CONSUMER BEHAVIOUR AND MARKETING STRATEGY: Chapter 8: Analyzing Consumer Behaviors

CONSUMER BEHAVIOR AND MARKETING STRATEGY

J. Paul Peter & Jerry C. Olson

Fifth Edition

Irwin McGrawhill Companies

United States

Lands End Outlet Store

I have no run over to Walgreens to pick up Angie’s medicine said Kari Jardine to her husband Andy. “Do you want to go with me? “Sure, Andy responded. I’d like to pick up some magazines for my flight to New York tomorrow. “On the way the Jardines chatted about the recent snowfall and how much they enjoyed Christmas and New Years although both agreed they were glad the holidays were over. It was nice to get back to a more normal routine without all of the hassle of shopping in crowded malls looking for Christmas gifts.

The snowplows had left large mounds of snow in the parking lot at the strip mall where the drugstore was located. Once in the store, Kari went back to the pharmacy to pick up the prescription and Andy went to the magazine rack in the front of the store. Andy pulled cut $10 from his wallet and purchased copied of Golf Digest and Sports illustrated and two Pepper mint Patties to munch during the drive home.

As they walked out of Walgreens Andy suggested that rather than go right home they should take a few minutes to Look in Lands End Outlet Store two doors down. I sawn a Cranberry shawl collar cardigan sweater in the Lands End catalog that I liked. May be it will be in the store and I could try it on. That would be fine with me, replied Kari,”I could look for a new spring coat. I don’t have to be at work until noon.

The sweater Andy was interested in was in store. He tried it on and liked it. He remembered the normal price was $56 but sale catalog price was $38.5. He decided to purchase it and saw another sweater he liked. The other sweater was a teal colored wool cardigan marked down from $70 to $56. Although a little reluctant to purchase the other sweater because it was more expensive and wasn’t much different from a green sweater he had received for Christmas, he decided to purchase it too. After all he desrved it and he could return the green sweater to Mashall Fields.

Kari found a three quarter length saud colored, light weight parka and was trying it on “What doyou think?” she asked Andy as he walked toward her sweaters dangling over hisw arm. How much is it? He asked. Lets see. Its $56 marked down from $70, Kari answered. “What did you find? After agreeing that the coat and sweaters were good buys, the Jardines went to the checkout counter in the center of the store. “Did you find everything you need today? Asked the salesclerk.”Yes and we are ready to check out counter in the center of the store. “Did you find everything you need today? Asked the salesclerk, checking the price tags ringing up the marchandise. Well let see. The sweaters are an additional 30 percent off today.So that’s $11.55 off one and $16.8 off the other.

See this symbol? The salesclerk said, pointing to a small black ships steering wheel stempel on the coats price tag. That means its 60 percent off, which will sace you…$35.4 The Jardines looked at each other and smiled. Wow You mean We’re saving 50 or 60 bucks of this stuff? Shouted Andy, a little too loudly. That’s right said the salesclerk, handing them their visa card receipt and the bag of clothes. We’ll have more spring clothes in the next week or two. Be sure to stop back and look for those big mark downs.

Driving home the Jardines figured out how much they had saved from the normal retail price. The total at retail was $196 and they paid $94.24 which included the 5 percent state sales tax. They felt good about their stop at the Lands Ends Outlet. Andy decided to keep the green sweater he had gotten such a good deal on the two new sweaters. He enjoyed eating his candy bars. You can learn more about Lands End Products at http://www.landsend.com.

What overt consumer behaviors were performed on this trip to Lands End Outlet Store? The Wheel of consumer analysis now turns from affect and cognition to behavior. In this section provide an overview of overt consumer behavior and marketing strategies designed to affect it. In this chapter we discuss the nature of overt consumer behavior and why it is important to marketing. Then we develop and explain a model of overt consumer behavior for use in designing marketing strategies. In the next chapter we overview conditioning and modeling processes used by marketers to influence overt consumer behavior. In the final chapter of this section we discuss a model and approaches to influencing overt consumer behavior.

What is Overt Consumer Behavior?

The term consumer behavior means many things. In some cases, it refers to a field of study or a college course. In others, it refers to what consumer think, feel, and do everything that influences them. However, overt consumer behavior has a specific meaning. It refers to the observable and measureable responses or actions of consumers. Thus overt behavior is distinct from affect and cognition because it is external and can be observed directly rather than being an internal psychological process that must be inferred.

That fact that overt behavior refers to external actions that are observable leads many analysts to think that it is a simple phenomenon. For example, marketers frequently refer to purchasing behavior, shopping behavior, or usage behavior as though threy were simple acts. However, each of these is a complex set of actions that require consumers to do many things. For example, for a consumer to purchase even a simple product like a jar of Jif peanut butter or a Bic pen at a 7 Eleven store, a multitude of complex actions is required. Also, because overt behavior is so obvious and prevalent, many analysts may think it is uninteresting or unworthy of study.

Part of the problem with studying overt consumer behavior is determining the appropriate level of analysis. Overt consumer behavior can be analyzed fruitfully at the level of a momentary movement of a few muscles or a single finger to the lifetime usage of products. When designing computer keyboards, finger movements are critical for marketers who are trying to develop more comfortable, more efficient products. For forecasting demand for Pampers, it is important to know not only expected birth rates, but also frequency of diaper changes and the number of years the product is used per child.

Another problem with studying overt behavior is deciding whether individual consumers or the entire world market is the appropriate level. When selling a car a salesperson is concerned with getting an individual consumer to sign a contract and pay for the car. In forecasting world demand for cars, current sales and trends in usage in world market must be analyzed.

A third problem with studying overt behavior is that the linkages between it and affect and cognition are not well developed at a theoretical level. The way in which mental events (affect and cognition) can cause physical actions (overt behavior) is not well understood. In spite of these problems, understanding overt consumer behavior is an important part of consumer analysis and developing marketing strategies.

