women) are dressing more causally at the office and not only on Fridays. This trend has had a big impact on the clothing industry. At one large retailer, sports coat sales increased 24 percent in 1993, whereas sales of men’s suits dropped 3 percent.

Levi Strauss & Company, manufacturer of Dockers, now a $1 billion line of causal men’s clothing, developed a creative strategy in response to these environmental changes. It created a toll free telephone line and invited corporate managers to call to discuss changes to their dress codes. In late 1993, Levi’s sent a newsletter and questionaire to thousands of corporate human resource executives to help them decide what dress code was best for the company. The mailing included a pictorial guide to casual dressing with the models wearing Levis and Dockers pants and shirts (of course!).

Other manufacturers have also responded to these environmental changes. Shirtmaker Van Hausen created a line of loose fitting (oversized) shirts appropriate for office wear, designed to be worn without coat. Several manufacturers created more casual tie designs to team with more casual shirts. Haggar and Farah brought out casual trousers in a new “no winkle” washable cotton fabric. Even stodgy Brooks Brothers been aggresively promoting its more casual styles to executives.

Sources: Teri Agins, “Between Suits and Jeans: The Corporate Casual Look, “The Wall Street Journal, January 21, 1994, pp. B1, B8. Reprinted by permission of The Wall Street Journal, copyright 1994 Dow Jones & Company, Inc. All Rights Reserved Worldwide.

The micro environment refers to the more tangible physical and social aspects of someone’s immediate suroundings the dirty floor in the store a talkative salesperson, the hot weather today, or the people in your family or household. Such small scale factors can have a direct influence on consumers specific behaviors and affective and cognitive responses. For instance, people tend not to linger in dirty, crowded stores; consumers might wait until evening to go shopping during a heat wave; you get frustrated and angry in a slow moving checkout line when you want get home to prepare dinner. Highlight 11.2 gives an example of how the micro environment can influence consumer behavior.

Aspects of the Environment

As noted in Chapter 2, the environment has two aspects or dimensions the social and physical. Through their marketing programs (building a new store), managers have direct control over certain aspects of the social and physical environments. Both the controllable aspects of the social and physical environments can influence consumers overt behaviors as well as their affective and cognitive responses.

The Social Environment

Broadly defined the social environment includes all social interactions between and among people. Consumers can interact with other people either directly (you might discuss sports equipment or clothes with a friend, talk to a salesperson) or vicariously (you watch your father negotiate a car price, observe the clothing other people are wearing). People can learn from both types of social interactions, direct and vicarious.

Highlight 11.2

Temperature and Sales

The year 1988 will long be remembered in the United States for the searing summer heat that spread over nearly the entire country, accompanied in many places by a prolonged drought. Although the weather wreaked havoc on many of the nation’s farmers, it was a blessing for some companies. Sales of products such as water related toys, fresh cold foods like lettuce and fruit, and bottled water were way up. The Crocodile Mile, a 25 foot plastic water slide that can be used in the backyard, was one of the five hottest selling toys of 1988. Production was completely sold out by July. In a single week during the peak of the hot weather, demand for water sprinklers to soak parched yards (and cool off hot kids) exceeded sales for the previous 12 months combined.

Sales of central air-conditioning hit new monthly records for nearly every month in 1988. But the market for room air conditioners traditionally is even more sensitive to changes in the weather. Just a couple of hot days in summer can send people flooding into stores to buy window units, while a few chilly days in summer can cool down demand just as quickly. Room air conditioner sales jumped by 28 percent in June 1988.

Other behaviors also are affected by hot weather, People tend to cook less at home when it gets really hot. But they don’t flock to full service restaurants because they don’t want to get dressed up, either. Instead, they tend to eat things at home that don’t require cooking, pushing up sales of fresh fruits and vegetables (for salads). And so it goes, demonstrating that the physical environment can have very large influences on consumers purchasing and consumption behaviors.

Sources: Reprinted from Ted Knuston, “Sales of Some Products Thrive Due to Heat Wave, “Marketing News 22. No.19 (September 12, 1938), pp.2, 12. Published by the American Marketing Association.

It is useful to distinguish between macro and micro levels of the social environment. The macro social environment refers to the direct and vicarious social interactions among very large groups of people. Researchers have studied three macro social environments culture, subculture, and social class that have broad and powerful influences on the values, beliefs, attitudes, emotions, and behaviors of individual consumers in those groups. For instance, a marketer might find that  consumers in different subcultures or social classes have quite different means end chains concerning a product, which indicates that they are likely to respond differently to marketing strategies. Such differences make macro social likely to respond differently to marketing strategies. Such differences make macro social environments useful for market segmentation.

The micro social environment includes face to face social interactions among smaller groups of people such as families and refrence groups. These direct social interactions can have strong influences on consumers knowledge and feelings about products, stores or ads and on their consumption behavior. For instance, people learn acceptable and appropriate behaviors and acquire many of their values, beliefs, and attitudes through direct social interaction with their families and refrence groups. The influence of families, moreover, can continue for years as some adult consumers purchase the same brands, patronize the same stores and shop in the same way their parents once did.

Families and refrence groups are influenced by the macro social environments of culture, subculture, and social class. Exhibit 11.1 illustrates the flow of social influence from the macro environments of culture, subculture and social class to the micro social environments of refrence groups and family and then on the individual consumer. We discuss these social influences at length in Chapters 12, 13 and 14.

Exhibit 11.1

Flows of Influence in Social Environment

Culture

Subculture

Social class

Organizations Refrence groups Family Media

Individual consumers

The hierarchial relationships portrayed in Exhibit 11.1 can help us understand how various levels of the social environment can influence consumers. For instance, consumers in different subcultures may have the same cultural values but reflect them in different ways. Likewise, consumers in different social classes may attempt to satisfy subcultural value in different ways. Consider how people can satisfy the common America value of achievement. A person living in a rural subculture might fulfill this value by going to agriculture school, earning a degree, and becoming an excellent farmer. In an urban subculture, a person with the same achievement value might go to low school after college, earn a degree and become successful attorney. Similarly, the social class of an individual can influence the college decision (a local community college, a large state school or internationally famous university). In turn, these macro social influences are filtered by a person’s family situation (parents expectations and financial support) and refrence groups (where one’s friends are going to college). In sum, although many individuals may share the same cultural values, their methods of achieving these values may differ considerably, depending on their macro and micro social environments. This suggests that people in different social environments are likely to use different means to reach the same ends.