The Importance of Overt Consumer Behavior

Although overt behavior is complex, it is a critical component of consumer analysis. The success of marketing strategies depends on maintaining and changing overt consumer behavior, not just influencing affect and cognition. There are at least three reasons why it is important. First although in many cases influencing affect and cognition may lead to overt behavior this linkage often does not hold. Consumers often have favorable attitudes about products, but do not buy them and favorable attitudes about stores, but do not shop there. As discussed in Chapter 6 even specific measures of behavioral intentions are often poor predictors of overt behavior.

Second as discussed as discussed in Chapter 2 behavior precedes and causes affect and cognition in some cases. For example, suppose a consumer tries out a friends. The Biggest Bertha driver at a driving range. Perhaps little thought was given to evaluating or buying the club beforehand. However, as the golf ball sails 260 yards, the consumer is awed by the clubs performance, decides to buy one and goes into the clubhouse and plunks down $500. It seems likely that successful behavior of hitting the ball well was an important determinant of purchase rather than just the small amount of pre-purchase affect and cognition. For low price low involvement products like say a new candy bar often consumers will try them first and then decide whether they like them and will buy them again.

Third, most marketing strategies cannot be successful without influencing overt consumer behavior. Although some intermediate strategies may focus on changing recallor recognition of ads or products, in most cases marketing strategies are designed ultimately maintain or increase the sales of particular products, services, or stores. This is usually accomplished by (1) increasing the frequency of purchase and use by existing customers, (2) maintaining purchase and use levels of existing customers and increasing purchase and use by new customers or (3) increasing purchase and use by both existing and new customers or (3) increasing purchase and use by both existing and new customers (3) increasing purchase and use by both existing and new customers. These can only happen by influencing overt consumer behavior.

Finally there is no question that many marketing practitioners are acutely concerned with overt consumer behavior. Many marketing research techniques are designed to assess overt shopping behavior in stores and product purchase and use patterns and many strategies are designed to increase these behaviors.

A Model of Overt Consumer Behavior

Traditional views of the purchase or adoption process in marketing treat it as a series or chain or cognitive events followed by a single overt behavior, usually called adoption or purchase. Consider the models, in Exhibit 8.1 of the adoption process as it is commonly treated in marketing. These models are consistent with the view that cognitive variables (awareness, comprehension, interest, evaluation, conviction etc.) are the main concern of marketing and the primary controllers of behavior. According to this view, the marketing task is to change these cognitive variables and move consumers through each stage until a purchase is made.

Although the models in Exhibit 8.1 are valuable, adoption or purchase can also be analyzed as a sequence of behaviors. From this perspective marketing managers usually want to increase the frequency of these behaviors and they design strategies and tactics for doing so. Although strategies and tactics to change affective and cognitive processes such as attention or attitude may be useful intermediate steps, they must ultimately change behavior to be profitable for marketers.

Exhibit 8.2 offers a model of a behavior sequence that occurs in the purchase of many consumer goods. Before discussing each of these stages, several qualifications should be noted. First, although we suggest that this is a logical sequence, many other combinations of behavior are also commonly performed by consumers. For example an unplanned (impulse) purchase of Twix cookie bars could start at the store contact stage. Not every purchase follows the sequence shown in Exhibit 8.2 and not every purchase requires that all of these behaviors be performed. However, the model is useful for categorizing a variety of marketing strategies in terms of the behaviors they are signed to influence.

Second, the model in Exhibit 8.2 is intended to illustrtate onjly one type of behavior sequence for retail purchases; similar models could be developed for other types of purchases, such as mail order, phone, Internet or catalog showroom exchanges. Further the sequences involved with other behaviors of interst to consumer analysis, such as voting, phsician care, baking or consumer education, could also be modeled in much the same way. We believe that any attempt to influence behavior should include an analysis of the behavior sequence that is necessary or desired. Unfortunately, many marketing managers do not consider exactly what behaviors are involved in actions they are attempting to get consumers to perform.

Exhibit 8.1

Traditional Models of the Adoption/Purchase Process

Awareness	Awareness	Attention	Awareness
Comprehension	Knowledge	Interest	Interest
Conviction	Liking	Desire	Evaluation
Action	Preference	Action	Trial
	Conviction		Adoption
	Purchase

Third, the time it takes for a consumer to perform these behaviors depends on a variety of factors. Different products, consumers, and situations may affect not only the total time to complete the process but also the time lags between stages. For example, an avid water skier purchasing a Mastercraft powerboat likely will spend more time per stage and more time will elapse between stages than a consumer purchasing a Timex quartz watch.

Fourth, members of the channel of distribution usually vary in their emphasis on encouraging particular behaviors. Retailers may be more concerned with increasing store contact than with purchase of a particular brand; manufacturers are less concerned with the particular store patronized but attempt to increase brand purchase; credit card companies may be less concerned with particular store or product contacts so long as their credit card is accepted and used. However although emphasis may vary, all three of these behaviors are common for a retail exchange and all three organization can benefit from others others efforts. Highlight 81 discusses a creative strategy for influencing consumers purchasing behavior that involves a discount card company and restaurants.

Finally, the seven categories of the consumer behavior chain Exhibit 8.2 deserve comment. Although we believe that these are logical and useful categories of behavior, other labels or breakdowns could also be useful. For instance, this behavior chain could be carefully broken down into individual actions of each muscle in the consumers body and research could be conducted at that level. However, given the lacks of knowledge concerning overt consumer behavior, the levels in Exhibit 8.2 are a useful starting point. With these qualifications we now turn to a discussion of each type of behavior and some marketing strategies currently employed to increase the probability of one or more of them.

Exhibit 8.2

A Common Behavior Sequence for a Retail Store

Consumer Goods Purchase

Consumption Stage	Types of Behavior	Examples of Behaviors
Prepurchases	Information contact	Read/observe newspaper, magazine, billboard ads Listen to radio commercials Listen to watch TV commercials Listen to salespersons, friends
Prepurchases	Funds access	Withdraw cash from bank or cash machine Write a check Obtain a credit card, loan or other line of credit
Purchase	Store Contact	Locate outlet Travel to outlet Enter outlet
Purchase	Product Contact	Locate Product in store Obtain Product Take Product to checkout counter
Purchase	Transaction	Exchange funds for product Take product to use location
Postpurchase	Consumption and Disposition	Consumers use product Dispose of packaging/used product Repurchase
Postpurchase	Communication	Tell others of product experience Fill out warranty cards Provide other information to the firm

Information Contact

A common early stage in the purchase sequence called information contact occurs when consumers come into contact with information, either intentionally or accidentally about products, stores, or brands. This stage includes behaviors such as reading or observing newspaper, magazine and billboard ads; listening to radio commercials; watching TV commercials; and talking to salespeople and friends. At this point the practical problem for marketers to increase the probability that consumers will observe and attend to the information and that this will increase the probability of other behaviors.

Highlight 8.1

Increasing Restaurants Patronage with a Transmedia Card

Transmedia Network Inc. came up with an innovative strategy to serve consumers probability with a discount card for restaurants meals, Here’s how it works. Transmedia offers cash advances to restaurants that, in turn, give Transmedia twice the cash amount in credits for meals. For example, Transmedia offers $5000 for $10000 worth restaurants credit. It then offers its card holders a 25 percent discount on meals (before tax and tip) eaten at restaurants that honor its cards. Usually it takes about six months for a group of cardholders to use all the $10000 credit at a particular restaurants. After giving card holders the 25 percent discount, Transmedia still gets $7500 for its initial $5000 cash advance.

Restaurants deal with Transmedia because they benefit from the quick cash, and the additional business is still profitable. Restaurants have high fixed costs but variable costs of food and service are only about 30 percent of the price of a meal. So if a check is $100 the restaurants gets $50 Transmedia, the cost of the meal is about $30, and the restaurants makes $20. The cards help the restaurants fill unused capacity and are a big help to new restaurants trying to build clientele.

Consumers benefit from lower prices, but Transmedia initially had trouble getting them to sign up. Even after advertising and offering free cards consumers didn’t initially believe the company could deliver such good deals. In transmedia’s first directory published in 1985, 41 restaurants were listed and only 225 consumers signed up. By 1995 5500 restaurants worldwide were on board and nearly 600000 consumers had discount cards. Transmedia’s revenue graw to $65.5 million in 1995 with net income of over $4 million. It charges consumers $50 for its card.

Transmedia’s success has attracted competitors like In Good Taste, Dining a la Card and Dinner on us Club. However its biggest problem is keeping restaurants on its list. Restaurants often signup when they’re new or need quick cash but then drop Transmedia when their cash position is improved. Also 70 percent of Transmedia’s charges are in the New York metropolitan area.

Overall this strategy increases the probability of consumers purchasing meals in specific restaurants and is profitable for Transmedia the restaurants and consumers who dine out a lot.

Sources: Nikhil Hutheesing, “Keeping the Seats Warm, “Forbes, January 1, 1996, pp.62-63; Richard S Teitelbaum, “Good Food Cheap? Pick a card! Fortune, March 18, 1996. P.133.

Not only do marketers seek to provide consumers with information, but consumers also search for information about products, brands, stores and prices. Marketing managers for brands with low market shares usually want to increase overall search behavior because it may increase the probability of switching to their firms brands.

High market share brands may try to discourage external search behaviors because the behavior may result in a shift to another brand. For example, Heinz has a major share of the market for ketchup and does not want consumers to search for information concerning different brands. Ads showing Heinz as the thicker, richer ketchup while depicting other brands as thin and unsavory may discourage loyal consumers from searching for an alternative. They may also help attract non-Heinz purchasers by demonstrating the negative consequences of using another brand.

Exhibit 8.2

Factors Affecting Information Search by Consumers

Influencing Factor	Increasing the Influencing Factor Causes Search to:
I. Market characteristics A. Number of alternatives B. Price Range C. Store Concentration D. Information availability 1. Advertising 2. Point of purchase 3. Sales personnel 4. Packaging 5. Experienced consumers 6. Independent sources	Increase Increase Increase Increase
II. Product characteristics A. Price B. Differentiation C. Positive Products	Increase Increase Increase
III. Consumer characteristics A. Learning and experience B. Shopping orientation C. Social status D. Age, Gender and household life cycle E. Perceived risk	Decrease Mixed Increase Mixed Increase
IV. Situational characteristics A. Time availability B. Purchase for self C. Pleasant surroundings D. Social surroundings E. Physical/mental energy	Increase Decrease Increase Mixed Increase

Source: Reprinted from Del I. Hawkins, Kenneth A. Coney and Roger Best, Jr., Consumer Behavior: Implications for Marketing Strategy 7^th ed., 1998, Irwin McGraw-Hill. Reproduced with permission from The Mc-GrawHill Companies.

The extent of a consumer’s search depends on many factors, such as those listed in Exhibit 8.3. In general, empirical research has shown that:

1. Consumers tend to engage in more search when purchasing higher-period, more visible, and more complex products that is, products that intrinsically create greater perceived risk.

2. Search is also influenced by individual factors such as the perceived benefits of search (e.g., enjoyment, self confidence, role), demographic aspects of the consumer and product knowledge already possessed.

3. Search efforts tend to be further influenced by factors in the marketplace (such as store distribution) and by situational factors (such as time pressure impinging on the shopper).