Exhibit 11.1 also identifies other social entities involved in transferring meanings, values and behavior norms from the macro social environment to individual consumers. These include media such as TV programs, newspapers, magazines, movies, literature and music as well as other organizations such as religious and educational institutions, police and the courts and government. Organizations also include business firms that develop marketing strategies to influence individual customers.

The Physical Environment

The physical environment includes all the nonhuman, physical aspects of the field in which consumer behavior occurs. Virtually any aspects of the physical environment can affect consumer behavior. The physical environment can be divided into spatial and nonspatial elements. Spatial elements include physical objects of all types (including product and brands) as well as countries, cities, stores and interior design. Nonspatial elements include intangible factors such as temperature, humidity, illumination, noise level and time. Marketers need to understand how various aspects of the physical environment influence consumers affect and cognitions and behaviors. In this section we discuss three factors in the nonspatial environment time, weather and lighting.

Time

Time has a great effect on consumer behavior. For instance, behaviors are influenced by the time of day (stores tend to be more crowded during the lunch hour), the day of the week (Mondays are often slow days for restaurants), the day of the month (sales may drop off just before the last of the month and pick up again after the first), and the season of the year (during the pre-Christmas holiday season, people’s shopping behaviors are quite different from other times of the year).

As another example of the effects of time, consider that Daylight Saving Time Coalition once petitioned Congress to increase daylight saving time by seven weeks per year. Advocates of this changes included the management of 7 Eleven convinience stores, who believed more women would stop at its stores on the way home from work if it were still light outside. The company estimated this extra daylight would increase sales by $30 million. Another advocate of this change was the Barbeque Industry Association. Reasoning that people would cook out more if it were light during the dinner hour, this association predicted an increase in sales of charcoal briquettes of 15 percent ($56 million) and 13 percent ($15 million) for starter fluid. Golfers were expected to play 4 million more rounds and buy an additional $7 million worth of clubs and balls and tennis buffs could get in 9.8 million more hours of outdoor play and spend another $7 million on equipment. Thus, what might seem to be a minor change in time could well have consider able impact on consumer behavior.

Lighting

Considerable evidence reveals that lighting affects behavior. It has been found that people work better in brighter rooms, but workers find direct overhead lighting unpleasant. In business meetings, people who intend to make themselves heard sit under or near lights, whereas those who intend to be quiet often sit in darker areas. Intimate candlelight may draw people together; bright floodights can cause people to hurry past a location. Overall, lighting may affect the way people work and interact with others, their overall comfort and even their mental and physical health

Although it seems likely that lighting could affect consumers moods, anxiety levels, willingness to shop and purchase behavior, little research is available on this topic. However, one discussion of lighting in retail stores and malls suggested specialized lighting systems increased sales dramatically. Pillowtex Corporation attributes one third of its $3 million plus annual sales to this lighting approach.

Marketing Implications

Although much of the environment cannot be controlled by marketing managers, marketers can influence certain aspects of the environment. Actually, every marketing strategy created by a marketing manager  involves changing some aspects of the social and physical environments. For example, aspects of the physical environment are changed by promotion strategies (a magazine ad, a billboard along the highway), product strategies (a new squeeze bottle for Crest tootpaste, a styling change in the Ford Taurus), distribution strategies (the location of Burger King, a product display in a store) and even pricing strategies (a Sale sign in a window, a price tag on a sweater).

Other marketing strategies modify aspects of the social environment. For instance, Lexus trains its car salespeople to be less aggressive and less pushy  with customers. A health club encourages members to invite a friend for a free workout. Wal-Mart stations an employee at the store entrance to smile and welcome customers to the store.

These environmental factors are created through marketing strategies and are designed to influence consumer affect, cognition and behavior. In this sense, marketers can be seen as environmental managers.

Situations

Because a huge number of elements make up the social and physical environment, marketers may find it difficult to identify the most important environmental influences on consumers affect, cognitions and behaviors. It can be easier to analyze the influences of the environment in the context of specific situations. A situation is neither the tangible physical environment (a checkout counter, a storefront, your living room, the temperature to day, a landscape) nor the objective features of the social environment (the number of people in a store, the time of day). Rather, a situation is defined by a person who is acting in an environment for some purpose. A situation occur over what longer (eating lunch) or quite protacted (buying a house). The person’s goals define the situation’s beginning (goal activation or problem recognition), middle (working to achieve the goal) and end (achieving the goal). Thus, a situation involves a sequence of goal directed behaviors, along with affective and cognitive responses and the various environments in which they occur. For instance, going to the mall to look for a CD is a shopping situation, whereas having lunch with your best friend is consumption situation. This view of situations as a series of goal directed interactions between the environment, affect and cfognitions and behaviour is consistent with Wheel of Consumer Analysis.

Situations vary in complexity. Some situations take place within a single physical and social environment and involve simple goals, relatively few behaviors and few affective and cognitive responses. Examples of relatively simple consumption related situations include buying a stamp at the post office, bargaining with a salesperson over the price of stereo system or discussing or spring break trip with your friends over dinner. Other consumer situations are more complex. Complex situations may take place in multiple physical and social environments, involve several (perhaps conflicting) goals and require many different behaviors and cognitive and affective responses. Shopping for a new winter coat at the mall is an example of a more complex situation.

Many consumer related situations are common and recurring. For intance, American consumers frequently buy gas for their cars, watch TV in the evening, shop for new clothes, rent videos, and go to grocery stores. As their experiences accumulate over time, consumers form clear goals, develop consistent problem representations for these recurring situations, and learn appropriate behaviors. There after when the problem situation occurs again, appropriate knowledge schemas and scripts may be activated from memory to influence consumer behavioral, affective and cognitive responses in that environment/situation. To the extent that people tend to form approximately the same interpretations for common consumer related situations, their behaviors will also tend to be similar. When common reactions occur, marketers can develop marketing strategies that should affect consumers in a target segment in similar ways.  