Exhibit 8.4

A Comparison of Information Sources

Sources	Effort Required	Believability
Internal (stored experiences in memory) Personal (friends, relatives) Marketing (advertising) Public (Consumer Reports, other studies) Experiential (examining or testing product)	Low Low Low High High	High High Low High High

From a public policy standpoint information search is encouraged to develop more knowledgeable consumers. However, there are differences in the effort required by consumers to obtain information from different sources and in the believability of the information. For example, Exhibit 8.4 illustrates five common sources of information and rates them on the dimensions of effort and believability.

This model predicts that internal sources (stored experiences) and personal sources (friends and relatives) are commonly used because they are easiest to access and most believable. Marketing sources (advertising) would also be commonly used because they are readily available. However, marketing sources are not as believable because advertisers have something to gain from the transaction. Finally public sources (Consumers Reports and other impractical studies) and experiential sources (personally examining or testing the product) are less likely to be used, at least in this early stage, because more effort is required to obtain information from these sources.

Information search could also be broken down into a sequence of basic behavior. However the main marketing task is to increase the probability that the target market comes into contact with product, brand and store information and pays attention to it.

Numerous marketing strategies are directed at bringing about these attentive behaviors. For example, media scheduling, message content and layout, color and humor in advertising and repetition all involve presenting stimuli to increase the probability that potential consumers will attend to relevant cars. In addition, Four appeals are used to brings about attentive behaviors and to vicariously stimulate emotions by exposing the observers to possible aversive consequences of certain conditions (inadequate insurance, faulty tires and batteries, the absence of smoke alarms not flossing regularly).

Strategies such as contrast and prizes bring about attentive behavior and promise rewards for engaging in certain actions that bring the consumer into closer contact with the product or point of purchase. Finally ads that show models receiving social approval and satisfaction from purchasing a product provide stimuli that can move the consumer closer to purchase by stimulating the “buying mood”. Highlight 8.2 discusses a strategy for encouraging information contact for magazine subscription.

Highlight 8.2

Encouraging Information Contact for Magazine Subscriptions

Including subscription caros in magazines is a useful marketing tactic because the cards are available while the magazine is being read and enjoyed. These cards make it convenient for readers of the magazine (the likely target market for future issues) to renew a subscription or start a new one.

Traditionally magazine marketers have bound subscription cards to the magazines. One drawback to such “bind in” cards is that readers often simply ignore them. Because the cards are bound to the issue, readers leaf through the entire magazine without giving the card (or the idea of starting or renewing a subscription) any consideration.

An alternative method of including subscription cards in magazines is to place them between the pages, unbound. These are called “blow-in” cards. When magazines are being read or carried, blow in cards frequently fall out. Consumers usually pick up the cards and examine them for at least a moment. In other words, the probability of information contact is increased when blow in rather than bind in cards are used. It is not surprising then that blow in cards are more effective than bind in cards at generating subscription renewals.

Funds Access

Current views of marketing emphasize exchange as the key concept for understanding the field. However, relatively little attention has been given to what consumer exchange in the marketing processes. Although time and effort costs are involved, money is the primary medium of consumer exchange. The consumer must access this medium in one form or another before an exchange. The consumer must access this medium in one form or another before an exchange can occur, engaging in what is known as funds access. The primary marketing issues at this stage are (1) the methods used by consumers to pay for particular purchases and (2) the marketing strategies to increase the probability that consumers can access funds for purchase.

Consumers can pay for a product offering in a variety of ways. These include cash in pocket; bank withdrawal of cash in pocket; bank withdrawal of cash; writing a check; using credit cards such as Visa. Master Card and American Express; opening a store charge account: using debit cards; and drawing on other lines of credit, such as bank loans and GMAC financing. Another issue concerns the effort exerted by the consumer to obtain the actual funds that are spent or used to repay loans. Funds obtained from tax refunds, stock sales and dividends, gambling winings, awards, or regular paychecks may be valued differently by the consumer and spent in different ways. Some retailers encourage the purchase of big ticket items by offering interest-free loans for a few months while consumers are waiting for their tax refunds.

A variety of other strategies can increase the probability that consumers can access funds for purchases. For example, J.C. Penney offers a small gift to anyone who fills out a Penney’s credit card application. The probability of purchasing at Penney’s credit card application. The probability of purchasing at Penney’s is increased when a consumer has a credit card because cash may not always be available. Other strategies include locating ATM’s in malls, instituting liberal credit terms and check cashing policies and accepting a variety of credit cards. Deferred payment plans and layaway plans that allow the consumer additional time to raise the required funds help stores avoid lost sales. Gift certificates are also used to presell merchandise and to provide consumers with another source of funds that is restricted for particular purchases. All of these strategies have a common goal to increase the probability of an exchange by increasing the probability of accessing funds.

Other strategies can be employed to increase certain types of purchases. For example, a store could offer a small discount for using cash to avoid the costs of paying credit card fees. An analysis of the conditions surrounding particular purchases may lead to other successful tactics. For example, many major home appliances are purchased only when both husband and wife are present and a necessary condition is that they can obtain funds. One tactic for an appliance store might be to offer a small gift to any couple that comes to the store with their checkbook or approved credit card. Thus, the appropriate contingencies are prearranged for an appliance sale. Any number of other tactics (such as offering rebates) could also be used in conjunction with this tactic to further increase the probability of purchase. Highlight 8.3 discusses a strategy used by credit card issuers to encourage consumers to obtain and use their credit cards for funds access.

Store Contact

Although catalog, telephone-order, and Internet purchases are important, most consumer goods purchases are still made in retail stores. Thus a major task of retailers is to get consumers into the store where purchases can occur. Store contact includes (1) locating the outlet (2) traveling to the outlet and (3) entering the outlet.