In contrast, consumers may not have clear goals or relevant knowledge when faced with new or unfamiliar situations. They may have to consciously interpret and integrate information to determine their goals, identify salient environmental factors and choose appropriate behaviors. Marketers should develop strategies to help consumers cope with unfamiliar situations. For instance, life insurance salespeople are trained to help consumers recognize their situation by defining their goals (college educaqtion for children, retirement plans, pay off mortgage) and identifying key environmental considerations (current savings, children’s ages, time to retirement). Then, in the contest of that situation, the salesperson can demonstrate the self relevance of life insurance.

Analyzing Situations

A powerful approach to understanding environmetal influences to analyze the situations in which the consumer experiences the environment. Marketers should understand the physical and social environments in terms of the perspectives of the consumers who experience them. To analyze a situation, marketers should first determine the major goals that define the situation for their target customers. Then they should identify the key aspects of the social and physical environments in the situation, including marketing strategies that might affect the consumer. Finally, marketers should attempt to understand consumers affective, cognitive and behavioral responses to these environmental characteristics.

Marketers can learn about personal consumption situations by asking consumers to describe the major occasions when they consume the product. A study conducted by one of the authors provides an example of such an analysis. We asked several candy users to describe the major situations when they ate candy. One young woman, a college freshman, identified three major consumption situations that she described in terms of her own goals, feelings and behaviors.

Situation 1	Hungry in a rush Environment: hectic; many other people around; between classes at the university. Goal: Satisfy hunger and get energy. Affect/cognition: feeling hungry, stressed and tense. Behavior; snack on candy between and during class.
Situation 2	Lazy-relaxed. Environment: quiet, alone at home in evening. Goal: relax so I can concentrate on work. Affect/cognition: feeling relaxed and calm, but alert. Behavior: Snack on candy while reading or studying.
Situation 3	Calm at lunch. Goal: I need a reward. Affect/cognition: happy to be home after hectic class schedule; starting to calm down. Behavior: eat candy for dessert.

 These three consumption situations occurred in the three different environments and each situation involved somewhat different goals, affective and cognitive states, and behaviors. Different products are likely to appeal the consumer in these situations.

Marketing strategies are seldom based on an analysis of a single consumer. Marketers are interested in identifying situations that are experienced similarly by large numbers of consumers. Then managers can develop marketing strategies (special products, prices, or advertising campaigns) for these consumption situations. For instance, a study fast food restaurants identified four consensual. I use situations lunch on a weekday, a snack during a shopping trip, an evening meal when rushed for time and an evening meal with family when not rushed for time. The authors found that different choice criteria were used in these situations (speed of service was more important at lunch; menu variety was more important in the evening when not more appropriate for certain situations. Finally, even if the same fast food restaurant was patronized in these different situations, consumers behaviors and affective and cognitive reactions in those situations could be quite different (rushed/not rushed, relaxed /not relaxed).  

Exhibit 11.2

Five Generic Consumer Situations

Situations	Generic Behaviors	Specific Behaviors and Environments
Information acquisition	Information contact Communication	Reading a billboard while driving Discussing running shoes with a friend at a track meet Watching TV commercial at home
Shopping	Store contact Product contact	Window shopping in a mall Browsing through an L.L. Bean catalog in a restaurant Comparing brands of shirts in a store
Purchase	Funds access Transaction	Obtaining a Visa card at a bank Going to check out counter at Sears Calling in an order to Lands End from home
Consumption	Use	Eating a taco at Taco Bell Using a refrigerator for 15 years
Disposition	Disposal	Recycling alumunium cans Throwing away a hot dog wrapper at a hockey game

Generic Consumer Situations

In this section, we consider five generic consumer situations information acquisition, shopping, purchase, consumption and disposition (see Exhibi8t 11.2). These broadly defined situations are relevant for most products. Marketers can analyze these situations to identify consumers behavioral goals, relevant affect and cognitions and the key environmental factors and can then develop marketing strategies to change, facilitate, or maintain the key behaviors.

Information Acquisition Situations

The information acquisition situation includes the environments where consumers acquire information relevant to a problem solving goal such as a brand or store choice. An information acquisition situation may contain social factors (word of mouth communication from friends, persuassion attempts by a salesperson) and physical stimuli (prominent signs in a store, labels on a product package) that can influence consumers affet, cognitions, and behaviors. As you learned in Chapter 5, such information may be acquired accidentally as consumers randomly come across information in their environments, or intentially as they consciously seek information relevant to their current goals. 

Marketers have considerable control over many aspects of consumers information environments, especially the advertising, sales promotion and personal selling elements of the promotion mix. Marketers can place signs in stores and on the front windows of shops, send direct mail material about their products to consumers and place ads on TV, in magazines and on billboards. They can add information to packages and labels or provide salespeople with special information to convey to customers. Other aspects of consumers information environments are not under marketers direct control for example, marketers can try to generate publicity and new articles about their product or encourage consumers to tell other consumers about a product. However, they may not be successful in creating this environmental information. 

Two especially important generic behaviors in information acquisition situations are information contact and communication. Because approximately two thirds of retail purchases are based on decisions made in the store, contact with marketing information in a store can have a significant influence on consumer behavior. Various marketing strategies are designed to facilitate information contact. For instance, A&P supermarkets (among others) allow ads on shopping carts. Pepsi cola has experimented with putting multicolored ads on paper grocery bags.

Modern technology allows marketers to direct information at precisely defined target groups. Many grocery stores have electronic coupons depending on what products a consumer buys. For instance, people buying peanut butter might receive a coupon for bread, or customers who buy Folgers coffee might receive a coupon for bread, or customers who buy Folgers coffee might receive a coupon for Maxwell House. Other marketing strategies are designed to facilitate information contact at the point of purchase. An example is the interactive computer display developed for Clarion Cosmetics. By answering a few simple questions, consumers can receive information about which Clarion products are best for their skin color and tone.  

Communicating with customers, usually via salespeople, is an important marketing strategy for companies. For example, Toyota, manufacturer of the Lexus luxury car, intensively trains its salespeople spend an average of 90 minutes presenting a car to each potential customer, much more than the industry average. Service after the sale is extremely important for all auto manufacturers and dealers. Consumers top complaint with auto service is having to bring the car back because the problem was not fixed properly the first time. Research showed that Lexus consumers believed this was largely because of poor communication in that their problems were not adequately explained to the mechanies doing the work. So when, Lexus buyers come to the dealers for service they speak directly to the diagnosis to make sure the problems are clearly communicated to the mechanics who will fix the cars.

Shopping Situations

The shopping situation includes the physical, spatial and social characteristics of places where consumers shop for products and services. Shopping behavior can occur in a variety of environments. Such as in boutiques, department and discount stores, malls, and pedestrian only retail areas being developed in many cities, in the home (via catalogs or television home shopping programs), at flea markets and auctions and so on. In retail environments alone, a huge number of physical factors including store design and layout, lighting and display fixtures, colors, the overall size of the store and miscellaneous other factors (such as temperature and noise level) and their cognitions and affective states (moods are feelings of involvement with shopping).

Shopping situations also include the merchandise (the particular products and brands) displayed in stores and catalogs. One innovation in car selling is the auto center in which a dealer combines several franchises under one roof. Customers can examine dozens of makes and models in one is shopping trip, much like shopping for a new dress or business suit at a large department store.

In addition, the shopping environment includes socialo factors such as how many salespeople and checkout personnel are in the store, how store personnel act toward customers, the presence of friends and relatives accompanying the consumer, the amount of crowding and the types of other people found there. All of these aspects of the shopping environment can influence consumers behaviors, cognitions and affective responses. For instance, many people dislike going to an auto showroom where they fear being “attacked” by hungry salespeople are in sight. Instead, consumers are greated by a receptionist behind a marble desk. Without interruption, they can learn more about the Lexus by studying the “media wall” consisting of videos and print materials. Only on request will the receptioninst call a sales representative to talk the consumer.

Of the many behaviors affected by the shopping environment, two are of particular importance: store contact and product contact. Store contact is critical for retailing success, and marketing strategies are intended to get consumers to come to the store. Giving away a free CD to the first 100 people to show up at an electronics store on a Saturday morning is an example of such a strategy.

Location is another critical environmental influence on store contact for many types of stores; for example, fast-food restaurants and convinience food stores need to be located in high traffic locations. (Highlight 11.3 describes an unusual strategy to increase store contact behavior.) As another example, consider the location strategy of Sunglass for $35 to $100. Their locations in the well traveled aisles of shopping centers, malls and airports facilitate store contact. Their marketing strategy also addresses information acquisition by facilitating communication with the customer. Each Hut is staffed with well trained, knowledgable salespeople who are able to tell customerswhy they should pay $80 or more for a pair of Sunglasses.

The location of smaller boutique type stores (candy, natural foods, gifts) in shopping malls can have a critical effect on store contact behaviors. A desirable location is close to the entrance of one the large and glamorous anchor stores, usually department stores found at the ends or middle of the mall. These anchor stores draw many consumers and the smaller stores benefit from the traffic flowing past their doors. The importance of locationwithin the mall was clearly shown during the recression of the early 1990s. When some retailers such as Bonwit Teller and B. Altman filed for bankruptcy. The Mall at Short Hills, an upscale mall in New Jersey, lost two of its four anchor stores. Immediately, the surrounding smaller stores at the mall also began having difficulties. Such changes in mall shopping environments can initiate a cycle of reciprocal effects on behaviors, affect and cognitions, and the environment. As more stores fail, a mall accumulates more empty, boarded up srores, the shopping environment further deteriorates and consumers become concerned and begin staying away.

Product contact is another important behavior affected by environmental characteristics of the shopping situation. Consider how the probability of product contact is reduced in very large stores, or if shoppers are discouraged from lingering in a store by overcrowding (too many other shoppers), or if sales personnel are overly aggressive (driving of some customers). Some stores use restful music, warm colors schemes.and low key salespeople to encourage shoppers to linger in their stores thus enhancing the probability of product contac. In large self service stores signs are hung from the ceilings to identify product locations. To facilitate product contact, Hallmark redesigned its product displays using colored strips to identify different types of greeting cards and help customers find the right cards quickly. In sum, retailers try to make the shopping environment attractive, informative and easy to use.

Highlight 11.3

Mobile Shopping Environments

Several companies are experimenting with movable shopping environments. Kentucky Fried Chicken, for example, rolled out a new concept in 1991 mobile merchandising. KFC built a KFC unit can be set up at fairs, outdoor jazz and rock concerts, and amusement parks to pursue customer wherever they go.

Pizza Hut, considered the innovator in the field, has more than 250 mobile kiosks in place, mostly in airports. Taco Bell hopes to increase the number of its outlets to over 10,000 by the end of the decade, a significant proportion will be mobile units. McDonald’s is not involved yet and Dairy Queen is studying the use of carts to sell its products.

Why go to the trouble? One reason is that the fast food industry has already taken most of the best fixed locations on street corners and in malls. With a mobile unit, if customers don’t show up, you move the restaurant to another spot. Another advantage is cost. The mobile units are much less expensive than a fixed site. A Taco Bell cart in an airport runs about $30,000 and the larger KFC truck costs about $200,000, compared to about $1 million for a bricks and mortar fast food restaurant.

Sometimes these unusual shopping environments create interesting consumer behavior problems. For instance, Pizza Hut discovered that some customers didn’t believe the pizzas at the mobile airport kiosk where made fresh on site. So the company redesigned the ovens (changed the purchasing environment) so customers could see the pizzas going into the oven.

Marketers of mobile restaurants must be especially conscious of consumers’ consumption environments. In most of these moving restaurants, the range of products available is limited to foods that people can eat on their feet. Therefore, KFC sells only chicken nuggets and sandwiches in its mobile restaurant.