The nature of consumers in their roles as shoppers affects the probability of store contact. Some consumers may enjoy shopping and may spend many hours looking in stores. To others, shopping may be drudgery. Some shoppers may be primarily price-oriented and favor particular low price outlets. Others may seek a high level of service or unique products and stores that express their individuality. These differences are important dimensions of designing market segmentation strategies for stores.

Many strategies are designed to increase the probability of store contact. For example, consider the methods used to increase the probability that shoppers will be able to locate a particular outlet. Selecting convenient locations in high traffic areas with ample parking has been very successful for many retailers, such as 7 Eleven convenience stores and Denny’s restaurants.

Highlight 8.3

Rewards for Credit Cards

For most of their lives. Harlan and Beverly Ness, both 56, made little use of Visa or MasterCard. But this spring they decorated and furnished their Florida condominium with a Northwest Visa. Their motivation: free air line tickets.

Until last year Stuart Feldstein would have written a check for his son’s tuition and housing at the University of Tennessee. Instead he charged the $13,000 on his GM Gold Card. His motivation: a$ 650 rebate toward the purchase of a General Motors car or truck. It’s my car fund, “says Feldstein of Budd Lake, New Jersey.

The Nesses and Feldstein are foot soldiers in revolution in the way consumers use credit cards. You can fill your car with gas, buy lunch at a fast food restaurant, mail a package at the post office, take a cab, see a doctor, pick up milk at the supermarket and go to movie all with a credit card.

You don’t have to carry cash, you don’t have to write a check and you get a record at the end of the month,” says Philip Purcell, CEO of Dean Witter Discover. In one recent year total credit card charges soared 25 percent to $421.9 billion from $338.6 billion the year before the biggest percentage increase since 1984. Revolving credit card balances make up 28 percent of all consumer installment debt, and credit card is growing faster than consumer debt in general. This means that some people are using cards instead of bank loans or store credit. Igniting the plastic explosion are rebates on merchandise ranging from cars to computers, wider acceptance of cards by business, and new technology that makes credit card use faster than writing a check.

The industry’s greatest growth is in rebate cards, thanks to the stunning success of the GM card. In just 20 months it had 9 million cardholders in the United States and another 2 million in Canada. Cardholders get 5 percent rebates on purchases to spend on GM vehicles up to $500 a year. The card also encourages consumers to transfer balances from other cards and earn GM rebates. That helped make it the fastest growing credit card ever. Ford, Shell Oil and GE Rewards are just some of the other companies that offered reward cards. However, Ford dropped its card because it often discounted its most popular model which would have sold well anyway.

As reward cards grow in popularity, consumer advocates warn that they can be costly. If you charge a lot and if you pay in full each month which are the two big ifs you can get something for nothing. But most people don’t pay in full and end up racking up all that interest says Ruth Susswein of consumer group Bankcard Holders of America. About 70 percent of cardholders carry balances from month to month. They should ignore rebates and get low interest cards, Susswein says. Regardless of the type of card, charging is expected to soar. Consumers like convenience and they’ll pay for it, says one analyst.

A major advantage for retailers locating in shopping malls is in the increase in consumers ability to find the outlet as well as the additional shopping traffic created by the presence of the other srores. Yellow pages, newspaper and other ads frequently include maps and information numbers to aid shoppers in locating an outlet. Outdoor signs and logos (such as Domino’s Pizza’s distinctive sign) are well known. One recreational vehicle dealer close to Columbus, Ohio used an interesting approach to aid potential customers in locating the dealership. The dealer’s TV ads consisted of the actual scenery, landmarks and road signs people would see when traveling to the dealership. Every turn was shown, as were directional signs on the highway, to help potential customers find the outlet.

Other tactics are used to get potential customers to the vicinity of stores or malls. For example, carnivals in mall parking lots, free fashion shows or other mall entertainment and visits by celebrities such as Santa Claus, the Easter Bunny, Sesame Street characters and soap opera actors are used to get consumers to come to the mall. Further, mall directories and information booths help shoppers find particular stores.

Finally, tactics are used to get the potential customer physically into the store. Frequently advertised sales, sale signs in store windows, door prizes, loss leaders, sounds (such as popular music) and smells (such as fresh popcorn) are commonly employed. A variety of other in store issues are discussed later in the text particularly in Chapter 19.

Product Contact

Whereas a major concern of retailers is increasing and maintaining selective store patronage, manufacturers are primarily concerned with selective demand purchase of their particular brands and models. Many of the methods employed to accomplish such product contact involve push strategies such as trade discounts and incentives to enhance the selling effort of retailers. For example, offering retailers a free case of Tide liquid detergent for every 10 cases purchased can be a powerful incentive for retailers to feature liquid Tide in newspaper ads, put it in prominent displays and even sell it at a lower price while maintaining or increasing profit margins. Many approaches also involve pull strategies, such as cents off coupons to encourage the consumer to purchase the manufacturer’s brand.

Once potential buyers are in the store three behaviors are usually necessary for a purchase to occur: (1) locate the product or brand in the store (2) physically obtain the product or brand, and (3) take the product or brand to the point of exchange (e.g., the checkout center).

Products must be easily located. Store directories end of aisle and other displays, in store signs, information booths, and helpful store personnel all help consumers move into visual contact with products. While consumers are in the store, their visual contact with the many other available product increases the probability of purchase.

Once interesting tactic employed by a major chain involves a variation of “blue light” specials. Blue light specials were pioneered by Kmart. These tactics offer shoppers in the store the opportunity to purchase products at special prices when a blue light is flashing at a particular location. Usually the sale item is one that is low priced and sold at its normal location. A variation of this tactic moves the sale merchandise and blue light to a location in the store where high priced or high margin items are located. This brings the blue light shoppers to the vicinity of such products and into visual contact with them which increases the probability of making these more profitable sales. This has been reported to be very successful.