Source: Marj Charlier, “Restaurants Mobilize to Pursue Customers, “The Wall Street Journal, June 10, 1991, pp. B1, B5. Reprinted by permission of The Wall Street Journal, copyright 1991 Dow Jones & Company, Inc. All Rights Reserved Worldwide.

Another goal of store design is to make the shopping environment more fun and  exciting so that consumers will spend more time in the store and be more likely to make contact with the merchandise. Highlight 11.4 describes a similar example of a store environment that makes shopping fun and increases product contact behavior.

Although the retail store environment is important, other types of shopping environments are becoming significant. These include shopping at home by telephone, by mail, or by Internet (see Highlight 11.5). Obviously, the environment at home is dramatically different from in the store shopping environment. Other shopping environments are relevant for some products, including garage sales, flea markets and swap meets, auctions, sidewalk sales, and private sales of merchandise by individuals and street vendors. In some cities you can avoid shopping situations entirely by hiring someone else to shop for you.

Highlight 11.4

The Store Environment as Theater

Nike sells a lot of shoes in his hometown store in Portland. Oregon, by creating an exciting. The entire store, Nike Town, is a fantasy experience that closely resembles theater. The center of the store is a tranqull town square with the sounds of birds chirping. Surrounding the square on two levels are separate shopping areas for different types of Nike shoes. The basketball area, for instance, has a wooden truss ceiling and a wooden basketball court floor. Speakers beneath the floor subfly fill the space with the hollow bounce of basketballs end the sounds of shoes squeaking on the court. Nike Aqua Gear shoes (for water sports) are displayed surrounded by large vertical tanks containing tropical fish, and several large screen swaying among the coral.

To keep stock from clutteting the fantasy environment, most shoes are stored downstairs. Salespeople use computers to call down for cetian models and sizes, and the shoes are sent up through clear plastic tubes via conveyor. Customer response to the store was so strong that a much bigger store with a five story town square was built in Chicago and another in Boston.

Source: Associated Press, “Nike’s Vision the Ultimate Store Includes Fantasy, “Marketing News, September 16, 1991, p.9.

Purchasing Situations

The purchasing situation include the social and physical stimuli present in the environment where the consumer makes the purchase. Consider, for instance, the difference in the purchasing environment for buying fresh vegetables at a supermarket versus at an outdoor farmers market. In some cases the purchasing environment is similar to the shopping environment, but they are seldom identical. In most self-service stores, for instance, consumers pay for the products they have selectedv at a checkout counter at the front of the store or at one of several cash register locations around the store.

In some stores the purchasing environment is designed to be quite distinct from the shopping environment. For instance, the central checkout counter at one trendy music store was desined to look like a giant piano keyboard with black and white keys. In other retail environments, such as an automobile dealership, the purchasing environment may be a separate room used axclusively for the purchase transaction. This is where the sales person and customer(s) retire to negotiate the final details of purchase.

Sometimes the shopping environment intrudes into the purchasing environment. For instance, checkout lines at grocey stores usually include displays of products such as magazines, gum and candy items, film and cigarettes to stimulate impulse purchases. The information acquisition and purchase environments also may overlap. For instance, A&P a chain of some 1,200 grocery stores, once experimented with showing ads on TV monitors placed at the checkout aisle, but many consumers complained that this type of information contact was too  intrusive. Besides, few customers left the line to get a product that was advertised.

Marketers are particularly interested in influencing two behaviors in purchasing situations funds access and the final transaction. For instance, most grocery stores and other retail stores have streamlined the transaction procedures in the purchasing situation by installing scanner equipment to speed up the checkout process. Sotheby’s, the world famous auction house for fine art, found that the extreme escalation of art prices in the late 1980s had created a funds access problem for customers. Buyer did not have the large sums of cash (millions, in some cases) necessary to buy fine works of art, so Sotheby’s instituted a credit policy by which it would lend up to one half the cost of artwork, using the other works of art owned by the borrower as collateral.

Highlight 11.5

The Shopping Environment at Home versus the Mall

Many Americans love to shop, but where? Although malls are still popular, fewer consumers enjoy going to the local mall. In 1982 average shopping time was 72 minutes and the number of stores visited decreased from 3.6 to 2.6. More consumers wanted to get into the store and out again (with their purchases) as quickly as possible. Some consumers avoided travelling to a retail store altogether by shopping from the comforts of their homes.

Home shopping using catalogs or TV, or even computers, grew rapidly. In 1993 Home Shopping Network merged with QVC, creating a home shopping meganet work available to over 60 million viewers (about two thirds of U.S. households). At that time TV shopping was a $2.2 billion industry, growing at about 20 percent a year. Long shunned by most major retailers. TV shopping had evolved beyond hawking tacky figurines and cheap costume jewelry. Now many retailers were becoming quite interested in TV shopping. Even Saks Fifth Avenue sold clothes on QVC. Macy’s planned to introduce its own 24 hour shopping channel. Other retailers are likely to follow suit as TV channels proliferate.

Analysts once thought the TV home shopper was older, lower income and rather unsophisticated. By the mid 1990s many consumers regularly shopped via TV. Actually, the typical TV shopper is almost identical to the average retail shopper: 25-34 years old, educated, reasonably affluent, and fashion conscious (and surprisingly, nearly 50 percent are men!).

Consumer can also shop from home using catalogs, and some consumers even use computer based shopping services such as CUC International. For a membership fee of about $50, CUC offers consumers substantially discounted prices on 250,000 brand name items. Consumers place their orders via phone or computer modem, and the item is shipped directly from the manufacturer generated about $42 billion in sales (compared to $789 billion at retail stores), but home shopping was growing rapidly ar 30 percent per year, while retail sales declined 3 percent. Of course, the popularity of home shopping does not mean that conventional retail stores are doomed far from it. Many people still prefer to shop in stores and malls. Part of the attraction seems to be the stimulating physical environment and entertainment value of a retail store. Also, the social environment of retail shopping is important to many consumers who value interacting with friends, family, other customers and even salespeople. Still, shopping from the comfort of home is a growing attraction.