Physically coming into contact with a product provides an extremely important source of stimuli and possible consequences that influence whether a purchase will occur. Attractive eye catching packaging and other aspects of product appearance influence the stimuli intended and possible consequences that influence whether a purchase will occur. Attractive eye catching packaging and other aspects of product appearance influence the stimuli attended to by the consumer. Trying the product in the store can also affect purchase probabilities.

The behavior of sales personnel can also affect the contingencies at the point of purchase. For example, consider sales salespeople who are overly aggressive and use high pressure tactics. One way for consumers to remove the aversive treatment is to purchase the product and some consumers do this rather than walk away.

Salespeople can also change the contingencies for purchasing versus not purchasing. For example, one of our associates told us of his experience in selling furniture to ambivalent customers who stated their intention to “go home and think it over.” Once the potential buyer leaves the store, the probability of a sale is reduced. Our associate however changed the contingencies for leaving. Potential buyers who wanted to think it over were told, “If you buy now, the price is $150. If you go home and come back later, the price will be the original $175. “Although we are not advocating this specific practice, we do want to stress that salespeople can modify the behavior of potential buyers.

A number of tactics are used to get potential buyers to the checkout or payment location. For example, checkout counters are commonly placed next to the exit and parking vouchers are usually validated at this location. Also salespeople frequently escort the buyer to the checkout where they may help arrange financing.

Transaction

In a macro sense, facilitate exchanges is viewed as the primary objective of marketing. In a micro sense, this involves transactions in which consumers funds are exchanged for products and services. Many marketing strategies involve removing obstacles to transactions. The credit methods discussed earlier are examples. So is the use of express checkout lanes and electronic scanners to decrease the time consumers wait in line, (Some consumers will leave stores without making a purchase if checkout lines are too long.) Credit card companies offer prompt purchase approvals to decrease the chances a sale will be missed because of a long wait.

Because the behavior checkout personnel has long been recognized as an important influence on purchase, these personnel are often trained to be friendly and efficient. McDonalds personnel frequently offer prompts in an attempt to increase the total amount of purchase. Regardless of the food order, prompts for additional food are offered: “Would you like some fresh, hot french fries with that? Or “How about some McDonalds cookies today? Because these are very low cost tactics few incremental sales are required to make them profitable.

Positive consequences are critical elements in obtaining transactions. Tactics such as rebates, friendly treatment and compliments by store personnel and contest tickets may increase the probability of purchase and repurchase. The quality and value of the product or service itself are also important. These may involve functional experiential and psychosocial benefits.

Consumption and Disposition

While consumption and use would seem to be very simple behaviors to delineate, they are not, because of the vast differences in the natures of various products and services. For example, compare typical behaviors involved in the purchase of non-durables such as burger and fries versus a durable such as an automobile. The burger and fries versus a durable such as an automobile. The burger and fries are likely to be consumed rather quickly and the packing disposed of properly. Certain strategies can increase the probability that consumption will be rather quick, such as seats in a restaurants that are comfortable for only a short time. As a result current customers do not take up space for too long that could be used for new customers. Prompts are often used to encourage proper disposal of packaging such as “Thank You” signs on refuse containers.

An automobile purchase usually involves several years of consumption or use. In addition, periodic service is required and additional complementary products such as gas must be purchased. Finally an automobile may be disposed of in several ways (selling it, junking it, or trading it on another model). At present little is known about the process by which consumers dispose of durable goods.

Regardless of the type of product, however a primary marketing concern is increasing the probability of repurchase. For non-durable packaged goods, commonly employed tactics include the use of in or on package coupons to encourage the consumer to repurchase the same brand. (Many consumers frequently use coupons and take pride in the money they save.) In addition proof of purchase seals have often been used to encourage consumers to purchase the same brand repeatedly obtaining enough seals to receive “free” gifts. Gold Medal flour has long used this tactic and Pampers diapers ran a promotion in which a coupon for a free box of diapers was sent to buyers who mailed in three proof of purchase seals.

For durable goods, proper instructions on the care and use of the product may be useful because they help the consumer receive full product benefits. In addition, high quality service and maintenance provided by the seller can help to develop long term client relationships.

Communication

A final set of behaviors that marketers attempt to increase involves communication. Marketers want consumers to communicate with two basic audiences. They want consumers to (1) provide the company with marketing information and (2) tell other potential consumers about the product and encourage them to purchase it Consumers can communicate with the company or other consumers about products, brands, or stores at any time, not just at the end of the purchase sequence. We place this behavior here because consumers who have purchased and used a product are likely to be more knowledgable about it and more influential in telling other consumers about it.

From Consumers to Marketers

Marketers typically want at least three types of information from consumers. First, they want information about the consumer to investigate the quality of their marketing strategy and success of market segmentation. Warranty cards are commonly used for this. These cards commonly ask about consumer demographics, what magazines consumers read, where they obtained information about the product, where they purchased it, and what competing brands they own or have tried. Free gifts are sometimes offered to encourage consumers to return warranty cards as well as subtle threats that the warranty cards as well as subtle threats that the warranty will be canceled if the card is not filled out and returned promptly.

A second type of information sought from consumers is the names of other potential buyers of the product. Some firms and organizations offer awards if the names of several potential buyers are given and a larger award if any of the prospects actually makes a purchase. Finally, marketers also seek consumer information about defective products. Money back or other guarantees that require the consumer to contact the store ot company provide this information and also reduce the risk of loss to the consumer. For example, General Mills offers a prompt adjustment of equal value “if the consumer is dissatisfied with Cheerios.

From Consumers to Consumers

Marketers also want consumers to tell their friends and others about the product. A product that is effective and performs well may encourage this behavior. However, other tactics also can encourage it. Tupperware parties have long been and used to take advantage of the fact that consumers respond favorably to information from their friends and to create an environment in which purchase is heavily encouraged. This approach has been so successful that, over the first 25 years of its existence, Tupperware doubled its sales and earnings every 5 years.

Newly opened bars and lounges frequently offer customers free drinks to encourage them not only to return but also to tell others about the place and to bring their friends. Word of mouth communication is the primary way such establishments become popular. Health clubs, such as Elaine Powers and Vic Tanay, often run promotions in which members who bring in new customers get special rates for the selves as well as for their friends. One cable TV company run a promotion in which any subscriber who got a friend to purchase the service received $10. Such tactics increase not only communication but also other behaviors in the purchase sequence. Finally, consumers often learn purchase and use behaviors through observing others perform them, as discussed in the next chapter.

Marketing Implication

The model of overt consumer behavior has several implications for marketers. First, marketing managers need to carefully consider precisely what behaviors are necessary for consumers to purchase and use particular products and brands and have clear implications for offering products in appropriate outlets. Also, it provides a starting point for thinking about and analyzing precisely what behaviors a marketing strategy is designed to influence. Depending on whether the marketer is a brand manager, store manager, or credit card company marketer, the desired responses vary. However each of the types of behavior listed in the model can be further broken down for more detailed analysis. A model for influencing these behaviors is discussed later in this section.

Second it should be clear from the discussion that marketing strategies and tactics are designed to change overt consumer behavior by changing one or more aspects of the environment. In some cases, intermediate steps include increasing cognitive activity about the offering and developing positive affect prior to the desired behaviors. These could involve providing information about competitive offerings that highlight the superiority of a company’s products. For example, Cadillac ran a series of humorous ads depicting Mercedes-Benz owners as driving underpowered cars; the Cadillac has a 275 horsepower engine compared to the Mercedes 215 horsepower. These ads require consumers to process the comparative information and are designed to increase affect for Cadillac relative to Mercedes and lead to a brand switch. However, many purchases are made on a routine or habitual basis without excessive cognitive activity, including some car purchases from customers who are dealer and brand loyal. Also many car ads offer little product information but rely on peripheral cues to develop positive affect designed to build brand equity and lead to overt purchase behavior. The frequency and quantity of cognitive activity and affect development for various purchases are not fully understood. However high involvement purchases typically involve greater affect and cognition than do low involvement products. They also typically involve more overt behavior.

Back To Lands End Outlet Store

This case discusses a simple shopping trip and mentions a variety of behaviors. Although the story does not detail every behavior, such as those necessary to get ready to go shopping and drive the car to the strip mall, there is sufficient information so we can understand what occurred. Lets examine Andy’s Jardines actions in terms of the types of behaviors discussed in the chapter and evaluate the value of the behavioral sequence model. A list of events and types of behavior is shown below.

From this brief description we get a good idea of what behaviors were performed and consider some marketing strategies to increase desired behaviors. For example, if the Lands End store had a large sign close to the front door or in the front window that explained the discounts available, perhaps the Jardines would have purchased more products. (The store had such a sign, but it is in the back of the store where consumers may not readily see it.) Thus, the behavioral sequence model helps explain behaviors, isolate them into manageable parts, and allow the analysis of tactics and strategies to increase desired behaviors.

A second point discussed in the chapter is also illustrated in this case. Consumer behaviors do not always follow the exact sequence laid out in Exhibit 8.2. For example, communication can occur in any stage in the process. Also more than one product is often purchased on a single shopping trip, which can lead to differences from the exact sequence laid out in Exhibit 8.2.

However, the general model, the categories of behavior listed, and the level of analysis seemuseful for understanding the behaviors. In addition, if the probability that the Jardines will return to the Lands End Outlet is increased by receiving the good deals, their behavior has been positively reinforced; the fact that Andy shouted about the savings suggests such reinforcement.

A third point concerns the limitations of the behavior approach for understanding consumer behavior and developing marketing strategies. For one thing, the analysis has not considered what the Jardines were thinking and feeling during this shopping episode. For example, we certainly know something about Andy from the descriptions of what he remembered, what he decided, his reluctance to purchase, his feeling that he deserved the other sweater, and that he felt good about the purchases. In addition, a more detailed description of the major environmental stimuli would allow deeper understanding of the shopping episode. Thus although studying overt behavior can provide valuable insights for designing effective marketing strategies, it is also necessary to study consumers affect and cognition as well as environmental factors.

Event

Type of Behavior

Is offered shopping opportunity

Responds verbally to offer

Drives to drugstore

Enters drugstore

Locates magazines and candy

Obtain products

Takes $10 from wallet

Exchanges money for products

Suggests going to outlet store

Walks to and enters outlet store

Locates and tries on sweaters

Discusses Kari’s coat

Takes out Visa card

Exchanges funds for products

Is offered information by salesclerk

Purchases sweaters and coat

Is offered more salesclerk information

Takes products home

Eats candy bars on the way home

Information contact

Communication

Store contact

Product contact

Funds access

Transaction

Communication

Store contact

Product contact

Communication

Funds access

Transaction

Information contact

Transaction

Information contact

Transaction

Consumption

Summary

This chapter introduced the topic of overt consumer behavior and discussed its importance to marketing. A sequential model of overt consumer behavior was developed for use in analyzing and increasing responses. The model listed the following seven behaviors: information contact, funds access, store contact, product contact, transaction, consumption and disposition, and communication. Each was discussed in terms of a variety of marketing strategies and tactics used to increase the chances that the behavior will occur or that the frequency of it will increase. In some situations and for some products, these behaviors may be rather automatic and not require much cognitive activity. However, in others, considerable cognitive activity and affect development may be necessary prior to, during and after purchase and consumption.