Sources: Cyndee Miller, “Catalogs Alive, Thriving, “Marketing News, February 28, 1994, pp.1-2; Laura Zinn, Gail De George, Rochelle Shoretz, Dori Yang, and Stephanie Anderson, “Retailing Will Never Be the Same,” Business Week, July 26, 1993, pp.54-60.

Consumption Situations

The consumption situation includes the social and physical factors present in the environments where consumers actually use or consume the products and services they have bought.  Obviously, consumption behaviors (and related cognitive and affective processes such as enjoyment, satisfaction or frustation) are most relevant in such situations. Consider how clean, tidy, well-lighted, and attractively decorated consumption environments in full-service and fast-food restaurants, pubs and bars, nightclubs and discos and ice cream padors can enhance consumers enjoyment environment may be critically important to consumers satisfaction with their purchases.

Consider the consumption environment in two bars at the Minneapolis and Detroit airports. Host International, a division of Mariott Corporation, re-created the Cheers bar from the famous TV show of the same name, including Sam’s Red Sox jersey framed on the wall, the wooden Indian statue inside the door, and the Wurtlitzer jukebox. In addition, two familiar patrons are preched at the bar replicas of Norm and Cliff. Up to 46 of these Cheers bars are planned for other U.S. airports.

For products such as appliances, clothing, cars and furniture, marketers have almost no direct control over the consumption environment. These products are taken from the retail environment and consumed elsewhere (usually in consumers bonuses). Moreover, for many of these products, the consumption behaviors over long periods (most people own and use a car or a microwive oven for several years). In some cases, the consumption environment might change during the useful life of the products, and this could affect consumption related  cognitive and affective responses (satisfaction) and behaviors (repairs and services). Perhaps the best marketers can do in these consumption situations is to monitor consumers satisfaction levels and behaviors over the lifetime of the product.

In other cases, however marketers have much control over the consumption environment. For instance, many service businesses, such as hairstylists, dentist and doctors and hotels and motels have total control over the consumption environment because consumption of these products and services occurs on the premises of the seller. Obvious examples are golf courses, ski resorts and theme parks such as Euro Disneyland outside Paris or Disney World in Florida, where the consumption environment is a major part of the product/service consumers buy. Disney Enterprises goes to great lengths to ensure that the consumption environment is perfect. The opening example of megaresorts in Las Vegas concerns the consumption environment as a major attraction.

Design of the consumption environment can also be critical in the restaurant industry. The Rainbow Room in New York serves halibut in gold-colored foil to enhance the theatricality of the dining experience. Highly decorated theme restaurants are popular in many U.S. cities. A restaurant in Salt Lake City replicates an 18^th century French farmhouse, down to ponds with geese and swans, peacocks roaming the grounds, waitresses in period costumes, and dried herbs and flowers hanging from the beamed cilings. An entrepreneur in Chicago created a series of offbeat restaurants where  the consumption environment was as important as the food. One spot called R.J. Grunts offered a burger and health food menu served by blue jeans clad waitpersons, with mystical, New Age music playing in the background.

Not all consumption environments are successful. A single type restaurant called Not So Great Gritzbe’s had a sign reading “Eat and Get Out.” The walls were decorated with Tums and Alka-Seltzer ads, and the food critic awards were crossed out. Although the media were intrigued, consumers became worried and the restaurant closed.

Disposition Situations

For certain products, marketers may need to consider other types of environmental situations. For instance, the disposition situation is highly relevant for some businesses; used car lots and used clothing stores are obvious examples. Here the key behavior of interest is disposal of products. Many people simply throw away unwanted products or give them to charity. Others sell their unwanted products at flea markets, garage sales and swap meets. These situations offer interesting environments for study. Disposition situations are relevant for public policy issues, too.

In many countries, including time United States, consumers are developing stronger values of quality, cost consciousness and concern for the natural environment that, in turn, are fueling interest in used products and the recycling of waste. Thus, the markets for recycled goods and used products (Furniture and appliances, clothing and housewares) are likely to increase and we can expect enterpreneurs to develop strategies to serve these markets.

Marketing Implications

Marketers need to identify the key social and physical environmental features of the information, acquisition, shopping, purchasing, consumption and disposition situations for their producys. They also need to undesrtand consumers affective, cognitive and behavioral responses to these environmental factors. For example, some aspects of these environments may block behaviors crucial for the marketing success of the firm’s product. Marketing strategies can be developed that modify the environment to stimulate, facilitate and reinforce the desired behaviors. If funds access is a problem for consumers, the company might introduce debit cards, accept regular credit cards, or allow charge accounts. If consumers are becoming increasingly discouraged with the shopping environment in many cities (noisy streets, difficult parking, crowded stores, fear of crime), clever marketers are likely to introduce alternative shopping environments, such as home shopping opportunities through the mail or by telephone. For instance, a home delivery service for groceries is available in San Fransisco. Strong growth for such businesses is forecast for the 1990s.

Megaresorts in Las Vegas

The megaresorts in Las Vegas are extraordinary physical and social environments designed to appeal to many types of consumers besides gamblers. Families and conventioners are two primary target markets. Vegas has long offered sporting events and lavish entertainment to draw adults and conventioneers to the gambling tables. The megaresort hotels hope to attract families with theme parks for the kids, evening entertainment for the parents and a fantasy environment for every one. Each property offers many entertainment situations for consumers such as behaviors rooms, elaborate pools, exciting celebrity entertainers, laser light shows, theme parks and amusement rides, excellent restaurants and various gambling activities (slot machines, card games, roulette). But would this attract families with kids?

In 1992, more than 22 million visitors came to Las Vegas (compared to just over 13 million in Orlando, Florida, home of Disney World). The crowds created a unique social environment and opportunities for many other businesses. For instance, the Belz Corporation recently opened a sprawling shopping complex of factory outlets.

The megaresorts in Las Vegas need to understand various situations in developing their marketing strategies. The consumption situation is most obvious. In addition to traditional gambling activities, these megaresorts offer customers an elaborate, fantastic physical environment plus a wide range of entertainment. These properties of the consumption environment plus a wide range of entertainment. These properties of the consumption environment help keep customers at the property and close to the gambling tables.

The information contact situation is relevant for making consumers aware of the resorts and their attributes. Many Las Vegas resorts aired TV ads in California (the prime source of visitors) that portrayed families enjoying theme parks and eating buffet dinners.

The new megaresorts stimulated competition as other hotels considered how to change their consumption environments to better entertain consumers. This led to further changes in the Las Vegas environment. Mirage planned to develop a resort project worth about $1 billion. Hilton spent over $100 million renovating the Flamingo Hilton and added Andrew Lloyd Webber’s roller skating stage  show, “Starlight Express,” as a permanent attraction.

Summary

This chapter presented an overview of environmental influences on consumer behavior. Three basic types of environments were identified: social, physical and marketing. The social environment includes the effects on consumer behavior of culture, subculture, social class, refrence group and family. The physical environment includes the effects of both spatial and nonspatial factors. The marketing environment includes all stimuli associated with marketing strategies that influence consumers cognitions, affect and behaviors either directly or indirectly.

We also discussed the important concept of situations, which involves the continuous interaction over time of consumers affective and cognitive responses and behaviors with one or more environmental settings. We identified five broad, generic situations most relevant for consumer research information acquisition, shopping, purchasing, consumption and disposition. And we discussed the important social and physical aspects of the environments in those situations as well as the key behaviors of be adapted to changing environmental conditions but also pay an important role creating the environment. 

Key Terms and Concepts

Consumption situation 260                             Micro social environmentt 249

Disposition situation 261                                Physical environment 251

Environment 247                                            Purchasing situation 258

Information acquisition situation 255             Shopping situation 256

Macro social environment 249                        Situation 253

Review and Discussion Questions

  1. Go to the Mirage home page at http://themirage.com/ and explore the various environments at this hotel including a volcano that erupts every few minutes, a tropical rain forest, a giant aquarium with live sharks, gourmet restauranyts, water falls and connected lagoons, a spa, a European style shopping boulevard, Siegfried & Roy’s jungle habitat for white tigers, a pool for Atlantic bottlenose dolphins and over 3,000 deluxe rooms and suites. Describes how these environments might appeal to consumers in different market segments. How might these environments influence consumers’ behaviors (stay at the Mirage and gamble there)?

  2.  Consider the distinction between macro and micro environments for grocery shoping. Which of these is more important for marketing strategy?

 3.Contrast the two approaches marketers can take to analyze environmental factors versus considering environmental factors in the context of situations. Under what circumtances might each of these two approaches be most appropriate?

  4.Use the situation of shopping for a personnal cassete player to describe the relationships between the physical and social environments. Point out those aspects that marketers could control.

  5.What is a situation? Use examples from your own, recent purchases to show how situations differ from environments.

   6. Are environmental factors more important as influences for new or recurring situations? Why?

  7. Use the Wheel of Consumer Analysis to describe how affect and cognition and behaviors interact with environmental factors in a textbook purchase situation.

   8.  How can marketers use situational analysis to segment markets? Identify some product categories where the approach has been used to the advantage of the marketing organization.
   9. For each of the five generic marketing situations, identify uncontrollable and controllable factors that should be considered in the development of marketing strategies.

  Marketing Strategy in Action

  America’s Movie Theaters

  The price of admission to many of America’s movie theaters sometimes buys an experience sensible people would pay to avoid. The blackened and musty carpet in the lobby could be a relic from the silent screen era. The $1.50 bucket of popcorn that’s small size holds 10 cents worth of corn covered with a strange liquid, perhaps derived from petroleum. Beneath the broken seats, sticky coats of spilled soda pop varnish the floor. The screen is tiny, the vsound is tinny and the audience is rude. Oh and one more thing the picture stinks.

   Many theater owners bought into the business at low prices after antitrust rullings forced the major Hollywood studios, which had previously owned the leading theater chains, to give up their movie houses. The new owners got a great deal. They owned the only show in town (sometimes literally), and the studios promoted the movies. As the easy profits rolled in, many exhibitors lost contact with their customers. They milked the business and let their theaters deteriorate.

  But the success of vidiocassette rentals and cable TV during the early 1980s converted many moviegoers to stay at homers. These changes forced exhibitors to recognize their folly. By 1985, theaters were no longer the only show in town. Attendance dropped 12 percent over 1984 figures. The $5 billion a year American movie theater industry was fighting for survival.

   The put the theater owners in a bind. To regain the loyalty of their customers, they needed to pour money into refurbishing, rebuilding, and restoring the glamour of moviegoing. But at the same time they were being hurt by the new technologies that competed them.

   To survive during these changes, exhibitors developed a couple of temporarily successful strategies. One was to develop their lobby concession stand as a source of revenues. To keep some of their customers, many theaters kept ticket prices fairly low the average price in 1985 was about $3.50 to $4 prices that lagged behind inflation. Once inside through moviegoers were a captive market for the popcorn, soda and candy sold at stupendous markups of 500 percent or more. A well run concession stand generated at least $1 of sales and as much as 75 cents of profit per ticket buyer. Exhibitors found that they could survive by charging ever more outrageous prices for popcorn.

   What brands of candy were in the typical concession stand? Usually, it was a strange mix of oversized boxes that included very few of the best selling brands in the United States. Theaters tended to stock candy brands like Milk Duds. Sho Caps and Juiyfruits, hardly big sellers on the outside. The exception was Snickers, the number one brand in the United States, which was present in most concession stands. Do moviegoers have different tastes than the rest of the population? No, of course not. The movie house operators preferred these brands because they were more profitable. With limited space available, the operators stocked the brands with the highest profit margins.

   The profits from concession sales can be considerable. For instancew. In 1985 a tub of popcorn that cost 30 cents was sold for about $2 a markup of 567 percent. A soft drink (often a Coke) that cost the theater 10 cents might have sold for 75 cents, a 650 percent markup. Candy produced a much smaller profit with markups of about 180 percent. On average, about 40 percent of the $850 million in annual concession sales came from popcorn, another 40 percent from soft drinks, and only about 20 percent from everything alse. Critics claim that by sticking to the most profitable brands, theater owners are missing an opportunity to increase overall candy sales by stocking more popular brands. As it stands now, only about one third of moviegoers buy anything from the concession stand.