Key Terms and Concepts

Communication 195 product contact 192

Consumption 194 pull strategies 192

Fund access 189 push strategies 192

Information contact 185 store contact 190

Overt consumer behavior 182 transactions 194

Review and Discussion Questions

1. Describe the differences between traditional models of the adoption process (for example, awareness, interest, evaluation, trial, adoption) and the behavior sequence presented in Exhibit 8.2.

2. What advantages do you see in the use of the behavior sequence model for marketing researchers and marketing managers?

3. Use the behavior sequence model to describe recent purchases of a product and a service.

4. Consider the challenges presented by the information search stage of the behavior sequence for each of the following: (a) a leading brand, (b) a new brand and (c) an existing low share brand.

5. Give some examples of marketing strategies aimed at addressing the funds access problems of college seniors.

6. Visit several local supermarkets and note evidences you observe of push and pull strategies used to increase product contact for grocery items. Share these observations with other members of your class.

7. List at least three examples of situations in which marketing efforts have been instrumental in changing your consumption or disposal behavior for products you have purchased.

8. Assume the role of a marketing manager for each of the purchases you described in response to Question 3. Which behaviors would you want to change?

9. Suggest strategies for decreasing the frequency of post holiday merchandise returns to a department store.

Marketing Strategy in Action

Peapod

Although its diminutive, garden fresh name might conjure images of a rustic roadside produce stand, there’s nothing old fashioned about Peapod. In fact, the computer based home shopping and delivery service is out revolutionize the way upscale America shops for groceries. Founded in 1990s by brothers Andrew and Thomas Parkinso, Peapod has grown from a two year, 400 household test project in Evanston, lllinois, to a multistate delivery service catering to more than 27,000 households in Chicago, San Fransisco, Boston, San Jose, California and Columbus, Ohio, and has expanded into Atlanta, Dallas, Houston and Austin Texas. The company is adding more than 2,000 subscribers each month and expects to reach $1.5 billion in sales by 2001.

Peapod subscribers pay a monthly fee that ranges from $4.95 to $6.95, depending on the city and can choose from 20,000 sku’s (stock keeping units) that include nearly everything a shopper would find in typical grocery store. Shoppers can browse store “aisles” on their home computers and can place their orders via computer, fax or telephone. The company is also testing television shopping in Columbus, Ohio. Orders are filled at stores owned and operated by Peopod’s partners such as Safeway in San Fransisco, Jewel/Osco in Chicago, and Kroger in Columbus and are delivered according to customere wishes within a 90 minute window. In addition to the membership fee, shoppers are changed between $4.95 and $6.95, plus 5 percent per order, for shiping, packaging and delivery. A Peopod ad guarantees satisfaction on every order: “If we make a mistake, we’ll make it right.”Perishable products are carefully selected and refrigerated items are delivered in temperature controlled coolers.

Although the additional charges may seem steep, the time starved, dual income families Peapod caters to haven’t yet balked. In fact, they tend to buy more, says president and chief executive officer Andrew Parkinson, spending roughly $114 per order. That’s higher than average Internet grocery bill of $77 and well above the $17 to $19 shoppers spend on a typical visit to supermarkets. Part of the reason for the higher spending, of course is that the delivery fees discourage consumers from using the service as often as they might if they were making a free trip to a store. Although normal supermarket shoppers might go to the store as often as twice a week the average Peapod customer orders only once every 10 days.

Because shoppers are using computers to place orders, they are not coming into the stores as often and thus are not as likely to make impulse purchases. Although this may lower a grocery store’s sales to a Peapod customer, it does help stores add value for customers. Peapod shoppers may go to the grocery store rather than order from home on some occasions. In fact, Peapod subscribers still do 30 percent of their grocery shopping in stores. Parkinson argues that computer shopping helps build customer loyalty to the stores that Peapod partners with.

Peapod sells space on its system to manufacturers that use their subscribers as a test market. For example, manufacturers can see what the value of an online coupon needs to be to change a shopper’s purchasing decision, or can include free samples of their products with customers orders. However Peapods alliance with manufacturers must be balanced with shoppers wants. Shoppers are less interested in graphics the bells and whistles of the Internet than they are with simple, easy to use text, says Parkinson. Manufacturers, on the other hand, like to display their products in a graphics sensitive environment. In addition, manufacturers want to include a lot of links to their own Web sites but this has to be carefully controlled so shoppers do not become confused or distracted.

Online shopping is expected to account for between 10 and 20 percent of grocery sales by 2005. That means that Peapod’s as well its competitors, such as Shopper’s Express, Shopping Alternatives and ERM will bew vying for the attention of shoppers and retailers alike.

Discussion Questions

1. Review the Peapod Web site at http://www.peapod.com Determine what behaviors are involved in grocery shopping online. How does this compare with traditional shopping in a grocery store in terms of behavioral effort?

2. What types of consumers are likely to value online grocery shopping from Peapod?

3. Evaluate the benefits of Peapod listed on its Web site.

4. Overall, what do you think about the idea of online grocery shopping? How does it compare with simply eating in restaurants and avoiding grocery shopping and cooking altogether?

Sources: Shelly Reese, “Peapod Demonstrates Potential of On Line Grocery Shopping,”Stores, January 1997, pp. 48-52; Laura Hooks and Heather Zuilkoski. “Peapod Electronic Crocer Shopping,”Retailing Management, 3^rd ed., eds. Michael Levy and Barton A. Weitz (Boston, MA Irwin/McGrawHill, 1998), pp.C6-C7; http://www.peapod.com

CONSUMER BEHAVIOUR AND MARKETING STRATEGY

Friday, September 12, 2014

Chapter 8: Analyzing Consumer Behaviors

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