   The other strategy was the multiscreen theater. During the 1980s, exhibitors began chopping up their grand old theaters into exhibitors did great, through (as long as they owned the only theaters in town). A theater with four screens, about the national average, is four times more likely to book a hit picture; the exhibitor then shows the hit in the largest room and lesser movies in the smaller theaters. In the 1990s, the trend to multiscreen theaters continued with even larger complexes being built, some with 15 or even 20 screens around a central core with restaurants, game, rooms and elaborate conessions stands.

   But at macro level, more seats were the last thing the industry needed. In 1995, the total number of tickets sold annually remained constant at about 1 billion, a number that hadn’t varied much for 25 years. But when the growing population is considered, this flat trend translates into a 24 percent per capita decline in moviegoing. As a writer for variety said, “Filmgoing used to be part of the social fabric. Now it is an impulse purchase.”

   Marketers that understand their custoners can gain an advantage. Many people believe that movie theaters are competing with the VCR. But Madelyn Fenton, director of marketing for American Multi cinema in Los Angeles says that VCRs have actually helped movie theaters by addicting some people to certain actors, directors, or movie genres. Fenton claims that the real consumer decision is whether to stay home or go out. Most people have limited free time and many ways to spend it. Movie theaters need to make the “going out to a movie experience” more positive than the “stay at home experience.” One way to do that is to offer a better experience when going to a movie.

   Howard Lichtman, of Cineplex Odeon Corporation, operator of 1,700 screens in North America, emphasizes the movie experience: “People at home can pop popcorn and dim the lights. They can even line up the chairs in their living rooms in a row. But watching a movie at home is not the same as going to a movie theater. “Lichtman considers the real threat to moviegoing to be other forms of entertainment outside the home, such as going out to dinner or going to the ballet. The look of Odeon  theaters around the country share a certain art deco glamour, but an Odeon theater in Des Moines and one in Los Angeles may have different features to appeal to local interest. For instance, the Cineplex Odeon Carnegie Hall theater shows a lot of “artsy movies.” That theater also contains a stylish café serving coffees, bottled waters and a wide assortment of fancy pastries. The café and foods appeal to people who attend “art movies” because they like to discuss the movie before and after they see it.

  Another exhibitor says, “We have to upgrade the quality of the moviegoing experience.”His newest theaters have granite floored lobbies with painted murals, spacious auditoriums, and first-rate sound and projection. The higher construction costs paid off in more customers at higher than average ticket prices and a splendid $1.35 per ticket take at the concession stand. However such theaters are still rare.

  Of course, there are still plenty of grungy movie theaters with the same old concession stands. However, theater chains, especially in areas with lots of competition, are attemting to differentiate themselves by modifying the moviegoing environment. As one company executive said, “Everyone can pop popcorn and show a movie.”

  Thus many theater chains are experimenting with other modifications to the movie environment. For instance, AMC in Los Angeles has tried to develop a competitive advantage over its competition by offering patrons something beyond popcorn and Goobers at a concession stand. Many of their theaters contain a café offering premovie and postmovie taste treats such as crab, cakes, salads, gourmet pizza, croissant sandwiches, and egg rolls. So, instead of going to dinner and a movie, consumers can go to dinner in a movie theater.

   To make the movie experience more convenient (by cutting down on standing in line time), AMC allows credit card sales and phone ahead credit card ticket purchases. In some theaters, AMC installed self serve dispensers of tickets and vouchers for the concession stand. AMC has tried some other marketing ideas to encourage moviegoing. They have a MovieWatcher program targeted at the frequent moviegoer. Members get points for every movie they attend, which quality them for prizes, including posters and special movie screenings, “We are trying to develop a loyal customer bane,”says Fenton, AMC executive.

  Of course, the bottom line is the movie itself, not the concession stand or the café or the bonus points. If the movies aren’t great, people won’t see them in theaters. In fact, theater attendance has been roughly stable for the past 10 to 15 years at about 1 billion tickets sold per year.

 Not all theater chains have bought into the upgrading trend and other special touches like gourmet calos, General Cinema theaters, with about 1,300 screens, are about the same everywhere Peter Farwell, vice presidentbof corporate relations says “People go to see a picture, not the concession stand. People buy popcorn and soft drinks at the movies, whether you live in New York or Indianapolis.”General Cinema focuses on cleanliness and the concession stands, and leaves promotions to the distributor.

  Perhaps the bottom line is that the concession stand is very important the theater profits whether it sells Milk Duds and popcorn or cappucino and cheescake.

   Discussion Questions

  1.      The VCR is a physical aspect of the marketing environment that has affected moviegoing behavior in the United States. Compare and contrast the consumption situations of watching a movie in a theater versus seeing the same movie at home on your VCR. Discuss the reciprocal interactions between environment, behavior and cognitive and affective responses. What long-term effects do you think the in home VCR environments will have on moviegoing? What can movie theaters do to improve the situation?

  2.      What macroenvironmental factors might affect moviegoing behavior (both decrease and increase)? Consider their impacts on different market segments. What marketing implications does your analysis have for theater owners or movie companies?

   3.      Analyze the information acquisition, purchasing and consumption envioronments of different movie theaters in your local area. What recommendations do you have for changing these environments to increase sales and profits?

   4.      Analyze the effects of the consumption situation at movie theaters on consumers purchase of snacks at the concession stand. What could theater owners do to change the purchasing and consumption environments in their theaters to encourage higher levels of snack consumption and greater sales at concession stands?

Source: Cyndee Miller, “Theaters Give Em More Than Goobers to Win Back Viewers,”Marketing News, October 1, 1990, pp.1.6; March Magiera, “Theater hains Applaud Fall Promotions,”Advertising Age, Septemmber 16, 1991, p.27; Alex Ben Block, “Those Peculiar Candies That Star at the Movies,”Forbes, May 19, 1986, pp. 174-76 and Stratford P. Sherman,”Back to the Future, “Fortune, January 20, 1966, pp.909-14.